<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 3, 2000
REGISTRATION NO. 333-95233
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WFS FINANCIAL OWNER TRUSTS
(ISSUER WITH RESPECT TO THE SECURITIES)
WFS FINANCIAL AUTO LOANS, INC.
(CO-ORIGINATOR OF THE TRUSTS DESCRIBED HEREIN)
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CALIFORNIA 9999 33-0149603
(STATE OR OTHER JURISDICTION OF (PRIMARY SIC (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
23 PASTEUR
IRVINE, CALIFORNIA 92618
(949) 727-1002
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOY SCHAEFER
PRESIDENT
WFS FINANCIAL AUTO LOANS, INC.
23 PASTEUR
IRVINE, CALIFORNIA 92618
(949) 727-1002
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WFS RECEIVABLES CORPORATION
(CO-ORIGINATOR OF THE TRUSTS DESCRIBED HEREIN)
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CALIFORNIA 9999 APPLIED FOR
(STATE OR OTHER JURISDICTION OF (PRIMARY SIC (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
6655 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102
(702) 247-1442
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID A. GUAY
PRESIDENT
WFS RECEIVABLES CORPORATION
6655 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102
(702) 247-1442
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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ANDREW E. KATZ, ESQ. DALE W. LUM, ESQ.
MITCHELL, SILBERBERG & KNUPP LLP BROWN & WOOD LLP
11377 W. OLYMPIC BOULEVARD 555 CALIFORNIA STREET
LOS ANGELES, CALIFORNIA 90064-1683 SAN FRANCISCO, CALIFORNIA 94104-1715
(310) 312-2000 (415) 772-1200
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
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Auto Receivable Backed Securities....... $3,500,000,000 100% $3,500,000,000 $924,000
- ----------------------------------------------------------------------------------------------------------------------------
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* Previously paid.
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<PAGE> 2
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS DATED MARCH 6, 2000
- --------------------------------------------------------------------------------
AUTOMOBILE LOAN ASSET-
BACKED SECURITIES, ISSUABLE IN
SERIES
WFS FINANCIAL AUTO LOANS, INC
AND
WFS RECEIVABLE CORPORATION,
REGISTRANTS
WFS FINANCIAL INC
MASTER SERVICER
- --------------------------------------------------------------------------------
- -------------------------------------------------------
YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE 8 OF THIS
PROSPECTUS AS WELL AS THOSE IN THE RELATED PROSPECTUS SUPPLEMENT. These
securities are automobile loan asset-backed securities issued by a trust.
The securities are not obligations of WFS Financial Auto Loans, Inc., WFS
Receivables Corporation, WFS Financial Inc or any of their affiliates, nor are
the securities insured by the Federal Deposit Insurance Corporation or any
other governmental agency on instrumentality.
This prospectus may not be used to consummate sales of securities unless
accompanied by the prospectus supplement relating to the offering of these
securities.
- --------------------------------------------------------
THE SECURITIES TO BE SOLD:
- - will be asset-backed securities issued from time to time in one or more
series;
- - will be backed by one or more pools of automobile loans held by the issuer;
- - will be rated in one of the four highest rating categories by at least one
nationally recognized statistical rating organization; and
- - will have the benefit of one or more forms of credit enhancement, such as an
insurance policy, overcollateralization, subordination or spread account
funds.
THE ASSETS:
The assets of each issuer will consist of a pool of retail installment sales
contracts secured by new or used motor vehicles, and other assets specified in
the applicable prospectus supplement.
NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is March 6, 2000.
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell any combination of the securities described in this prospectus in one or
more offerings. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and the related prospectus supplement.
We have filed with the SEC a registration statement in connection with the
securities being offered in this prospectus. This prospectus is a part of the
registration statement but does not contain all of the information included in
the registration statement. Some information in this prospectus is not complete
and refers you to exhibits and schedules contained in the registration statement
and to documents incorporated by reference in this prospectus. You can review
and copy the registration statement at the following locations:
- Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549
- Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661
- 7 World Trade Center, Suite 1300, New York, New York 10048
- http://www.sec.gov.
If you purchase securities you will also be provided with unaudited
quarterly and annual reports concerning the automobile loan contracts which back
the securities.
You should rely on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information.
We do not claim the accuracy of the information in this prospectus as of
any date other than the date stated on the cover of this prospectus.
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
We have included cross-references to captions in this prospectus and the
related prospectus supplement where you can find further related discussions. We
have started with an introductory section describing each trust, and an
abbreviated discussion of terms, of which some will apply to every offering
while others will vary depending on the nature of the particular offering. A
more complete description of terms follows the abbreviated discussion.
Cross-references may be contained in the introductory section which will
direct you elsewhere in this prospectus. You can also find references to key
topics in the Table of Contents.
You can find a listing of the pages where capitalized terms are defined
under the caption "Index of Definitions" beginning on page 53 of this
prospectus.
WFS, as Master Servicer, will provide without charge to each person,
including any beneficial owner of Notes, to whom a copy of this prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all of the documents incorporated herein by reference, except the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests for such copies should be directed to Secretary,
WFS Financial Inc, 23 Pasteur, Irvine, California 92618 or by calling
(949)727-1002.
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS....... 2
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS.......................... 2
SUMMARY OF TERMS..................... 5
The Parties........................ 5
The Offered Securities............. 5
The Trust Property................. 5
Redemption of Securities and
Repurchase of Contracts......... 6
Tax Status......................... 7
ERISA Considerations............... 7
RISK FACTORS......................... 8
Absence of Secondary Market for the
Notes Could Limit Your Ability
to Resell the Notes............. 8
The Ratings of the Notes May be
Withdrawn or Revised Which May
Have an Adverse Effect on the
Market Price of the Notes....... 8
Losses on Contracts May be Affected
Disproportionately Because of
Geographic Concentration of
Contracts in California......... 8
Prepayments on the Contracts Could
Cause You to Be Paid Earlier
Than You Expected, Which May
Adversely Affect Your Yield to
Maturity........................ 8
Possession of the Contracts by WFS
May Cause Your Payments to Be
Reduced or Delayed.............. 9
Losses and Delinquencies on the
Contracts May Differ From WFS'
Historical Loss and Delinquency
Levels.......................... 9
Noteholders Have No Recourse
Against WFS for Losses.......... 9
FORMATION OF THE TRUST............... 9
General............................ 9
Capitalization..................... 11
Interest Rate and Currency Swaps... 11
Prefunding Account................. 11
The Owner Trustee.................. 12
THE CONTRACTS POOL................... 12
Underwriting Procedures Relating to
the Contracts................... 12
</TABLE>
<TABLE>
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PAGE
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<S> <C>
Servicing of Contracts............. 14
POOL FACTORS AND TRADING
INFORMATION........................ 15
THE NOTES............................ 15
General............................ 15
Payments of Interest and
Principal....................... 15
Optional Redemption................ 16
Optional Repurchase of Contracts by
WFSRC........................... 16
Prepayment Following Optional
Repurchase by WFSRC............. 16
The Indenture Trustee.............. 16
Events of Default.................. 17
CERTAIN INFORMATION REGARDING THE
SECURITIES......................... 17
Book-Entry Registration............ 17
DTC's Year 2000 Efforts............ 19
Definitive Notes................... 19
Payments on the Contracts.......... 20
The Accounts and Eligible
Investments..................... 21
Distributions on the Notes......... 22
Payment Priorities of the Notes;
The Spread Account.............. 22
Withdrawals from the Spread
Account......................... 23
Payments from the Spread Account
and Under the Note Policy....... 23
Statements to Noteholders.......... 24
Evidence as to Compliance.......... 24
Certain Matters Regarding the
Master Servicer................. 25
Servicer Default................... 26
Rights Upon Servicer Default....... 27
Waiver of Past Defaults............ 27
Voting Interests................... 27
Amendment.......................... 28
List of Noteholders................ 30
No Bankruptcy Proceedings.......... 30
Termination........................ 30
The Trustees....................... 31
Duties of the Trustees............. 32
Administration Agreement........... 32
Prepayment Considerations.......... 32
THE NOTE POLICY...................... 33
Other Terms of the Note Policy..... 34
FINANCIAL SECURITY ASSURANCE INC..... 36
General............................ 36
Reinsurance........................ 36
Ratings............................ 37
</TABLE>
3
<PAGE> 5
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PAGE
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Capitalization..................... 37
Insurance Regulation............... 37
Sources of Additional
Information..................... 37
THE MASTER SERVICER.................. 37
Collection of Payments............. 38
Advances........................... 38
Insurance on Financed Vehicles..... 39
Servicer Determination and Reports
to Trustees..................... 40
Servicing Compensation............. 40
Realization Upon Defaulted
Contracts....................... 41
Year 2000 Compliance............... 41
CERTAIN LEGAL ASPECTS OF THE
CONTRACTS.......................... 41
General............................ 41
Security Interests in the Financed
Vehicles........................ 42
Enforcement of Security Interests
in Financed Vehicles............ 43
Other Matters...................... 44
Repurchase Obligation.............. 45
</TABLE>
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PAGE
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WFAL................................. 45
WFSRC................................ 45
WFS.................................. 46
General............................ 46
Business Activities................ 46
FEDERAL AND CALIFORNIA INCOME TAX
CONSEQUENCES....................... 46
Federal Income Tax Consequences.... 46
Tax Characterization of Trusts..... 47
Tax Consequences to Holders of the
Notes........................... 47
California Income Tax
Consequences.................... 49
ERISA CONSIDERATIONS................. 49
Overview........................... 49
Prohibited Transactions............ 50
The Notes.......................... 50
PLAN OF DISTRIBUTION................. 51
LEGAL MATTERS........................ 52
EXPERTS.............................. 52
INDEX OF DEFINITIONS................. 53
</TABLE>
4
<PAGE> 6
SUMMARY OF TERMS
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering, carefully
read this entire document and the accompanying prospectus supplement.
THE PARTIES:
The Issuer or the Trust....... Each series of Notes will be issued by a
separate owner trust (each, a "Trust")
Sellers/Seller................ WFS Financial Auto Loans, Inc. ("WFAL") and WFS
Receivables Corporation ("WFSRC") or only WFAL,
as described in the related prospectus
supplement
Sellers' Addresses............ WFAL: 23 Pasteur, Irvine, California 92618
WFSRC: 6655 West Sahara Avenue, Las Vegas,
Nevada 89102
Sellers' Telephone Numbers.... WFAL: (949) 727-1000
WFSRC: (702) 247-1442
Master Servicer............... WFS Financial Inc ("WFS")
The Insurer................... Financial Security Assurance, Inc. ("Financial
Security")
Indenture Trustee............. See the related prospectus supplement
Owner Trustee................. See the related prospectus supplement
THE OFFERED SECURITIES:
We will describe in each prospectus supplement the securities we are
offering at that time. The offered securities will include one or more classes
of asset-backed notes.
The Notes..................... Each Note will represent the right to receive
payments of principal and interest as described
in the related prospectus supplement. Payments
will be made on Distribution Dates set forth in
the related prospectus supplement.
THE TRUST PROPERTY:
General....................... The property of each trust will be described in
the applicable prospectus supplement. In
general, trust property will include:
- a pool of retail installment sales contracts
and a limited number of installment loans
originated by WFS, all of which are secured
by new or used automobiles or light duty
trucks;
- an insurance policy issued by the Insurer
guaranteeing all payments to be made to
holders of the notes; and
- the funds in a spread account; and
- any other credit enhancement features
designed to provide protection against losses
on trust assets.
5
<PAGE> 7
THE CONTRACTS
The Contracts will consist of
- retail installment sales contracts secured by new and used automobiles
and light duty trucks purchased by WFS from new and used car dealers,
- retail installment loans secured by new and used automobiles and light
duty trucks made by WFS to the obligors under those loans, and
- retail installment loans secured by new and used automobiles and light
duty trucks made by independent auto finance companies to the obligors
under those loans, which loans have been purchased by WFS,
each a "Contract" and together "the Contracts", including in each case, the
right to receive the payments due thereon from on or after the Cut-Off Date
specified in the related prospectus supplement.
THE SPREAD ACCOUNT
A Spread Account will be a segregated trust account in the name of the
Indenture Trustee that will afford you some limited protection against losses on
the Contracts. The Spread Account will be part of each Trust. It would be
created with an initial deposit by WFAL of an amount specified in the related
prospectus supplement. On any date upon which payments are to be made with
respect to the Notes issued by a Trust (each such date a "Distribution Date"),
the funds that are available from the Spread Account will be distributed to you
to cover any shortfalls in interest and principal required to be paid on the
Notes. The funds in the Spread Account will be supplemented on each distribution
date by any available funds in the collection account remaining after making all
of the payments necessary on that Distribution Date. The funds in the Spread
Account will be supplemented until they are at least equal to a certain
percentage, described in the related prospectus supplement, of the sum of the
remaining principal balance of the Simple Interest Contracts and the present
value of the remaining scheduled payments of the monthly principal and interest
due on the Rule of 78's Contracts. The percentage to be applied will depend upon
the loss and delinquency rate trigger in the related Sale and Servicing
Agreement.
If on the last day of any month or on any Distribution Date the amount on
deposit in the Spread Account is greater than the amount required to be in that
account on that date, the excess cash will be distributed first to the Insurer
to the extent of any unreimbursed amounts due to it, then to WFAL until WFAL has
received an amount equal to the initial WFAL deposit and finally to the Sellers
in accordance with their certificate percentage interests as described in
further detail in the prospectus supplement. You will have no further rights to
any such excess cash once distributed.
THE NOTE POLICY
The Insurer will issue an insurance policy that will guarantee all payments
due to the Noteholders of insured classes.
REDEMPTION OF SECURITIES AND REPURCHASE OF CONTRACTS:
OPTIONAL REPURCHASE BY WFSRC
If WFSRC is a seller, to the extent described in the related prospectus
supplement, WFSRC may repurchase all of the Contracts it has transferred to a
Trust on any Distribution Date prior to which it has given notice that it is
exercising this right (an "Optional Repurchase"). If WFSRC exercises its right
to repurchase, WFSRC will pay a Trust, in addition to the Scheduled Balances of
6
<PAGE> 8
the Contracts being repurchased, a premium in an amount to be specified in the
related prospectus supplement.
OPTIONAL PURCHASE
The Sellers may purchase all of the Contracts owned by a Trust at any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than an amount to be specified in the related
prospectus supplement (an "Optional Purchase").
OPTIONAL REDEMPTION
If the Sellers purchase all of the Contracts of the Trust pursuant to an
Optional Purchase, each class of outstanding Notes will be redeemed in whole at
a price equal to the unpaid principal amount of that class of Notes plus the
accrued interest on that class of Notes.
MANDATORY REDEMPTION
The Notes may be accelerated if an Event of Default has occurred and is
continuing under the Indenture. Except as otherwise provided in the related
prospectus supplement, if an Insurer Default has occurred and is continuing and
an Event of Default has occurred and is continuing, the Indenture Trustee may be
permitted to accelerate the Notes. Except as otherwise provided in the related
prospectus supplement, if an Event of Default has occurred and is continuing but
no Insurer Default has occurred and is continuing, the Insurer may have the
right (in addition to its obligation to make payments on the Notes in accordance
with the terms of the Note Policy), but not the obligation, to elect to
accelerate the Notes. If the Notes are accelerated, the Master Servicer or the
Indenture Trustee will sell or otherwise liquidate the property of the Trust and
deliver the proceeds to the Indenture Trustee for distribution in accordance
with the terms of the Indenture.
TAX STATUS:
In the opinion of Mitchell, Silberberg & Knupp LLP, special counsel for
federal income and California income tax purposes:
- the Notes will be characterized as debt; and
- the Trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
If you purchase a Note, you agree to treat it as debt for tax purposes.
ERISA CONSIDERATIONS:
The Notes are generally eligible for purchase by employee and other benefit
plans that are subject to the Employee Retirement Income Security Act of 1974 as
amended ("ERISA"), or to Section 4975 of the Code. However, administrators of
employee benefit plans should review the matters discussed under "ERISA
Considerations" in this prospectus supplement and also should consult with their
legal advisors before purchasing Notes.
7
<PAGE> 9
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any of the Notes. You should also consider the risk factors set forth
under the heading "Risk Factors" in the prospectus supplement.
ABSENCE OF A SECONDARY MARKET FOR THE NOTES COULD LIMIT YOUR ABILITY TO RESELL
THE NOTES
The absence of a secondary market for the Notes could limit your ability to
resell them. This means that if in the future you want to sell any Notes before
they mature, you may be unable to find a buyer or, if you find a buyer, the
selling price may be less than it would have been if a market existed for the
Notes. There currently is no secondary market for the Notes. The underwriters
named in the related prospectus supplement expect to make a market in the Notes
but will not be obligated to do so. There is no assurance that a secondary
market for the Notes will develop. If a secondary market for the Notes does
develop, it might end at any time or it might not be sufficiently liquid to
enable you to resell any of your Notes.
THE RATINGS OF THE NOTES MAY BE WITHDRAWN OR REVISED WHICH MAY HAVE AN ADVERSE
EFFECT ON THE MARKET PRICE OF THE NOTES
A rating agency can revise or withdraw its ratings at any time if it feels
the circumstances which led to the existing ratings have changed. A revision or
withdrawal of the existing rating may have an adverse effect on the market price
of the related Notes.
A security rating is not a recommendation to buy, sell or hold the Notes.
The ratings are an assessment by the rating agencies of the likelihood that each
class of Notes will be paid in full by the related final scheduled distribution
date. The ratings do not consider to what extent the Notes will be subject to
prepayment.
LOSSES ON CONTRACTS MAY BE AFFECTED DISPROPORTIONATELY BECAUSE OF GEOGRAPHIC
CONCENTRATION OF CONTRACTS IN CALIFORNIA
We anticipate that, as compared to other states, California will account
for a larger percentage of the aggregate principal balance of the Contracts.
Information regarding geographic concentrations is set forth in the prospectus
supplement under the heading "Geographic Concentration of the Contracts".
Economic conditions or other factors affecting California in particular could
adversely affect the losses on the Contracts.
PREPAYMENTS ON THE CONTRACTS COULD CAUSE YOU TO BE PAID EARLIER THAN YOU
EXPECTED, WHICH MAY ADVERSELY AFFECT YOUR YIELD TO MATURITY
The yield to maturity of the Notes may be adversely affected by a higher or
lower than anticipated rate of prepayments on the Contracts. If you purchase a
Note at a premium, and the Note pays principal more quickly than you expected,
your yield will be reduced and you may not recover the premium you paid.
Similarly, if you purchase a Note at a discount and the Note pays principal more
slowly than you expected, your yield will be lower than you anticipated. The
Contracts may be prepaid in full or in part at any time. We cannot predict the
rate of prepayments of the Contracts, which is influenced by a wide variety of
economic, social and other factors, including among others, obsolescence of the
related vehicles, prevailing interest rates, availability of alternative
financing, local and regional economic conditions and natural disasters.
Therefore, we can give no
8
<PAGE> 10
assurance as to the level of prepayments that a Trust will experience. Your
Notes could be subject to optional or mandatory redemption features, exposing
you to investment risk. One or more classes of Notes may be subject to optional
or mandatory redemption in whole or in part, on or after a specified date, or on
or after the time when the aggregate outstanding principal amount of the
Contracts or the Notes is less than a specified amount or percentage. Since
prevailing interest rates may fluctuate, we cannot assure you that you will be
able to reinvest these amounts at a yield equaling or exceeding the yield on
your Notes. You will bear the risk of reinvesting unscheduled distributions
resulting from a redemption.
POSSESSION OF THE CONTRACTS BY WFS COMBINED WITH THE INSOLVENCY OF WFS MAY CAUSE
YOUR PAYMENTS TO BE REDUCED OR DELAYED
Any insolvency by WFS while in possession of the Contracts may result in
competing claims to ownership or security interests in the Contracts which could
result in delays in payments on the Notes, losses to securityholders or the
repayment of the Notes. In addition, if a Seller, the servicer, or a third party
while in possession of the Contracts, sells or pledges and delivers them to
another party, that party could acquire an interest in the Contracts with
priority over the Trustee's interest. This could result in delays in payments on
the Notes, losses to you or the repayment of the Notes.
LOSSES AND DELINQUENCIES ON THE CONTRACTS MAY DIFFER FROM WFS' HISTORICAL LOSS
AND DELINQUENCY LEVELS
We cannot guarantee that the delinquency and loss levels of the contracts
in the Trust will correspond to the historical levels WFS experienced on its
loan and vehicle portfolio. There is a risk that delinquencies and losses could
increase or decline significantly for various reasons including:
- Changes in underwriting standards; or
- Changes in the local, regional or national economies.
NOTEHOLDERS HAVE NO RECOURSE AGAINST WFS FOR LOSSES
There is no recourse against WFS. The Notes represent obligations solely of
the Trust or debt secured by the trust property. No Notes will be guaranteed by
WFS, WFAL, WFSRC or the applicable trustee. Consequently, if payments on the
Contracts, and to the extent available, any credit enhancement, are insufficient
to pay the securities in full, you have no rights to obtain payment from WFS,
WFAL, WFSRC or the applicable trustee.
FORMATION OF THE TRUST
GENERAL
Each Trust will be a business trust formed for the transaction described in
this prospectus under the laws of the State of Delaware pursuant to a trust
agreement which will be amended and restated on a date to be specified in the
related prospectus supplement (the "Trust Agreement"). After its formation, the
Trust will only engage in the following activities:
- acquiring, holding and managing the Contracts and the other assets of the
Trust and proceeds therefrom;
- issuing the Notes to investors;
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<PAGE> 11
- issuing Certificates to Sellers or their affiliates;
- making payments on the Notes and Certificates; and
- engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing purposes or are incidental thereto or
connected therewith.
On the date the Notes are initially issued (the "Closing Date"), the
Sellers, WFAL and WFSRC, will individually or jointly establish the Trust (as
described in greater detail in the related prospectus supplement), to which the
Contracts will be sold. WFAL will sell and assign a percentage of the Contracts
directly to the Trust, and the remaining Contracts will be transferred to WFSRC,
which will then sell and assign those Contracts to the Trust. The percentage of
Contracts to be sold to the Trust through WFSRC will be specified in the related
prospectus supplement and will range from zero percent to one hundred percent.
The Sellers will receive Certificates representing their beneficial interest in
the assets of the Trust. The Certificates will be subordinate to the Notes.
WFS will act as Master Servicer of the Contracts and will receive
compensation and fees for those services. WFS, as Master Servicer, may retain
physical possession of the original executed Contracts, and certain other
documents or instruments relating to the Contracts, as custodian for the Owner
Trustee pursuant to the Sale and Servicing Agreement, or may employ one or more
Subservicers as custodians. In order to protect the Trust's ownership interest
in the Contracts, the Trust's interest in the Contracts will be perfected by
filing UCC-1 financing statements in the State of California to give notice of
the Trust's ownership of the Contracts. Under the Sale and Servicing Agreement
and the Indenture, WFS will be obligated to take all necessary steps to preserve
and protect the interests of the Trustees in the Contracts. Neither the
Indenture Trustee nor the Owner Trustee will be responsible for the legality,
validity or enforceability of any security interest in respect of any Contract.
WFS will not physically segregate the Contracts from other retail installment
sales contracts and installment loans owned or serviced by it and will not stamp
the Contracts with notice of the sale to the Sellers or the Trust. See "Certain
Legal Aspects of the Contracts".
Simultaneously with the issuance of the Notes, the Insurer will issue a
policy (the "Note Policy") to the Indenture Trustee for the benefit of the
Noteholders. Under the Note Policy, the Insurer will unconditionally and
irrevocably guarantee to the related Noteholders full and complete payment of
the Scheduled Payments for each Distribution Date. The Insurer will have a lien
on the Contracts and other documents relating to the Contracts subordinate to
the interest of the Noteholders, which lien cannot be executed upon until all
required payments under the Note Policy have been made. Detailed information
about the Note Policy and the Insurer are set forth under the headings "The Note
Policy" and "Financial Security Assurance Inc.".
On and after the Closing Date, the property of the Trust will consist of:
- Contracts secured by new or used automobiles and light duty trucks (the
"Financed Vehicles");
- principal and interest due under the Contracts on and after a date to be
specified in the prospectus supplement (the "Cut-Off Date");
- security interests in the Financed Vehicles;
- the Note Policy;
- amounts on deposit in the Collection Account, the Note Distribution
Account, the Spread Account and the Holding Account, including all
Eligible Investments therein and all income from the investment of funds
therein and all proceeds therefrom;
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- proceeds from claims under certain insurance policies in respect of
individual Financed Vehicles or obligors under the Contracts (the
"Obligors"); and
- rights as a third party beneficiary under the sale and servicing
agreement (the "Sale and Servicing Agreement"), among the Trust, the
Sellers and the Master Servicer.
Pursuant to the Indenture, the property of the Trust (other than the Note
Distribution Account and the Note Policy) will be held by the Master Servicer
for the benefit of the Indenture Trustee and the Insurer on behalf of the
holders of the Notes.
After the sale and assignment of the Contracts to the Trust, WFS as Master
Servicer must repurchase Contracts only if:
(a) one of the following occur:
- any representation or warranty made by WFS is incorrect;
- WFS breaches its obligations under the Sale and Servicing Agreement
regarding collection of payments on the Contracts; or
- WFS fails to maintain the Trust's first priority perfected security
interest in each Contract;
(b) such incorrectness or breach listed in (a) above is not cured
within 30 days; and
(c) that incorrectness or breach materially and adversely affects a
Contract.
See "The Master Servicer."
CAPITALIZATION
Each prospectus supplement sets forth further details regarding the
capitalization of the Trust.
INTEREST RATE AND CURRENCY SWAPS
The Trust may include a derivative arrangement for any series or class of
Notes. A derivative arrangement may include a guaranteed rate agreement, a
maturity liquidity facility, a tax protection agreement, an interest rate cap or
floor agreement, an interest rate or currency swap agreement or any other
similar arrangement. The related prospectus supplement will contain further
details regarding any such arrangement.
PREFUNDING ACCOUNT
The amount of Notes issued by a particular Trust may exceed the Aggregate
Scheduled Balance of the Contracts sold to that Trust. If so, the difference
will be placed in a cash account (the "Prefunding Account"). The Prefunding
Account will be used to purchase additional Contracts by the Trust. The
Prefunding Account will not exceed 25% of the principal amount of the Notes sold
by a Trust. The related prospectus supplement will contain further details
regarding the Prefunding Account, if any.
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THE OWNER TRUSTEE
The Owner Trustee will have the rights and duties set forth herein under
"Certain Information Regarding the Securities -- The Trustees" and "-- Duties of
the Trustees". Each prospectus supplement will contain further information
regarding the Owner Trustee.
THE CONTRACTS POOL
Each Contract is a retail installment sales contract or installment loan
originated by a new or used car dealer or an auto finance company. Most of the
Contracts will be purchased by WFS from new and used car dealers; however, a
limited number of Contracts may be installment loans originated by branch
offices or affiliates of WFS directly to consumers or by other independent auto
finance companies which loans are then sold to WFS. Each Contract is secured by
a Financed Vehicle. Except as otherwise noted, all references herein to
contracts include installment loans.
WFS will select the Contracts from its portfolio of fixed-interest rate
contracts which are secured by new and used automobiles or light duty trucks.
The Contracts are underwritten and purchased by WFS in the ordinary course of
its business operations. Each of the Contracts is fully amortizing and provides
for level payments over its term, with the portions of principal and interest of
each such level payment being determined on the basis of the Rule of 78's or the
simple interest (actual number of days) method. The amortization of the Rule of
78's Contracts will result in the outstanding principal balance on each of those
Contract being in excess of the Scheduled Balance of that Contract. For purposes
of the Trust, all Rule of 78's Contracts are amortized on an actuarial basis to
prevent shortfalls of principal payments on the Notes. As amortization on an
actuarial basis produces a faster amortization than does application of the Rule
of 78's, there will not be a shortfall of principal in any event, including as a
result of prepayments or timely payment to maturity of a Rule of 78's Contract.
The prospectus supplement sets forth details regarding the percentage of
Contracts which are Rule of 78's Contracts and the percentage of Contracts which
are Simple Interest Contracts. Each prospectus supplement also will contain
details regarding the distribution of Contracts by APR, the geographic
concentration of the Contracts, and the percentage of Contracts relating to new
and used vehicles.
UNDERWRITING PROCEDURES RELATING TO THE CONTRACTS
WFS and its predecessors and affiliates have underwritten and purchased
contracts since 1973. The discussion herein regarding contracts is applicable to
the Contracts and none of the Contracts included in the Trust Property will have
been underwritten under special financing programs. WFS purchases contracts
across the full spectrum of the prime and non-prime credit quality market. It
offers competitive rates commensurate with the risks inherent in its obligors'
ability to make payments under their contracts.
Substantially all contracts are nonrecourse to the originating dealer or
lender. In the case of new vehicle contracts, the original amount financed does
not exceed the sum of the dealer's cost, taxes, license fees, service warranty
cost and, if applicable, premiums for credit life or credit disability
insurance, and in some cases, miscellaneous costs. Over-advances (i.e., advances
in excess of the amount specified in the previous sentence) may be made under
certain circumstances to assist a dealer in selling an automobile or light duty
truck by permitting a lower down payment, and in some cases no down payment,
based on the creditworthiness of the applicant. For used vehicles, the amount
financed does not exceed the wholesale "blue book" value for the vehicle plus
the related expenses and the over-advances just described. WFS does not have a
fixed maximum amount
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financed as a percentage of the wholesale or retail value of the financed
vehicle. Any amount financed in excess of the wholesale value of the financed
vehicle is dependent upon the creditworthiness of the applicant. WFS believes
that, with respect to substantially all contracts, the total amount financed,
including any over-advance, does not exceed the retail value of the financed
vehicle.
Each contract is fully amortizing and provides for level payments over its
term with the portion of principal and interest of each level payment determined
generally on the basis of the sum of the digits (also known as the Rule of
78's), or on a simple interest basis otherwise. WFS does not have minimum
maturity requirements; however, contracts with maturities of less than three
years are seldom purchased or made due to low customer demand.
The underwriting process begins when an application is faxed to WFS'
centralized data entry center. WFS' data entry group enters the applicant
information into its front-end underwriting computer system. Once the
application has been entered, the computer system will automatically obtains
credit bureau information on the applicant which is then routed through one of
WFS' multiple proprietary credit scorecards.
WFS uses credit scoring to differentiate credit applicants and to rank
order credit risk in terms of expected default probabilities, which enables WFS
to tailor contract pricing and structure according to this statistical
assessment of credit risk. For example, a consumer with a lower score would
indicate a higher probability of default; therefore, WFS would structure and
price the transaction to compensate for this higher default risk. Multiple
scorecards are used to accommodate the full spectrum of contracts WFS purchases.
In addition to a credit score, the system will highlight certain aspects of the
credit application which have historically impacted the creditworthiness of the
borrowers.
Given the different risk characteristics of the contracts WFS acquires, WFS
has separate credit analysts who specialize in reviewing either prime or
non-prime contracts. Credit analysts are responsible for properly structuring
and pricing deals to meet WFS' risked-based criteria. Credit analysts review the
information, structure and price of an application and make a determination
whether to approve or decline it, or make a counteroffer to the dealer. Each
credit analyst's lending levels and approval authorities are established based
on the individual's credit experience and portfolio performance, credit manager
audit results and quality control review results. Higher levels of approvals are
required for higher credit risk and are controlled by system driven parameters
and limits. System driven controls include limits on interest rates, contract
term, contract advances, payment to income ratios, debt to income ratios,
collateral values and low side overrides.
Once adequate approval has been received, the computer system automatically
sends a fax back to the dealer with WFS' credit decision, specifying approval,
denial or conditional approval based upon modification to the transaction such
as increase in down payment, reduction of term, or the addition of a co-signer.
As part of the approval process, the system or the credit analyst may require
that some of the information be verified, such as income, employment, residence
or credit history of the applicant. The system increases efficiency by
automatically denying approval in certain circumstances without additional
underwriting being performed. These automated notices are controlled by
parameters set by WFS to be consistent with WFS' credit policy.
If the dealer and obligor accept the terms of the approval, the dealer is
required to deliver the necessary documentation for each contract to the
appropriate office. The operations group audits such documents for completeness
and consistency with the application, providing final approval and funding of
the contract. A direct deposit is made or a check is prepared and is promptly
sent to the dealer for payment. The dealer's proceeds include an up-front dealer
participation paid to the dealer
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for consideration of the acquisition of the contract. The completed contract
file is then forwarded to the records center for imaging.
Under the direction of WFS' Credit Pricing Committee, the Chief Credit
Officer of WFS oversees credit risk management, sets underwriting policy,
monitors contract pricing and tracks compliance to underwriting policies and
re-underwrites select contracts. If re-underwriting statistics are unacceptable,
all monthly and quarterly incentives. are forfeited by the office that
originated the contracts. WFS' internal quality control group reviews contracts,
on a statistical sampling basis, to ensure adherence to established lending
guidelines and proper documentation requirements. Credit managers, within each
regional business center, provide direct management oversight to each credit
analyst. In addition, the Chief Credit Officer provides oversight management to
ensure that all credit managers analysts are following overall corporate
guidelines.
Contracts purchased from independent auto finance companies are fully
underwritten by WFS in the same manner and to the same criteria as contracts
originated by WFS. WFS purchases contracts from independent auto finance
companies only after WFS has completed a thorough review of the business
practices and lending criteria applied by that independent auto finance company
and WFS has entered into a written agreement with that company. The written
agreement contains representations and warranties as to the contracts no less
broad than those made by WFS or the Sellers in the Sale and Servicing Agreement
as to a related Trust.
SERVICING OF CONTRACTS
WFS services all of the contracts WFS purchases or originates, both those
held by WFS and those sold in securitization transactions. The servicing process
includes the routine collection and processing of payments, responding to
borrower inquiries, maintaining the security interest in the vehicle,
maintaining physical damage insurance coverage and repossessing and selling
collateral when necessary.
WFS uses monthly billing statements to serve as a reminder to borrowers as
well as an early warning mechanism in the event a borrower has failed to notify
WFS of an address change. Approximately 15 days before a borrower's payment is
due, WFS mails a billing statement directing the borrower to mail payments to
WFS' lockbox address. Payments received in the mail or through WFS' offices are
processed by WFS' remittance processing center using state of the art lockbox
equipment. To expedite the collection process, WFS accepts payments from
borrowers through automated payment programs, direct debits and third party
payment processing services. WFS' customer service center uses interactive voice
response technology to answer routine account questions and route calls to the
appropriate service counselor.
WFS' fully integrated servicing and collections system automatically
forwards accounts based on estimated likelihood of default and delinquency
status to WFS' automated dialers or to WFS' collection centers throughout the
country. Borrowers who are past due initially receive a call from a collector
queued by WFS' automated telephone dialing system. If the system is unable to
reach a borrower within a specified number of days or if the account is more
than 30 days delinquent, the account is forwarded to a collection specialist
within the office that originated the contract. This process balances the
efficiency of centralized collection efforts with the effectiveness of
decentralized personal collection efforts. WFS' systems also track delinquencies
and chargeoffs, monitor the performance of WFS' collection associates and
forecast potential future delinquency. To assist in the collections process, WFS
can access original documents through WFS' imaging system which stores all the
documents related to each contract. WFS limits deferments to a maximum of three
deferments over the life of the contract and rarely rewrite contracts.
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If satisfactory payment arrangements are not made, the vehicle is generally
repossessed within 60 to 90 days of the date of delinquency, subject to
compliance with applicable law. WFS uses independent contractors to perform
repossessions. The vehicle remains in WFS' custody generally for 15 days, or
longer if required by local law, to provide the obligor the opportunity to
redeem the contract. If after the redemption period the delinquency is not
cured, WFS writes down the vehicle to fair value and reclassifies the contract
as a repossessed asset. After the redemption period expires, WFS prepares the
vehicle for sale. WFS sells substantially all repossessed vehicles through
wholesale auto auctions. WFS does not provide the financing on repossessions
sold. WFS uses regional remarketing departments to sell WFS' repossessed
vehicles. Once the vehicle is sold, any remaining deficiency balances are then
charged off.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a six-digit decimal
which the Master Servicer will compute prior to each Distribution Date
indicating the unpaid principal amount of each Class of Notes, after giving
effect to payments to be made on that Distribution Date, as a fraction of the
initial outstanding principal amount of that Class of Notes. Each Note Pool
Factor will be 1.000000 as of the Closing Date, and thereafter will decline to
reflect reductions in the outstanding principal amount of the applicable Class
of Notes. A Noteholder's portion of the aggregate outstanding principal amount
of the related Class of Notes will be the product of (i) the original
denomination of such Noteholder's Note and (ii) the applicable Note Pool Factor
at the time of determination.
The Noteholders will receive reports on or about each Distribution Date
concerning payments received on the Contracts, the Aggregate Scheduled Balance,
each Note Pool Factor and various other items of information. In addition,
Noteholders of record during any calendar year will be furnished information for
tax reporting purposes not later than the latest date permitted by law. See
"Certain Information Regarding the Securities -- Statements to Noteholders".
THE NOTES
GENERAL
For each Trust that issues notes, one or more classes of notes of the
related series will be issued pursuant to the terms of an indenture (the
"Indenture"). You can obtain a copy of the Indenture (without exhibits) by
writing to the Indenture Trustee at its corporate trust office set forth in the
related prospectus supplement. The following summary and the information
contained under "Certain Information Regarding the Securities" describes certain
terms of the Indenture and the Notes, but does not purport to be complete. You
should review the applicable prospectus supplement, the provisions of the Notes
and the Indenture along with the following summary in order to have more
complete information. Where particular provisions or terms used in the Notes or
the Indenture are referred to, the actual provisions of such documents
(including definitions of terms) are incorporated by reference as part of such
summaries.
PAYMENTS OF INTEREST AND PRINCIPAL
The applicable prospectus supplement will describe the timing and priority
of payment, seniority, allocations of losses, interest rate and amount of or
method of determining payments of principal and interest on each class of notes
of a given series, including the final distribution date for each class of
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Notes (each, a "Final Scheduled Distribution Date"). In particular, interest
and/or principal may be paid at different intervals, for example, monthly,
quarterly, or semi-annually. Interest may be payable on either a fixed or
floating rate basis. The rights of holders of any class of notes to receive
payments of principal and interest may be senior or subordinate to the rights of
holders of any other class or classes of Notes of that series.
OPTIONAL REDEMPTION
Each Class of outstanding Notes may be subject to redemption, on terms set
forth in the applicable prospectus supplement. An Optional Purchase may occur on
any distribution date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than an amount to be specified in the applicable
prospectus supplement.
OPTIONAL REPURCHASE OF CONTRACTS BY WFSRC
If WFSRC is a seller, as described in the related prospectus supplement, it
will have an Optional Repurchase right as to the Contracts it has transferred to
a Trust. If WFSRC exercises its Optional Repurchase right, WFSRC will pay the
Trust a repurchase premium in an amount to be specified in the related
prospectus supplement.
PREPAYMENT FOLLOWING OPTIONAL REPURCHASE BY WFSRC
If WFSRC exercises its Optional Repurchase right as described above:
- the amount received upon repurchase equal to the Scheduled Balances of
the repurchased Contracts will be treated as other collections on the
Contracts and distributed to the Noteholders in the order of priority
specified in the related prospectus supplement in addition to the
distributions to which the Noteholders would then otherwise be entitled
to receive,
- the amount received equal to the prepayment premium will be distributed
by the Trust on a pro rata basis to all classes of Notes then outstanding
based upon the principal amount of each such class outstanding following
all other payments made on the Distribution Date on which the
distribution occurs other than the amount paid equal to the Scheduled
Balances of the repurchased Contracts, and
- the repurchased Contracts will be transferred back to WFSRC and will no
longer be assets of the Trust.
The effect of the exercise by WFSRC of its optional right to repurchase all of
the Contracts it has sold to a Trust will be a reduction of the average life of
each class of Notes outstanding at the time the Optional Repurchase occurs. The
extent of that reduction will be a function of when, following the Closing Date,
the repurchase occurs. The reduction will be greater the sooner after the
Closing Date the repurchase occurs.
THE INDENTURE TRUSTEE
The Indenture Trustee will have the rights and duties set forth under
"Certain Information Regarding the Securities -- The Trustees" and "-- Duties of
the Trustees". Each prospectus supplement will contain further information
regarding the Indenture Trustee.
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EVENTS OF DEFAULT
With respect to the Notes of a given series, unless otherwise specified in
the related prospectus supplement, "Events of Default" under each Indenture will
occur if:
(1) the Trust fails to pay any interest on the Notes of any class
within 5 days after the interest payment becomes due and payable;
(2) the Trust fails to pay any principal of the Notes of any class
when it becomes due and payable;
(3) the Indenture Trustee notifies the Trust, or if the holders of
Notes evidencing at least 25% of the voting interests of all the Notes,
notifies the Trust or the Indenture Trustee that one of the following
events has occurred, and continues for a period of 30 days after the notice
is given:
- the Trust fails to observe or perform any covenant or agreement it
made in the Indenture; or
- the representations or warranties made by the Trust in the Indenture
or in any certificate delivered pursuant to or in connection with the
Indenture was incorrect in a material respect at the time it was made;
or
(4) certain events of bankruptcy, insolvency, receivership or
liquidation relating to the Trust occur (each, a "Trust Insolvency").
CERTAIN INFORMATION REGARDING THE SECURITIES
BOOK-ENTRY REGISTRATION
The Depository Trust Company ("DTC"), New York, New York, will act as
securities depository for the Notes. Each class of Notes will be issued as fully
registered securities registered in the name of Cede & Co. ("Cede"), the nominee
of DTC. No person acquiring a beneficial interest in the Notes (each, an
"Owner") will be entitled to receive Definitive Notes representing such person's
beneficial ownership interest in the related Notes except in the event that
Definitive Notes are issued under the limited circumstances described herein. It
is anticipated that the only Noteholders will be Cede, as nominee of DTC. Owners
will not be recognized by the Indenture Trustee as "Noteholders," as such term
will be used in the Indenture. Owners will only be permitted to exercise the
rights of Noteholders indirectly through DTC and its Participants, as further
described below.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code in effect in the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC
was created to hold securities for its participating members ("Participants")
and to facilitate the clearance and settlement of securities transactions
between Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers (including,
except as otherwise set forth in the prospectus supplement, the underwriters
named therein), banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to banks, brokers, dealers
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and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (the "Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the SEC.
Owners that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or an interest in, Notes may
do so only through Participants and Indirect Participants. Participants will
receive a credit for the related Notes on DTC's records. The ownership interest
of each Owner will in turn be recorded on the respective records of Participants
and Indirect Participants. Owners will not receive written confirmation from DTC
of their purchase, but Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or Indirect Participant through which the Owner
entered into the transaction. Transfers of ownership interests in the Notes will
be accomplished by entries made on the books of Participants acting on behalf of
the related Owners.
To facilitate subsequent transfers, all Notes deposited by Participants
with DTC will be registered in the name of Cede, as nominee of DTC. The deposit
of Notes with DTC and their registration in the name of Cede will not change
beneficial ownership. DTC will have no knowledge of the actual Owners and its
records will reflect only the identity of the Participants to whose accounts
such Notes are credited, which may or may not be the ultimate Owners.
Participants and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
DTC's practice is to credit Participants' accounts on each Distribution
Date in accordance with their respective holdings of Notes as shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such Distribution Date. Payments by Participants and Indirect Participants to
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
or Indirect Participant and not of DTC, the Indenture Trustee, the Owner
Trustee, Financial Security or the Sellers, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal of and interest on the Notes and any premium to DTC will be the
responsibility of the related Trustee, disbursement of such payments to
Participants will be the responsibility of DTC and disbursement of such payments
to Owners will be the responsibility of Participants and Indirect Participants.
As a result, under the book-entry format, Owners may experience some delay in
their receipt of payments. DTC will forward such payments to its Participants
which thereafter will forward them to Indirect Participants or Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of an Owner to
pledge Notes to persons or entities that do not participate in the DTC system,
or otherwise take actions with respect to such Notes, may be limited due to the
lack of a physical certificate for such Notes.
Neither DTC nor Cede will consent or vote with respect to the Notes. Under
its usual procedures, DTC will mail an "Omnibus Proxy" to the Indenture Trustee
or the Owner Trustee, as the case may be, as soon as possible after each
applicable record date for such a consent or vote. The Omnibus Proxy will assign
Cede's consenting or voting rights to those Participants to whose accounts
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the related Notes will be credited on that record date (identified in a listing
attached to the Omnibus Proxy).
None of the Master Servicer, the Sellers, Financial Security, the Indenture
Trustee or the Owner Trustee will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Notes held by Cede, as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DTC'S YEAR 2000 EFFORTS
We believe that DTC has not experienced any "Year 2000 Problems." DTC
management is aware that some computer applications, systems, and the like for
processing data ("Systems") that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter Year 2000 Problems.
DTC has informed its Participants and other members of the financial community
that it has developed and has implemented a program so that its Systems, as the
same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC ("DTC Services"), continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan included a testing phase, which was completed
within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information of the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has indicated that it has contacted (and will continue to
contact) third party vendors from whom DTC acquires services to: (i) impress
upon them the importance of such services being Year 2000 compliant; and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
DEFINITIVE NOTES
Physical certificates representing any class of Notes ("Definitive Notes")
will be issued to the related Owners rather than to DTC, only if:
- DTC is no longer willing or able to discharge its responsibilities as
depository with respect to the Notes, and neither the Indenture Trustee
nor the Administrator is able to locate a qualified successor;
- the Administrator, at its option, elects to terminate the book-entry
system with respect to the related Notes through DTC; or
- after an Event of Default or Servicer Default, Noteholders evidencing 51%
or more of the voting interests of all Notes advise the related Trustee
through DTC and its Participants in writing that the continuation of a
book-entry system through DTC or its successor is no longer in the best
interests of the related Owners.
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Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee will be required to notify the
related Owners, through Participants, of the availability through DTC of
Definitive Securities. Upon surrender by DTC of the certificates representing
all Notes of any affected class and the receipt of instructions for
re-registration, such Trustee will issue Definitive Notes to the related Owners,
who thereupon will become Noteholders for all purposes of the Indenture or the
Trust Agreement, respectively.
Distributions on the Definitive Notes will thereafter be made by the
related Trustee directly to holders of such Definitive Notes in accordance with
the procedures described herein and to be set forth in the Indenture. Interest
payments and any principal payments on the Notes on each Distribution Date will
be made to holders in whose names the Definitive Notes were registered at the
close of business on the Record Date with respect to such Distribution Date.
Distributions will be made by check mailed to the address of such holders as
they appear on the register specified in the Indenture. The final payment on any
Notes (whether Definitive Notes or Notes registered in the name of Cede),
however, will be made only upon presentation and surrender of such Notes at the
office or agency specified in the notice of final distribution to Noteholders.
The Indenture Trustee will mail such notice to registered Noteholders within
five Business Days of receipt from the Master Servicer of notice of termination
of the Trust.
Definitive Notes will be transferable and exchangeable at the offices of
the Indenture Trustee (or any security registrar appointed thereby), as will be
set forth in the Indenture, as the case may be. No service charge will be
imposed for any registration of transfer or exchange, but such Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
PAYMENTS ON THE CONTRACTS
All Net Collections on or in respect of the Contracts will be deposited in
or credited to the Collection Account or, in limited instances, the Holding
Account. "Net Collections" will include all payments received by the Master
Servicer on or in respect of the Contracts due on or after the Cut-Off Date, net
of late payments in respect of which the Master Servicer has previously made an
Advance or reimbursement to the Master Servicer for Nonrecoverable Advances. Net
Collections will include:
(a) prepayments, Net Liquidation Proceeds and Net Insurance Proceeds;
(b) any amounts deposited in the Collection Account by:
- a Seller to purchase Contracts (including, if WFSRC is a Seller,
the Scheduled Balances of Contracts repurchased in connection with
an Optional Repurchase), or
- the Master Servicer to purchase Contracts; and
(c) any Advances that may be made by the Master Servicer in respect of
delinquent Contracts.
"Net Liquidation Proceeds" will be proceeds received by the Master Servicer
(net of Liquidation Expenses) upon liquidation of a defaulted Contract.
"Liquidation Expenses" will be the reasonable out-of-pocket expenses (exclusive
of overhead expenses) incurred by the Master Servicer in realizing upon a
defaulted Contract. "Net Insurance Proceeds" will be proceeds paid by any
insurer under a comprehensive and collision or limited dual interest insurance
related to a Contract (other than funds used for the repair of the related
Financed Vehicle or otherwise released to the related Obligor in
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accordance with normal servicing procedures), after reimbursement to the Master
Servicer of expenses recoverable under such insurance policy.
Subject to the remainder of this paragraph, distributions on the Notes will
be made on each Distribution Date out of Net Collections for the related Due
Period plus certain reinvestment earnings on Eligible Investments and any
Advance made by the Master Servicer as described under "The Master Servicer --
Advances". The amount of those Net Collections, reinvestment earnings and
Advances on each Distribution Date will be applied as described under "Certain
Information Regarding the Securities -- Distributions on the Notes". Amounts, to
the extent available, will be withdrawn from the Spread Account to cover any
shortfalls in distributions to Noteholders. Under the Note Policy, the Insurer
will be obligated to provide for distribution on the Notes on each Distribution
Date the amount, if any, by which the amount of Net Collections and funds
available in the Spread Account is less than the sum of the interest and
principal due on the Notes for that Distribution Date and will be obligated to
provide for the payment of Scheduled Payments on each class of Notes on its
respective final scheduled distribution date.
THE ACCOUNTS AND ELIGIBLE INVESTMENTS
General. All net collections received by the Master Servicer on or in
respect of the Contracts and any Advances made by the Master Servicer will be
deposited in or credited to the Collection Account or, in certain limited
instances, the Holding Account. All amounts paid under the Note Policy will be
deposited in or credited to the Collection Account. On each Distribution Date,
the Indenture Trustee will distribute the amounts on deposit in the Collection
Account with respect to such Distribution Date to the Note Distribution Account.
All payments to Noteholders will be made from the Note Distribution Account.
The Collection Account. The Master Servicer will cause all collections made
on or in respect of the Contracts during a Due Period (other than amounts to be
deposited in the Holding Account as described below) to be deposited in or
credited to an account (the "Collection Account") to be established by the
Master Servicer under the Sale and Servicing Agreement. The collections
deposited will be net of late payments in respect of which the Master Servicer
has previously made an Advance and reimbursements to it for Nonrecoverable
Advances. The Collection Account may, upon prior written approval of the
Insurer, be an uninsured general ledger account or a deposit account at Western
Financial Bank, the parent of WFS (the "Bank"). Funds in the Collection Account
will be invested in a reinvestment contract (the "Reinvestment Contract") under
which the Bank and WFS Financial Auto Loans 2, Inc., a subsidiary of WFS, will
be the obligors, so long as the Reinvestment Contract is an Eligible Investment
as described below. The reinvestment earnings on the Reinvestment Contract for
each Distribution Date will be equal to the amount, if any, by which the related
payment of interest for that Distribution Date exceeds the aggregate amount of
interest accrued on the Contracts during the related Due Period. If the
Reinvestment Contract does not qualify as an Eligible Investment, the Indenture
Trustee shall invest the funds on deposit in the Collection Account in one or
more other Eligible Investments. Payments under the Reinvestment Contract will
be deposited in the Collection Account no later than the Business Day
immediately preceding each Distribution Date.
If an Event of Default under the Sale and Servicing Agreement has occurred
and is continuing, funds in the Collection Account eligible to be invested in
Eligible Investments will be invested at the direction of the Indenture Trustee.
"Eligible Investments" will be specified in the Sale and Servicing Agreement and
will be limited to investments which meet the criteria of the rating agencies as
being consistent with their then-current ratings of the Notes. All income or
other gain from such
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investments will be promptly deposited in, and any loss resulting from such
investments shall be charged to, the Collection Account.
Note Distribution Account. The Master Servicer will establish and maintain
with the Indenture Trustee an account, in the name of the Indenture Trustee on
behalf of the Noteholders, in which amounts released from the Collection Account
for distribution to Noteholders will be deposited and from which all
distributions to Noteholders will be made (the "Note Distribution Account").
The Holding Account. The Master Servicer will establish an account (the
"Holding Account") into which it will deposit during each Due Period payments on
Rule of 78's Contracts that are due in one or more subsequent Due Periods. Funds
in the Holding Account due in the next Due Period will be transferred to the
Collection Account immediately after the next succeeding Distribution Date.
DISTRIBUTIONS ON THE NOTES
Beginning on the Distribution Date specified in the applicable prospectus
supplement, payments of principal of and interest (or, where applicable, of
principal or interest only) on each class of Notes entitled thereto will be made
by the applicable Indenture Trustee to the Noteholders. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments to
each class of Noteholders will be set forth in the applicable prospectus
supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be withdrawn from the related Collection Account and
will be paid to the Noteholders to the extent provided in the applicable
prospectus supplement. Credit enhancement, including the Note Policy and amounts
on deposit in the Spread Account, will be available to cover any shortfalls in
the amount available for payment to the Noteholders on that date to the extent
specified in the applicable prospectus supplement. As more fully described in
the applicable prospectus supplement:
1. payments of principal of a class of Notes of a given series will be
subordinate to payments of interest on that class;
2. payments in respect of one or more classes of Notes may be
subordinated to payments in respect of other classes of Notes of the same
series.
PAYMENT PRIORITIES OF THE NOTES; THE SPREAD ACCOUNT
General. The rights of the Noteholders to receive distributions with
respect to the Contracts will be subordinated to the rights of the Master
Servicer (to the extent that the Master Servicer has not been reimbursed for any
outstanding Advances and has not been paid all Servicing Fees), the Trustees (to
the extent the Trustees and such other entities have not received all Trust fees
and expenses payable to them) and the Insurer (to the extent of any amounts due
but unreimbursed). In addition, the rights of the Noteholders to receive
distributions with respect to the Contracts will be subject to the priorities
set forth under "-- Distributions on the Notes -- Deposits to the Distribution
Account; Priority of Payments," to the extent described above. Such priorities
and subordination are intended to enhance the likelihood of timely receipt by
Noteholders of classes of Notes with a higher priority of the full amount of
interest and principal required to be paid to them, and to afford such
Noteholders limited protection against losses in respect of the Contracts.
The Spread Account. In the event of delinquencies or losses on the
Contracts, the foregoing protection will be effected both by the right of the
Noteholders to receive current distributions with respect to the Contracts and
by the establishment of a segregated trust account in the name of the Indenture
Trustee (the "Spread Account"). A Spread Account will be part of each Trust. The
Indenture Trustee will have a perfected security interest in the Spread Account
and in all amounts
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deposited in or credited to the Spread Account as well as all Eligible
Investments made with such deposits and earnings. The Spread Account will be
created with an initial deposit by WFAL on the Closing Date in an amount to be
specified in the prospectus supplement (the "Spread Account Initial Deposit").
The Spread Account will thereafter be funded by the deposit therein of any
amounts in respect of each Distribution Date not required to be paid to any
other party, until the amount on deposit in the Spread Account is at least equal
to the Specified Spread Account Balance.
Amounts held from time to time in the Spread Account will be invested in
Eligible Investments. Investment income on monies on deposit in the Spread
Account will be credited to the Spread Account. Any loss on that investment will
be charged to the Spread Account.
Calculation of Specified Spread Account Balance. The "Specified Spread
Account Balance" will be calculated as described in the related prospectus
supplement.
WITHDRAWALS FROM THE SPREAD ACCOUNT
Amounts held from time to time in the Spread Account will be held for the
benefit of the Noteholders and the Insurer. On each Distribution Date, funds
will be withdrawn from the Spread Account to the extent that the amount on
deposit in the Note Distribution Account is less than the Note Distributable
Amount and will be deposited in the Note Distribution Account. See "Certain
Information Regarding the Securities -- Withdrawals from the Spread Account" in
the related prospectus supplement.
If the amount on deposit in the Spread Account on any Calculation Day or
any Distribution Date (after giving effect to all deposits thereto or
withdrawals therefrom on that Distribution Date) is greater than the Specified
Spread Account Balance, the Indenture Trustee will distribute any excess first,
to the Insurer, to the extent of any amounts due but unreimbursed, then to WFAL
until WFAL has received from the Spread Account an aggregate amount equal to the
Spread Account Initial Deposit and thereafter as described in the related
prospectus supplement.
Upon any distributions to the Insurer or either Seller, the Noteholders
will have no further rights in, or claims to, such amounts. None of the
Noteholders, the Indenture Trustee, the Owner Trustee, the Sellers or the
Insurer will be required to refund any amounts properly distributed or paid to
them, whether or not there are sufficient funds on any subsequent Distribution
Date to make full distributions to the Noteholders. The obligations of the
Insurer under the Note Policy will not be diminished or otherwise affected by
any amounts distributed to the Insurer.
PAYMENTS FROM THE SPREAD ACCOUNT AND UNDER THE NOTE POLICY
On each Distribution Date on which the Note Distributable Amount exceeds
the amount then on deposit in the Note Distribution Account, the Noteholders
will be entitled to receive that deficiency (including amounts necessary to
reduce the outstanding principal balance of a given Class of Notes to zero on
the related Final Scheduled Distribution Date), first, from amounts on deposit
in the Spread Account, and if those amounts are insufficient, then from the
payment of a claim under the Note Policy.
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STATEMENTS TO NOTEHOLDERS
On or prior to each Distribution Date, you will be provided with a
statement prepared by the Master Servicer (the "Statement to Noteholders")
setting forth with respect to the Distribution Date or related Due Period, as
applicable, among other things, the following information:
(i) the amount of the Noteholder's distribution allocable to principal
(stated separately for each Class of Notes);
(ii) the amount of the Noteholder's distribution allocable to interest
(stated separately for each Class of Notes);
(iii) the Aggregate Scheduled Balance as of the close of business on
the last day of the related Due Period;
(iv) the amount of the Servicing Fee paid to the Master Servicer with
respect to the related Due Period;
(v) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, on that Distribution Date and the change in
such amounts from those with respect to the immediately preceding
Distribution Date;
(vi) the Note Pool Factor for each Class of Notes as of that
Distribution Date;
(vii) the balance on deposit in the Spread Account on that
Distribution Date, after giving effect to distributions made on that
Distribution Date, and the change in that balance from the immediately
preceding Distribution Date; and
(viii) if applicable, following an Optional Repurchase, the amount of
Base Price and Repurchase Premium payable.
Each amount set forth pursuant to subclauses (i), (ii), (iv), (v) and
(viii) above with respect to a Note will be expressed in the aggregate and as a
dollar amount per $1,000 of original principal amount of a Note. Copies of the
statements may be obtained by Owners of Notes by a request in writing addressed
to the Indenture Trustee at its corporate trust office. In addition, within the
prescribed period of time for tax reporting purposes after the end of each
calendar year during the term of the Sale and Servicing Agreement, the Indenture
Trustee will mail to each person who at any time during such calendar year shall
have been a Noteholder, a statement containing the sum of the amounts described
in clauses (i), (ii), (iv), (v) and (viii) above for the purposes of such
holder's preparation of federal income tax returns. See "Federal and California
Income Tax Consequences".
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement. The Sale and Servicing Agreement will
provide that a firm of independent public accountants will furnish to the
Indenture Trustee and the Owner Trustee and the Insurer, on or before 90 days
after the end of each fiscal year of the Master Servicer, a statement as to
compliance by the Master Servicer during the preceding fiscal year (or since the
Closing Date in the case of the first such statement) with certain standards
relating to the servicing of the Contracts.
The Sale and Servicing Agreement will also provide for delivery to the
Indenture Trustee, the Owner Trustee and the Insurer, on or before 90 days after
the end of each fiscal year of the Master Servicer, of a certificate signed by
two officers of the Master Servicer stating that the Master Servicer has
fulfilled its obligations under the Sale and Servicing Agreement throughout the
preceding fiscal
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year (or since the Closing Date in the case of the first such certificate) or,
if there has been a default in the fulfillment of any such obligation,
describing each such default.
Copies of those statements and certificates may be obtained by Noteholders
by a request in writing addressed to the related Trustee at its corporate trust
office.
The Indenture. The Trust will be required to file annually with the
Indenture Trustee and the Insurer a written statement as to the fulfillment of
its obligations under the Indenture.
The Indenture Trustee will be required to mail each year to all related
Noteholders a brief report relating to, among other things:
- its eligibility and qualification to continue as Indenture Trustee under
the Indenture;
- any amounts advanced by it under the Indenture;
- the amount, interest rate and maturity date of certain indebtedness owing
by the Trust to the Indenture Trustee in its individual capacity;
- the property and funds physically held by the Indenture Trustee as
Indenture Trustee; and
- any action taken by it that materially affects the Notes and that has not
been previously reported.
CERTAIN MATTERS REGARDING THE MASTER SERVICER
Each Sale and Servicing Agreement will provide that the Master Servicer may
not resign from its obligations and duties as Master Servicer except upon
determination that the Master Servicer's performance of such duties is no longer
permissible under applicable law. No resignation will become effective until (i)
the Indenture Trustee or a successor master servicer has assumed the Master
Servicer's servicing obligations and duties under the Sale and Servicing
Agreement and (ii) the rating agencies confirm that the selection of such
successor master servicer will not result in the qualification, reduction or
withdrawal of its then-current rating of any class of Notes.
Each Sale and Servicing Agreement will further provide that neither the
Master Servicer nor any of its directors, officers, employees and agents shall
be under any liability to the Trust or the Noteholders for taking any action or
for refraining from taking any action pursuant to the Sale and Servicing
Agreement, or for errors in judgment; provided, however, that neither the Master
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties thereunder. In addition, each Sale and Servicing Agreement will
provide that the Master Servicer will be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its servicing
responsibilities under the Sale and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability. The Master Servicer
may, however, undertake any reasonable action that it may deem necessary or
desirable in respect of the Sale and Servicing Agreement and the rights and
duties of the parties thereto and the interests of the Noteholders thereunder.
In any event, the legal expenses and costs of that action and any liability
resulting therefrom will be expenses, costs and liabilities of the Trust, and
the Master Servicer will be entitled to be reimbursed therefor out of funds on
deposit in the Collection Account. Any indemnification or reimbursement could
reduce the amount otherwise available for distribution to Noteholders.
Any corporation into which the Master Servicer may be merged or
consolidated, any corporation resulting from any merger, conversion or
consolidation to which the Master Servicer is a party or any
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corporation succeeding to the business of the Master Servicer or the Master
Servicer's obligations as the Master Servicer, will be the successor of the
Master Servicer under the Sale and Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related prospectus supplement,
"Servicer Defaults" under each Sale and Servicing Agreement will consist of:
(a) a claim being made under the Note Policy;
(b) any failure by the Master Servicer to deposit in, credit to, or
make the required distribution from the following, and such failure is not
remedied within three Business Days after the Master Servicer receives
written notice from the Indenture Trustee, the Owner Trustee or the Insurer
or after the Master Servicer discovers such failure:
- the Collection Account,
- the Note Distribution Account or the account established to distribute
monies to the Certificateholders,
- the Spread Account, or
- the Holding Account;
(c) any failure by the Master Servicer to deliver to the Indenture
Trustee, the Owner Trustee or the Insurer certain reports required by the
Sale and Servicing Agreement by, except as otherwise provided in the
related prospectus supplement, the fourth Business Day prior to the related
Distribution Date or to perform certain other covenants under the Sale and
Servicing Agreement;
(d) any failure by the Master Servicer or either Seller to observe or
perform in any material respect any other covenant or agreement in the Sale
and Servicing Agreement, which failure materially and adversely affects the
rights of Noteholders, the Insurer, the Indenture Trustee or the Owner
Trustee and which continues unremedied for 30 days after the giving of
written notice of such failure to:
- the Master Servicer or the related Seller, as the case may be, by the
Owner Trustee, the Indenture Trustee or the Insurer or
- to the Master Servicer or the related Seller, as the case may be, and
to the Indenture Trustee or the Owner Trustee by:
- holders of Notes evidencing at least 25% of the voting interests of
all Notes, voting together as a single class, or
- so long as a default under the Note Policy has not occurred or is
not continuing and no insolvency of the Insurer has occurred, by the
Insurer;
(e) certain events of insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings and certain action by either
Seller or the Master Servicer indicating its insolvency, reorganization
pursuant to bankruptcy or similar proceedings or inability to pay its
obligations (each, an "Insolvency Event"); and
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(f) any material breach of any of the representations and warranties
of the Master Servicer or either Seller (except for any breaches relating
to Contracts repurchased by either Seller or the Master Servicer) that has
a material adverse effect on the Noteholders and, within 30 days after
written notice thereof shall have been given to the Master Servicer or
either Seller by:
- the Indenture Trustee or the Owner Trustee,
- by holders of Notes (voting together as a single class), evidencing at
least 25% of the respective voting interests thereof, or
- so long as no default under the Note Policy has occurred and is
continuing and no insolvency of the Insurer has occurred, by the
Insurer.
RIGHTS UPON SERVICER DEFAULT
Except as otherwise provided in the related prospectus supplement, as long
as a Servicer Default remains unremedied, the Indenture Trustee, the Insurer or
holders of Notes representing not less than 25% of the voting interests thereof,
voting together as a single class, may terminate all the rights and obligations
of the Master Servicer under the Sale and Servicing Agreement. After such
termination, the Indenture Trustee will automatically succeed to all the
responsibilities, duties and liabilities of the Master Servicer in its capacity
as such under such agreement and will be entitled to similar compensation
arrangements. 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, the Insurer, or the Noteholders from effecting a transfer
of servicing. In the event that the Indenture Trustee is unwilling or unable so
to act, it may appoint or petition a court of competent jurisdiction to appoint
a successor with a net worth of at least $50,000,000 and whose regular business
includes the servicing of motor vehicle receivables. The Indenture Trustee may
make such arrangements for compensation to be paid, which in no event may be
greater than the servicing compensation paid to the Master Servicer under the
Sale and Servicing Agreement. Notwithstanding such termination, the Master
Servicer shall be entitled to payment of certain amounts payable to it prior to
such termination, for services rendered prior to such termination.
So long as the Insurer is not in default under the Note Policy it may
direct the actions of the Indenture Trustee upon an Event of Default.
WAIVER OF PAST DEFAULTS
The holders of Notes evidencing at least 51% of the voting interests
thereof, voting together as a single class, may, on behalf of all Noteholders,
with the consent of the Insurer, waive any default by the Master Servicer in the
performance of its obligations under the Sale and Servicing Agreement and its
consequences. A default, however, in making any required deposits to or payments
from the Collection Account, the Holding Account, the Spread Account or the Note
Distribution Account in accordance with that agreement or in respect of a
covenant or provision of that agreement that cannot be modified or amended
without the consent of each Noteholder, may only be waived by the approval of
holders of all of the Notes. No such waiver will impair the Noteholders' rights
with respect to subsequent Servicer Defaults.
VOTING INTERESTS
The "voting interests" of the Notes of a class or classes will be allocated
among the Noteholders or related Owners, as the case may be, in accordance with
the unpaid principal amount of the Notes
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of each class or classes represented thereby; except that in certain
circumstances Notes held by either Seller, WFS or any of their respective
affiliates will be excluded from such determination.
AMENDMENT
Amendment of the Sale and Servicing Agreement. The Sale and Servicing
Agreement may be amended, with the consent of the Insurer but without the
consent of the Noteholders to:
- cure any ambiguity,
- correct or supplement any provision therein which may be inconsistent
with any other provision therein,
- add any other provisions with respect to matters or questions arising
under the agreement which are not inconsistent with the provisions
thereof,
- add or provide for any credit enhancement for any class of Notes or
- permit certain changes with respect to the Specified Spread Account
Balance.
The requirements that must be met to make the above listed amendments are:
(a) that any amendment will not, in the opinion of counsel
satisfactory to the related Trustee, materially and adversely affect the
interests of any Noteholder, and
(b) that in the case of a change with respect to the Specified Spread
Account Balance:
- the Trustee receives a letter from Standard & Poor's, a division of
the McGraw-Hill Companies, Inc. ("Standard & Poor's"), if it has rated
the Notes, which basically states that its then-current rating on each
Class of Notes will not be qualified, reduced or withdrawn due to that
amendment and
- the Master Servicer provides Moody's Investors Services, Inc.
("Moody's"), if it has rated the Notes, notice of such amendment.
The Sale and Servicing Agreement may also be amended with the consent of
the Noteholders evidencing at least 51% of the respective voting interests
thereof, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of such agreement or of modifying in any
manner the rights of the related Noteholders of each class; provided, that no
such amendment may (i) except as described above, increase or reduce in any
manner the amount of or accelerate or delay the timing of collections of
payments on or in respect of the Contracts, required distributions on the Notes,
or the Specified Spread Account Balance or the manner in which the Spread
Account is funded, or (ii) reduce the percentage of the voting interests of
which the holders of any class of Notes are required to consent to any such
amendment, without the consent of the Insurer and the holders of all of the
relevant class of Notes.
Amendment of the Trust Agreement. The Trust Agreement may be amended, with
the consent of the Insurer but without the consent of the Noteholders, to:
- cure any ambiguity,
- correct or supplement any provision which may be inconsistent with any
other provision or
- add any other provisions with respect to matters or questions arising
thereunder which are not inconsistent with the provisions thereof.
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The Trust Agreement may also be amended with the consent of Noteholders
evidencing at least 51% of the respective voting interests thereof, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such agreement or of modifying in any manner the rights of
the Noteholders; provided, that no such amendment may increase or reduce in any
manner the amount of or accelerate or delay the timing of (i) collections of
payments on or in respect of the Contracts or required distributions on the
Notes, or any interest rate or (ii) reduce the aforesaid percentage of the
voting interests of which the holders of any class of Notes are required to
consent to any such amendment, without the consent of the Insurer and the
holders of all of the relevant class of Notes.
Amendment of the Indenture. The Trust and the Indenture Trustee (on behalf
of the Trust) may, without the consent of the Noteholders but with the consent
of the Insurer, enter into one or more supplemental indentures for any of the
following purposes:
(i) to correct or amplify the description of the property subject to
the lien of the Indenture or to subject additional property to the lien of
the Indenture;
(ii) to provide for the assumption of the Notes and the Indenture
obligations by a permitted successor to the Trust;
(iii) to add additional covenants for the benefit of the related
Noteholders or to surrender any rights or powers conferred upon the Trust;
(iv) to convey, transfer, assign, mortgage or pledge any property to
the Indenture Trustee;
(v) to cure any ambiguity or correct or supplement any provision in
the Indenture or in any supplemental indenture which may be inconsistent
with any other provision in the Indenture, any supplemental indenture, the
Sale and Servicing Agreement or certain other agreements; provided, that
any such action shall not adversely affect the interests of any Noteholder;
(vi) to provide for the acceptance of the appointment of a successor
Indenture Trustee or to add to or change any of the provisions of the
Indenture as shall be necessary and permitted to facilitate the
administration by more than one trustee;
(vii) to modify, eliminate or add to the provisions of the Indenture
in order to comply with the Trust Indenture Act of 1939, as amended; and
(viii) to add any provisions to, change in any manner, or eliminate
any of the provisions of, the Indenture or modify in any manner the rights
of Noteholders under the Indenture; provided, that any of those actions
will not, in the opinion of counsel satisfactory to the Indenture Trustee,
materially and adversely affect the interests of any Noteholder or result
in the creation of a new security; and further provided that any of those
actions shall not, as evidenced by an opinion of counsel, adversely affect
in any material respect the interests of any Noteholder unless such
Noteholder's consent is otherwise obtained as described below.
Without the consent of the holder of each outstanding Note affected
thereby, no supplemental indenture may:
- change the due date of any installment of principal of or interest on any
Note or reduce the principal amount thereof, the interest rate thereon
(or the method by which such interest or principal is calculated) or the
redemption price with respect thereto or change any place of payment
where or the coin or currency in which any Note or any interest thereon
is payable;
- impair the right to institute suit for the enforcement of provisions of
the Indenture regarding payment;
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- reduce the percentage of the voting interests of the Notes, the consent
of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of
compliance with certain provisions of the Indenture or of certain
defaults thereunder and their consequences as provided for in the
Indenture;
- modify or alter the provisions of the Indenture regarding the voting of
Notes held by the Trust, any other obligor on the Notes, the Seller or
any of their respective affiliates;
- reduce the percentage of the voting interests of the Notes, the consent
of the holders of which is required to direct the Indenture Trustee to
sell or liquidate the property of the Trust if the proceeds of that sale
or liquidation would be insufficient to pay the principal amount of and
accrued but unpaid interest on the outstanding Notes;
- decrease the percentage of the voting interests of such Notes required to
amend the provisions of the Indenture which specify the applicable
percentage of voting interests of the Notes necessary to amend such
Indenture or certain other related agreements; or
- permit the creation of any lien ranking prior to or on a parity with the
lien of the Indenture with respect to any of the collateral for the Notes
or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of such Indenture on any of the collateral for the
Notes or deprive the holder of any Note of the security afforded by the
lien of the Indenture;
provided, that any of those actions will not, in the opinion of counsel
satisfactory to the related Trustee, result in the creation of a new security.
LIST OF NOTEHOLDERS
Three or more holders of Notes may, by written request to the Indenture
Trustee, obtain access to the list of all Noteholders maintained by such
Indenture Trustee for the purpose of communicating with the other Noteholders
with respect to their rights under the Indenture or under the Notes. The
Indenture Trustee may elect not to afford the requesting Noteholders access to
the list of Noteholders if it agrees to mail the desired communication or proxy,
on behalf of and at the expense of the requesting Noteholders, to all
Noteholders.
Neither the Trust Agreement nor the Indenture will provide for the holding
of any annual or other meetings of Noteholders.
NO BANKRUPTCY PROCEEDINGS
The Trust Agreement will provide that the Owner Trustee, and the Indenture
will provide that the Indenture Trustee and each Noteholder agree that they will
not at any time institute, or join in any institution against, the Trust, or the
Sellers, any bankruptcy proceedings relating to the Notes, the Trust Agreement,
the Indenture or certain other agreements.
TERMINATION
The obligations of the Master Servicer, the Sellers, the Owner Trustee and
Indenture Trustee pursuant to the Trust Agreement, Sale and Servicing Agreement
and Indenture will terminate upon the earliest to occur of (i) the maturity or
other liquidation of the last Contract and the disposition of any amounts
received upon liquidation of any property remaining in the Trust, (ii) the
payment to you of all amounts required to be paid to you pursuant to such
agreement and (iii) the occurrence of the event described below.
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In order to avoid excessive administrative expenses, the Sellers will be
permitted to purchase the remaining Contracts from the Trust on any Distribution
Date following the last day of a Due Period as of which the Aggregate Scheduled
Balance is less than a certain percentage, specified in the related prospectus
supplement, of the Aggregate Scheduled Balance on the Cut-Off Date at a price
equal to the aggregate unpaid principal amount of the Notes, together with
accrued interest thereon for the related interest period. Each Seller will pay
an amount equal to a percentage of the Aggregate Scheduled Balance of Contracts
remaining in the Trusts in accordance with their relative certificate percentage
interests.
The Indenture Trustee will give you written notice of termination at least
20 days prior to such termination. The final distribution to you will be made
only upon surrender and cancellation of your Notes at the office or agency of
the Indenture Trustee specified in the notice of termination. Any funds
remaining in the Trust at least 18 months after the date of termination and
after the Indenture Trustee has attempted to locate a Noteholder and such
measures have failed, will be distributed to a charity designated by the Master
Servicer.
Any outstanding Notes will be redeemed concurrently with any Optional
Purchase, and the subsequent distribution to the Sellers of all amounts required
to be distributed to them pursuant to a Trust Agreement will terminate the
Trust.
THE TRUSTEES
Each of the Owner Trustees and the Indenture Trustee (the "Trustees") may
resign at any time, in which event the Administrator, or its successor, will be
obligated to appoint a successor trustee. The Administrator may also remove the
Owner Trustee or the Indenture Trustee, in each case if such Trustee becomes
insolvent or ceases to be eligible to continue as a Trustee under each Trust
Agreement or Indenture, as the case may be. In such event, the Administrator
will be obligated to appoint a successor Trustee. Any resignation or removal of
a Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
Each Trustee and any of its affiliates may hold Notes in their own names or
as pledgees. For the purpose of meeting the legal requirements of certain
jurisdictions, the Administrator and the Owner Trustee or Indenture Trustee
acting jointly (or in some instances, the Owner Trustee and Indenture Trustee
acting without the Administrator) will have the power to appoint co-trustees or
separate trustees of all or any part of the Trust. In the event of such an
appointment, all rights, powers, duties and obligations conferred or imposed
upon the affected Trustee by each Indenture, Sale and Servicing Agreement or
Trust Agreement will be conferred or imposed upon that Trustee and the separate
trustee or co-trustee jointly, or, in any jurisdiction in which that Trustee
will be incompetent or unqualified to perform certain acts, singly upon the
separate trustee or co-trustee who will exercise and perform such rights,
powers, duties and obligations solely at the direction of that Trustee.
Each Trust Agreement will further provide that each Trust will, or will
cause the Administrator to, pay the fees of the Indenture Trustee. Each Trust
Agreement will further provide that the Owner Trustee will be entitled to
indemnification by the Master Servicer for, and will be held harmless against,
any loss, liability or expense incurred by it not resulting from its own willful
misconduct, bad faith or negligence (other than by reason of a breach of any of
its representations or warranties set forth in such agreement). The Indenture
will further provide that the Indenture Trustee will be entitled to
indemnification by the Trust or the Administrator for any loss, liability or
expense incurred by it not resulting from its own willful misconduct, negligence
or bad faith.
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DUTIES OF THE TRUSTEES
Neither Trustee will make any representations as to the validity or
sufficiency of each Trust Agreement or Indenture, the Notes (other than the
execution and authentication thereof by the Indenture Trustee), or of any
Contracts or related documents. Neither Trustee will be accountable for the use
or application by the Sellers or the Master Servicer of any funds paid to the
Sellers or the Master Servicer in respect of the Notes or the related Contracts,
or the investment of any monies by the Master Servicer before such monies are
deposited into the Collection Account. The Trustees will not independently
verify the existence or characteristics of the Contracts. If an Event of Default
or Servicer Default has not occurred or is not continuing, each Trustee will be
required to perform only those duties specifically required of it under the
Indenture, Trust Agreement or Sale and Servicing Agreement, as the case may be.
Generally those duties will be limited to the receipt of the various
certificates and reports or other instruments required to be furnished to such
Trustee under such agreements, in which case it will only be required to examine
them to determine whether they conform to the requirements of such agreements.
No Trustee will be charged with knowledge of a failure by the Master Servicer to
perform its duties under the relevant agreements which failure constitutes an
Event of Default or a Servicer Default unless such Trustee obtains actual
knowledge of such failure as specified in such agreements.
No Trustee will be under any obligation to exercise any of the rights or
powers vested in it by the Indenture, Trust Agreement or Sale and Servicing
Agreement, as the case may be, or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request order or direction of any of the Noteholders,
unless those Noteholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby. No Noteholder will have any right to institute any
proceeding with respect to the Indenture, Trust Agreement or Sale and Servicing
Agreement, unless that holder previously has given to the appropriate Trustee
written notice of default and (i) the default arises from the Master Servicer's
failure to remit payments when due or (ii) the holders of Notes evidencing not
less than 25% of the voting interests of the related Notes, voting together as a
single class, have made written request upon the appropriate Trustee to
institute that proceeding in its own name as Trustee thereunder and have offered
to that Trustee reasonable indemnity and that Trustee for 60 days has neglected
or refused to institute that proceeding.
ADMINISTRATION AGREEMENT
WFS, in its capacity as administrator (the "Administrator"), will enter
into an agreement (the "Administration Agreement") with the Trust, the Sellers
and the Indenture Trustee pursuant to which the Administrator will agree, to the
extent provided in the Administration Agreement, to provide the notices and to
perform other administrative obligations required to be provided or performed by
the Trust or the Owner Trustee under the Indenture. As compensation for the
performance of the Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related thereto, the
Administrator will be entitled to a monthly administration fee, which fee will
be paid by the Sellers and not from the proceeds of the Contracts or other
assets of the Trust.
PREPAYMENT CONSIDERATIONS
Because the rate of distribution of principal on the Notes will depend on
the rate of payment on the Contracts (including prepayments, liquidations, the
exercise of the Optional Repurchase by WFSRC if WFSRC is a seller, and
repurchases of Contracts by a Seller or the Master Servicer following breach of
certain representations or warranties or servicing obligations and the sale or
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liquidation of the property of the Trust under certain conditions following the
occurrence of an Event of Default), the final distribution on each Class of
Notes is likely to occur earlier than the related final scheduled distribution
date. The right of the Sellers to repurchase all of the Contracts upon certain
events is described under "-- Termination" and "The Master Servicer," and the
right of WFSRC to repurchase Contracts is described under "The Notes -- Optional
Repurchase of Contracts by WFSRC".
The law of California and most other states generally requires that retail
installment sales contracts such as the Contracts permit full and partial
prepayment without penalty, although a minimum finance charge may be applicable
in some circumstances. Any prepayments (including certain partial prepayments
not designated as advance payments by the Obligor on the related Contract) can
reduce the average life of the Contracts. The Master Servicer will permit the
sale or other transfer of a Financed Vehicle without accelerating the maturity
of the related Contract if such Contract is assumed by a person satisfying WFS'
then-current underwriting standards. Partial prepayments not designated as
advance payments by the Obligor on a Contract and all partial prepayments as to
Simple Interest Contracts will affect the average life of the Contracts because
those partial prepayments will be passed through to Noteholders on the
Distribution Date following the Due Period in which they are received. Those
partial prepayments designated as advance payments for Rule of 78's Contracts
only will be held until passed through in accordance with the original schedule
of payments for the related Contract or until the amount of such partial
prepayment equals the remaining principal amount plus accrued interest due on
the related Contract. Any reinvestment risk resulting from the rate of
prepayments of the Contracts and the distribution of such prepayments to
Noteholders will be borne entirely by the Noteholders, which will be partially
offset to the extent WFSRC is a Seller and it pays the premium set forth in the
related prospectus supplement in connection with the exercise of an Optional
Repurchase.
Purchases by the Seller of Contracts because of certain material defects in
Contract documentation or due to breaches of its respective representations and
warranties in respect thereof, in either case that materially and adversely
affect the interests of Noteholders, the Indenture Trustee, the Owner Trustee or
the Insurer, and purchases by the Master Servicer of Contracts due to certain
breaches in representations and warranties made by the Master Servicer or due to
certain breaches by the Master Servicer in servicing procedures, in either case
that materially and adversely affect such Contracts can reduce the average lives
of the Contracts and the Notes. Any reduction in the average life of the Notes
will reduce the aggregate amount of interest received by the Noteholders over
the life of the Notes.
THE NOTE POLICY
The following summary of the terms of the Note Policy does not purport to
be complete. You should review the summary along with the Note Policy, which is
included as an exhibit to the Registration Statement of which this prospectus
supplement is a part, for complete information. The following summary does,
however, describe the material terms of the Note Policy as it relates to insured
classes of Notes.
On each Closing Date, Financial Security will issue the Note Policy to the
Indenture Trustee pursuant to the insurance, indemnity and pledge agreement (the
"Insurance Agreement"), among Financial Security, the Trust, the Sellers,
Bankers Trust Company, as collateral agent for Financial Security, and WFS.
Pursuant to the Note Policy, Financial Security will fully, unconditionally and
irrevocably guarantee to the Noteholders payment of the Scheduled Payments (as
defined below) for each Distribution Date. Under the Note Policy, Financial
Security will unconditionally and irrevocably guarantee to the Indenture Trustee
for the benefit of each Noteholder the full and
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complete payment of (i) Scheduled Payments on the Notes and (ii) the amount of
any Scheduled Payment which subsequently is avoided in whole or in part as a
preference payment under applicable law, but will not guarantee payment of any
premium paid in connection with the exercise by WFSRC of its Optional Repurchase
option.
"Scheduled Payments" will mean, with respect to any Distribution Date,
payments which are scheduled to be made on the Notes during the term of the Note
Policy in accordance with the original terms of the Notes when issued and
without regard to any subsequent amendment or modification of the Notes or of
the Indenture except amendments or modifications to which Financial Security has
given its prior written consent in an amount equal to (i) the Note Interest
Distributable Amount and (ii) the Note Principal Distributable Amount, in each
case as more fully described in the related prospectus supplement. Scheduled
Payments will not include (i) payments which become due on an accelerated basis
as a result of (a) a default by the Trust, (b) any election to pay principal on
an accelerated basis, (c) the occurrence of an Event of Default under the
Indenture or (d) any other cause, unless Financial Security elects, in its sole
discretion, to pay in whole or in part such principal due upon acceleration,
together with any accrued interest to the date of acceleration or (ii) any
premium payable in connection with the exercise by WFSRC of its Optional
Repurchase option. If Financial Security does not so elect, the Note Policy will
continue to guarantee Scheduled Payments on the Notes in accordance with their
original terms. Scheduled Payments shall not include any portion of a Note
Interest Distributable Amount due to Noteholders because a notice and
certificate in proper form was not timely Received (as defined below) by
Financial Security unless, in each case, Financial Security elects, in its sole
discretion, to pay such amount in whole or in part. Scheduled Payments shall not
include any amounts due in respect of the Notes attributable to any increase in
interest rate, penalty or other sum payable by the Trust by reason of any
default or any event of default in respect of the Notes, or by reason of any
deterioration of the creditworthiness of the Trust. Scheduled Payments shall
also not include, nor shall coverage be provided under the Note Policy in
respect of, any taxes, withholding or other charge with respect to any
Noteholder imposed by any governmental authority due in connection with the
payment of any Scheduled Payment to a Noteholder.
Payment of claims on the Note Policy made in respect of Scheduled Payments
will be made by Financial Security following Receipt (as defined below) by
Financial Security of the appropriate notice for payment on the later to occur
of (a) 12:00 noon, New York City time, on the fourth Business Day following
Receipt of such notice for payment, and (b) 12:00 noon, New York City time, on
the date on which such payment was due on the Notes.
OTHER TERMS OF THE NOTE POLICY
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Note Policy, Financial Security shall cause such payment to be made on the
later of:
(a) the date when due to be paid pursuant to the Order referred to
below or
(b) the first to occur of:
(i) the fourth Business Day following Receipt by Financial Security
from the Indenture Trustee of:
(A) a certified copy of the order (the "Order") of the court or
other governmental body which exercised jurisdiction to the effect
that the Noteholder is required to return principal or interest paid
on the Notes during the term of the Note
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Policy, in either case because such distributions were avoidable as
preference payments under applicable bankruptcy law,
(B) a certificate of the Noteholder that the Order has been
entered and is not subject to any stay and
(C) an assignment duly executed and delivered by such
Noteholder, in such form as is reasonably required by Financial
Security and provided to such Noteholder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of
such Noteholder relating to or arising under the related class of
Notes, against the debtor which made such preference payments or
otherwise with respect to such preference payment, or
(ii) the date of Receipt by Financial Security from the Indenture
Trustee of the items referred to in clauses (A), (B) and (C) above if,
at least four Business Days prior to such date of Receipt, Financial
Security shall have Received written notice from the related Trustee
that such items were to be delivered on such date and such date was
specified in such notice.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
Indenture Trustee or any Noteholder directly (unless a Noteholder has previously
paid such amount to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order in which case such payment shall be disbursed
to the related Trustee for distribution to such Noteholder upon proof of such
payment reasonably satisfactory to Financial Security). In connection with the
foregoing, and as will be provided in the Indenture and Sale and Servicing
Agreement, Financial Security will have certain rights to direct proceedings
regarding the seeking to avoid payments made on or in respect of the Contracts
or the Notes as preferential.
The terms "Receipt" and "Received," with respect to the Note Policy, shall
mean actual delivery to Financial Security and to its fiscal agent, if any,
prior to 12:00 noon, New York City time, on a Business Day and delivery either
on a day that is not a Business Day or after 12:00 noon, New York City time,
shall be deemed to be Receipt on the next succeeding Business Day. If any notice
or certificate given under the Note Policy by the Indenture Trustee is not in
proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received, and Financial Security or its fiscal agent
shall promptly so advise the Indenture Trustee, and the Indenture Trustee may
submit an amended notice.
Under the Note Policy, "Business Day" will mean any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in The City of
New York, New York are authorized or obligated by law or executive order to be
closed.
Financial Security's obligations under the Note Policy in respect of
Scheduled Payments shall in each case be discharged to the extent funds are
transferred to the Indenture Trustee, as provided in the Note Policy whether or
not such funds are properly applied by the Indenture Trustee.
Financial Security shall be subrogated to the rights of each Noteholder to
receive payments of principal and interest to the extent of any payment by
Financial Security under the Note Policy.
Claims under the Note Policy will constitute direct, unsecured and
unsubordinated obligations of Financial Security ranking not less than pari
passu with other unsecured and unsubordinated indebtedness of Financial Security
for borrowed money. Claims against Financial Security under each other financial
guaranty insurance policy issued thereby constitute pari passu claims against
the general assets of Financial Security. The terms of the Note Policy cannot be
modified or altered by
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any other agreement or instrument, or by the merger, consolidation or
dissolution of the Trust. The Note Policy may not be cancelled or revoked prior
to distribution in full of all Scheduled Payments. The Note Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. The Note Policy are governed by the laws of the
State of New York. As a result, if a claim is made on the Note Policy for the
benefit of the Noteholders and Financial Security is insolvent and unable to pay
the amount then due under that policy, the Noteholders would not be permitted to
file a claim against the Property/Casualty Insurance Fund specified in Article
76 of the New York Insurance Law. In that circumstance, the Noteholders would
have recourse against the estate of Financial Security only, as any other
general creditor of Financial Security.
FINANCIAL SECURITY ASSURANCE INC.
GENERAL
Financial Security is the Insurer. Financial Security is a monoline
insurance company incorporated in 1984 under the laws of the State of New York.
Financial Security is licensed to engage in financial guaranty insurance
business in all 50 states, the District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged in the business of
writing financial guaranty insurance, principally in respect of securities
offered in domestic and foreign markets. In general, financial guaranty
insurance consists of the issuance of a guaranty of scheduled payments of an
issuer's securities -- thereby enhancing the credit rating of those
securities -- in consideration for the payment of a premium to the insurer.
Financial Security and its subsidiaries principally insure asset-backed,
collateralized and municipal securities. Asset-backed securities are generally
supported by residential mortgage loans, consumer or trade receivables,
securities or other assets having an ascertainable cash flow or market value.
Collateralized securities include public utility first mortgage bonds and
sale/leaseback obligation bonds. Municipal securities consist largely of general
obligation bonds, special revenue bonds and other special obligations of state
and local governments. Financial Security insures both newly issued securities
sold in the primary market and outstanding securities sold in the secondary
market that satisfy Financial Security's underwriting criteria.
Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company.
Major shareholders of Holdings include MediaOne Capital Corporation, White
Mountains Insurance Group, Inc., The Tokio Marine and Fire Insurance Co., Ltd.
and XL Capital Ltd. No shareholder of Holdings is obligated to pay any debt of
Financial Security of any claim under any insurance policy issued by Financial
Security or to make any additional contribution to the capital of Financial
Security.
The principal executive offices of Financial Security are located at 350
Park Avenue, New York, New York 10022, and its telephone number at that location
is (212) 826-0100.
REINSURANCE
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by Financial Security or any
of its domestic or Bermuda operating insurance company subsidiaries are
generally reinsured among such companies on an agreed-upon percentage
substantially proportional to their respective capital, surplus and reserves,
subject to applicable statutory risk limitations. In addition, Financial
Security reinsures a portion of its liabilities under certain of its financial
guaranty insurance policies with other reinsurers under various quota
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share treaties and on a transaction-by-transaction basis. Such reinsurance is
utilized by Financial Security as a risk management device and to comply with
certain statutory and rating agency requirements; it does not alter or limit
Financial Security's obligations under any financial guaranty insurance policy.
RATINGS
Financial Security's insurance financial strength is rated "Aaa" by
Moody's. Financial Security's insurer financial strength is rated "AAA" by
Standard & Poor's and Standard & Poor's (Australia) Pty. Ltd. Financial
Security's claims-paying ability is rated "AAA" by Fitch IBCA, Inc. and Japan
Rating and Investment Information, Inc. Such ratings reflect only the views of
the respective rating agencies, are not recommendations to buy, sell or hold
securities and are subject to revisions or withdrawal at any time by such rating
agencies. See "Risk Factors -- The Ratings of the Notes May be Withdrawn or
Revised Which May Have an Adverse Effect on the Market Price of the Notes".
CAPITALIZATION
Information regarding the capitalization of Financial Security is presented
in the accompanying prospectus supplement.
INSURANCE REGULATION
Financial Security is licensed and subject to regulation as a financial
guaranty insurance corporation under the laws of the State of New York, its
state of domicile. In addition, Financial Security and its insurance
subsidiaries are subject to regulation by insurance laws of the various other
jurisdictions in which they are licensed to do business. As a financial guaranty
insurance corporation licensed to do business in the State of New York,
Financial Security is subject to Article 69 of the New York Insurance Law which,
among other things, limits the business of each such insurer to financial
guaranty insurance and related lines, requires that each such insurer maintain a
minimum surplus to policyholders, establishes contingency, loss and unearned
premium reserve requirements for each such insurer, and limits the size of
individual transactions ("single risks") and the volume of transactions
("aggregate risks") that may be underwritten by each such insurer. Other
provisions of the New York Insurance Law, applicable to non-life insurance
companies such as Financial Security, regulate, among other things, permitted
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liability for
borrowings.
SOURCES OF ADDITIONAL INFORMATION
For further information concerning Financial Security, see the accompanying
prospectus supplement and the consolidated financial statements of Financial
Security and Subsidiaries, and the notes thereto, incorporated by reference into
this prospectus and the related prospectus supplement. Copies of the statutory
quarterly and annual statements filed with the State of New York Insurance
Department by Financial Security are available upon request to the State of New
York Insurance Department.
THE MASTER SERVICER
The Contracts will be serviced by WFS in its capacity as Master Servicer.
While WFS may or may not use a Subservicer in servicing the Contracts, WFS is
referred to as the Master Servicer herein.
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The Master Servicer will be obligated pursuant to the Sale and Servicing
Agreement, subject to the limitations set forth therein, to service the
Contracts and to repurchase Contracts under certain circumstances if certain
representations and warranties made by the Master Servicer are incorrect or if
the Master Servicer breaches certain of its servicing obligations under the Sale
and Servicing Agreement, in either case in a manner that materially and
adversely affects the Noteholders. The Master Servicer, may perform its
servicing duties through one or more subservicers (each, a "Subservicer"),
provided that the employment of a Subservicer shall not relieve the Master
Servicer from any liability of the Master Servicer under the Sale and Servicing
Agreement.
If the Master Servicer uses a Subservicer, the Master Servicer will enter
into a subservicing agreement with that Subservicer. The subservicing agreement
must not be inconsistent with the terms of the Sale and Servicing Agreement. The
Master Servicer may terminate a subservicing agreement and either service the
related Contracts directly or enter into a new subservicing agreement for those
Contracts with a Subservicer that need not be an affiliate of the Master
Servicer. Notwithstanding any subservicing agreement, the Master Servicer will
remain obligated and liable to the Indenture Trustee, the Owner Trustee and the
Noteholders for servicing and administering the Contracts in accordance with the
Sale and Servicing Agreement as if the Master Servicer alone were servicing the
Contracts. References herein to actions required or permitted to be taken by the
Master Servicer include the actions by a Subservicer.
COLLECTION OF PAYMENTS
The Master Servicer will service the Contracts and will provide certain
accounting and reporting services with respect to the Contracts and the Notes.
The Master Servicer must take all actions necessary to maintain continuous
perfection of the security interests granted by the Obligors in the Financed
Vehicles. The Master Servicer will be obligated to service the Contracts in
accordance with the customary and usual servicing procedures employed by
financial institutions that service retail installment sales contracts and/or
installment loan agreements secured by motor vehicles and, to the extent more
exacting, the procedures used for such contracts owned by the Master Servicer.
In its judgment, the Master Servicer may reduce the APR of a delinquent Contract
(but not below the sum of the weighted average interest rate of the Notes as of
the Closing Date and the Servicing Fee Percent), may reduce the principal
balance and may extend the scheduled maturity of a delinquent Contract for up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract, so long as the Master Servicer makes an appropriate Advance as
will be required in the Sale and Servicing Agreement, but in no event beyond the
last final scheduled distribution date.
The Master Servicer shall deposit in or credit to the Collection Account or
the Holding Account, within two Business Days of receipt, all Net Collections
received on or in respect of the Contracts (except that as to Contracts serviced
by a Subservicer, such proceeds shall be deposited within three Business Days of
receipt by the Subservicer). The Master Servicer will also deposit in or credit
to the Collection Account or the Holding Account, within two Business Days of
receipt, all Net Liquidation Proceeds and Net Insurance Proceeds, after
deducting the amount of any outstanding and unreimbursed Advances. See "Certain
Information Regarding the Securities -- The Accounts and Eligible Investments".
ADVANCES
The Master Servicer will be obligated to advance delinquent payments of
Monthly P&I on individual Rule of 78's Contracts and to advance 30 days of
interest at the sum of the weighted average interest rate and the Servicing Fee
Percent for each month of delinquency in that Due Period on individual Simple
Interest Contracts (each, an "Advance") to the extent that any Advance, if
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made, would not, in the good faith judgment of the Master Servicer, constitute a
Nonrecoverable Advance. A "Nonrecoverable Advance" will be an Advance previously
made or to be made by the Master Servicer which, in the good faith judgment of
the Master Servicer, may not be ultimately recoverable by the Master Servicer
from proceeds of liquidated contracts and proceeds of any insurance applicable
to a Financed Vehicle or otherwise. Concurrently with the furnishing of the
related Distribution Date Statement to the Indenture Trustee and the Owner
Trustee, the Master Servicer will deposit in the Collection Account all
Advances, if any, in respect of the related Due Period. The Master Servicer will
not be entitled to any interest on Advances when it is reimbursed for Advances.
The amount of Advances deposited in the Collection Account for any Distribution
Date may be net of amounts otherwise payable to the Master Servicer on such
Distribution Date.
In making Advances, the Master Servicer will be endeavoring to maintain a
regular flow of interest and principal payments to the Noteholders rather than
to guarantee or insure against losses. Advances will be reimbursed to the Master
Servicer out of recoveries on the related Contracts (e.g., late payments by the
Obligor, Net Liquidation Proceeds and Net Insurance Proceeds) or, to the extent
any portion of an Advance is determined to be a Nonrecoverable Advance, out of
unrelated installments of Monthly P&I or prepayment proceeds.
INSURANCE ON FINANCED VEHICLES
Each Obligor on a Contract is required to maintain insurance covering
physical damage to the Financed Vehicle of such Obligor in an amount not less
than the lesser of its actual cash value or the unpaid principal balance under
that Contract; provided, however, that the Master Servicer will not be obligated
to enforce this requirement when the principal balance of a Contract is less
than $4,000 or there are six or fewer months remaining to its scheduled
maturity. The Master Servicer or a Subservicer is required to be named as a loss
payee under the policy of insurance obtained by the Obligor. In addition, to the
extent required by applicable law, the policy of insurance will be delivered to
the Master Servicer or Subservicer, as appropriate. The Financed Vehicle is
required to be insured against loss and damage due to fire, theft,
transportation, collision and other risks covered by comprehensive coverage. The
Master Servicer shall obtain a limited dual interest insurance policy which
provides coverage for physical damage to, or loss of, a Financed Vehicle if the
Obligor fails to maintain the required insurance and may add the premium for
that insurance to the balance due on the Contract to the extent permitted by
applicable law; provided, however, that the Master Servicer shall not be
required to maintain that insurance in respect of any Financed Vehicle as to
which the related Contract has an unpaid principal balance of less than $4,000
or there are six or fewer months remaining until the Contract matures. Since
Obligors may choose their own insurers to provide the required coverage, the
specific terms and conditions of their policies vary. The Scheduled Balance of a
Contract will not include any amount for premiums paid by the Master Servicer,
and payments by an Obligor in respect of such financed premium will not be
applied to distributions on the Notes.
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SERVICER DETERMINATION AND REPORTS TO TRUSTEES
The Master Servicer will perform monitoring and reporting functions for the
Owner Trustee, the Indenture Trustee and the Insurer. The Master Servicer will
prepare and deliver to the Owner Trustee, the Indenture Trustee and the Insurer
the following:
(a) each Statement to Noteholders and
(b) an additional report covering:
- the aggregate amount, if any, paid by or due from the Master
Servicer or a Seller for the purchase of Contracts which the Master
Servicer or a Seller has become obligated to purchase, and
- the net amount of funds which have been deposited in or credited to
the Collection Account or Holding Account.
SERVICING COMPENSATION
The Master Servicer will be entitled to compensation for the performance of
its obligations under the Sale and Servicing Agreement. The Master Servicer
shall be entitled to receive for each Contract from the Monthly P&I paid on or
in respect of that Contract an amount (the "Servicing Fee") equal to a certain
percentage (the "Servicing Fee Percent"), which, except as otherwise specified
in the related prospectus supplement, shall equal one-twelfth of 1.25% per annum
of the Scheduled Balance of that Contract for the related month in respect of
which the Monthly P&I for that month has been collected or advanced. As
additional compensation, the Master Servicer or its designee shall be entitled
to retain all late payment charges, extension fees (the Master Servicer will
determine when an extension is to be granted, subject to the limitations
described under "The Master Servicer -- Collection of Payments") and similar
items paid in respect of the Contracts. The Master Servicer or its designee will
receive as additional servicing compensation the amount, if any, by which the
outstanding principal balance of a Contract that is prepaid in full prior to its
maturity exceeds the Scheduled Balance of that Contract. The Master Servicer
shall pay all expenses incurred by it in connection with its servicing
activities under the Sale and Servicing Agreement and shall not be entitled to
reimbursement of such expenses except to the extent they constitute Liquidation
Expenses or expenses recoverable under an applicable insurance policy.
The Servicing Fee will compensate the Master Servicer for:
(a) performing the functions of a third party servicer of the
Contracts as an agent for the Indenture Trustee and the Owner Trustee,
including:
- collecting and posting all payments,
- responding to inquiries of Obligors,
- investigating delinquencies,
- sending payment statements and reporting tax information to Obligors,
- paying costs of collections, and
- policing the collateral; and
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(b) administering the Contracts, including:
- accounting for collections, and
- furnishing quarterly and annual statements to the Indenture Trustee
and the Owner Trustee with respect to distributions and generating
federal income tax information and certain taxes, accounting fees,
outsider auditor fees, data processing costs and other costs incurred
in connection with administering the Contracts.
REALIZATION UPON DEFAULTED CONTRACTS
The Master Servicer will liquidate any Contract that goes into default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments. Liquidation of a defaulted Contract may be through
repossession or sale of the Financed Vehicle or otherwise. In connection with a
repossession or other conversion, the Master Servicer will follow normal and
usual procedures for holders of motor vehicle retail installment sales contracts
and installment loans. In this regard, the Master Servicer may sell the Financed
Vehicle at a repossession or other sale.
YEAR 2000 COMPLIANCE
We have been advised by WFS that WFS has not experienced any "Year 2000
Problems," but WFS continues to monitor for such problems. Many computer systems
process transactions involving dates by using only two digits to represent the
year of the transaction (i.e., "98" for 1998), rather than the full four digits
of the year involved. These computer systems could fail or produce erroneous
results during the transition from 1999 to 2000. This problem could affect a
wide variety of automated information management systems, the most critical of
these functions from the perspective of the Trust are the billing and collection
systems used by the Master Servicer.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
GENERAL
The Contracts are "chattel paper" as defined in the Uniform Commercial Code
as in effect in California and the other states in which the Contracts are
originated (the "UCC"). Pursuant to the UCC, an ownership or security interest
in chattel paper may be perfected by possession of the chattel paper or filing a
UCC-1 financing statement with the secretary of state or other central filing
office in the appropriate state as required by the applicable UCC.
WFS and each Seller will each take or cause to be taken those actions as
are required to perfect a Trust's rights in the Contracts sold by that Seller
and will represent and warrant that the Trust, subject to the interest of the
Insurer under each Insurance Agreement pursuant to which a Note Policy will be
issued, has good title, or a first priority security interest, free and clear of
liens and encumbrances, to each Contract on the Closing Date. Under each Sale
and Servicing Agreement, WFS, as Master Servicer (or one or more Subservicers),
will have custody of the Contracts following the sale of the Contracts to a
Trust and will hold the Contracts as bailee for the benefit of the Trust.
However, the Contracts will not be physically marked to indicate the ownership
or security interest thereof by a Trust. UCC-1 financing statements will be
filed with the California Secretary of State to perfect by filing and to give
notice of a Trust's ownership or security interest in the Contracts. If, through
inadvertence or otherwise, any of the Contracts were sold to another party who
purchased those Contracts in the ordinary course of its business and took
possession of them, the purchaser would acquire an interest in those Contracts
superior to the interests of a Trust if the purchaser
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acquired the Contracts in good faith, for value and without actual knowledge of
the Trust's ownership or security interest in those Contracts. The Master
Servicer will agree in the Sale and Servicing Agreement to take all necessary
actions to preserve and protect a Trust's ownership or security interest in the
Contracts. The Seller will represent and warrant that each Contract is secured
by a Financed Vehicle. Notwithstanding the failure of a Trust to have obtained a
valid, first priority ownership or security interest in a Contract, the Insurer
will remain unconditionally and irrevocably obligated on its guarantee of
Scheduled Payments payable to Noteholders on each Distribution Date. See "The
Note Policy".
SECURITY INTERESTS IN THE FINANCED VEHICLES
All of the Financed Vehicles were registered in the State of California or
another of the states listed above under "The Contracts Pool" at the time of
origination of the related Contracts. Perfection of security interests in motor
vehicles is generally governed by state certificate of title statutes or by the
motor vehicle registration laws of the state in which each vehicle is located.
Security interests in vehicles registered in the State of California (the state
in which the largest number of Financed Vehicles is located) may be perfected by
depositing with the California Department of Motor Vehicles a properly endorsed
certificate of title showing the secured party as legal owner or an application
for an original registration together with an application for registration of
the secured party as legal owner. Security interests in vehicles registered in
most other states are perfected, generally, in a similar manner. California and
some other states permit the required documents to perfect a security interest
to be filed electronically as well as physically. The Sellers will represent and
warrant to the Trust in the Sale and Servicing Agreement that all steps
necessary to obtain a perfected first priority security interest with respect to
the Financed Vehicles securing the Contracts sold by that Seller have been
taken. If the Master Servicer fails, because of clerical error or otherwise, to
effect or maintain such notation for a Financed Vehicle, the Trust may not have
a first priority security interest in that Financed Vehicle.
All contracts purchased or originated by WFS name WFS as obligee or
assignee and as the secured party. WFS also takes all actions necessary under
the laws of the state in which the related vehicles are located to perfect its
security interest in those vehicles, including, where applicable, having a
notation of its lien recorded on the related certificate of title and obtaining
possession of the certificates of title.
WFAL will sell and WFSRC will transfer Contracts to the Trust and both
Sellers will assign their security interests in the Financed Vehicles to each
Trust and Financial Security. However, because of the administrative burden and
expense, neither a Trust nor Financial Security will amend any certificate of
title to identify the Trust or Financial Security as the new secured party nor
will the certificates of title be delivered to the Trustee. Accordingly, WFS
will continue to be named as the secured party on the certificates of title for
the Financed Vehicles. Under the law of California and most other states, the
assignment of the Contracts is an effective conveyance of a security interest
without amendment of any lien noted on a vehicle's certificate of title, and the
new secured party succeeds thereby to the assignor's rights as secured party.
However, there exists a risk in not identifying a Trust as the new secured party
on the certificates of title that, through fraud or negligence, the security
interest of the Trust in one or more Financed Vehicles could be released.
In the absence of fraud or forgery by the Financed Vehicle owner or
administrative error by state recording officials, notation of the lien of WFS
on the certificates of title or in the electronic records of the state officials
where electronic titles are permitted should be sufficient to protect the Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are any
Financed Vehicles as to which WFS has
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failed to perfect the security interest assigned to the Trust, the security
interest would be subordinate to, among others, subsequent purchasers of the
Financed Vehicles and holders of perfected security interests.
In the event that the owner of a Financed Vehicle relocates to a state
other than the state in which the Financed Vehicle is registered, under the laws
of most states the perfected security interest in the Financed Vehicle would
continue for four months after that relocation and thereafter, in most
instances, until the owner registers the Financed Vehicle in that state. A
majority of states, including California, generally require surrender of a
certificate of title to initially register in that state a vehicle originally
registered in another state. Therefore, the Master Servicer on behalf of the
Trust must surrender possession, if it holds the certificate of title to a
relocated Financed Vehicle, for the Financed Vehicle owner to effect the
registration. If the Financed Vehicle owner moves to a state that provides for
notation of lien on the certificate of title to perfect the security interests
in the Financed Vehicle, WFS, absent clerical errors or fraud, would receive
notice of surrender of the certificate of title if WFS' lien is noted thereon.
Accordingly, WFS will have notice and the opportunity to reperfect the security
interest in the Financed Vehicle in the state of relocation. If the Financed
Vehicle owner moves to a state which does not require surrender of a certificate
of title for registration of a motor vehicle, registration in that state could
defeat perfection. In the ordinary course of servicing its portfolio of motor
vehicle loans, WFS takes steps to effect reperfection upon receipt of notice of
reregistration or information from the obligor as to relocation. Similarly, when
an Obligor under a Contract sells a Financed Vehicle, the Master Servicer must
surrender possession of the certificate of title or will receive notice as a
result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related Contract before release of the lien. Under
the Sale and Servicing Agreement, the Master Servicer, at its cost, will be
obligated to maintain the continuous perfection of security interests in the
Financed Vehicles.
Under the law of California and most other states, liens for unpaid taxes
and possessory liens for storage of and repairs performed on a motor vehicle
take priority even over a perfected security interest in that vehicle. The
Internal Revenue Code of 1986, as amended, also grants priority to certain
federal tax liens over the lien of a secured party. The laws of certain states
and federal law permit the confiscation of motor vehicles by governmental
authorities under certain circumstances if used in unlawful activities, which
may result in the loss of a secured party's perfected security interest in a
confiscated vehicle. Each Seller will represent in the Sale and Servicing
Agreement that, as of the Closing Date, the security interest in each Financed
Vehicle is prior to all other present liens upon and security interests in that
Financed Vehicle. However, liens for repairs or taxes could arise at any time
during the term of a Contract. No notice will be given to the Trustees, the
Master Servicer or Noteholders in the event such a lien or confiscation arises
and any such lien or confiscation arising after the Closing Date would not give
rise to each Seller's repurchase obligations under the Sale and Servicing
Agreement.
ENFORCEMENT OF SECURITY INTERESTS IN FINANCED VEHICLES
The Master Servicer, on behalf of the Trust, may take action itself or
through one or more Subservicers to enforce its security interest with respect
to defaulted Contracts by repossession and resale of the Financed Vehicles
securing such defaulted Contracts. In addition to the provisions of the UCC,
under California law the Contracts originated in California are subject to the
provisions of its Rees-Levering Motor Vehicle Sales and Finance Act (the
"Rees-Levering Act"). Contracts originated in other states are subject to retail
installment sales laws and similar laws of those states including in many of
those states their version of the Uniform Consumer Credit Code. The provisions
of the Rees-Levering Act and similar laws of other states control in the event
of a conflict with the provisions of the UCC. Under the UCC and laws applicable
in most states, a creditor can, without
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prior notice to the debtor, repossess a motor vehicle securing a loan by
voluntary surrender, by "self-help" repossession without breach of peace, and by
judicial process. The Rees-Levering Act and similar laws of other states place
restrictions on repossession sales, including notice to the debtor of the intent
to sell and of the debtor's right to redeem the vehicle. In addition, the UCC
requires commercial reasonableness in the conduct of the sale.
In the event of repossession and resale of a Financed Vehicle, the Master
Servicer for the benefit of the Trust would be entitled to be paid out of the
sale proceeds before the proceeds could be applied to the payment of the claims
of unsecured creditors or the holders of subsequently perfected security
interests or, thereafter, to the debtor.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the motor vehicle securing such debtor's loan. However, some
states impose prohibitions or limitations on deficiency judgments. Under
California law the proceeds from the resale of the motor vehicle securing the
debtor's loan are required to be applied first to the expenses of resale and
repossession, and if the remaining proceeds are not sufficient to repay the
indebtedness, the creditor may seek a deficiency judgment for the balance. The
priority of application of proceeds of sale as to repossessed vehicles under the
Contracts originated in most other states is similar.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, may limit or delay the ability of a creditor to repossess
and resell collateral or enforce a deficiency judgment.
In the event that deficiency judgments are not satisfied or are satisfied
at a discount or are discharged in whole or in part in bankruptcy proceedings,
including proceedings under Chapter 13 of the Bankruptcy Reform Act of 1978, as
amended, the loss will be borne by the Trust.
OTHER MATTERS
The so-called "holder-in-due-course" rule of the Federal Trade Commission
is intended to defeat the ability of the transferor of a consumer credit
contract which is the seller of goods which give rise to the transaction (and
certain related lenders and assignees) to transfer such contract free of notice
of claims by the debtor thereunder. The effect of this rule is to subject the
assignee of a transferred contract to all claims and defenses which the debtor
could assert against the seller of goods. Liability under this rule, which would
be applicable to a Trust and Financial Security, is limited to amounts paid
under a Contract; however, the Obligor may also assert the rule to set off
remaining amounts due as a defense against a claim brought by a Trustee against
that Obligor.
The courts have imposed general equitable principles on repossession and
litigation involving deficiency balances. These equitable principles may have an
effect of relieving an Obligor from some or all of the legal consequences of a
default.
Numerous other federal and state consumer protection laws, regulations and
rules impose requirements applicable to the origination and servicing of the
Contracts, including the Truth-in-Lending Act (and Federal Reserve Board
Regulation Z), the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Equal Credit Opportunity Act (and Federal
Reserve Board Regulation B), the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and the California Rees-Levering Act and
motor vehicle retail installment sale acts in other states, and similar laws and
rules. Also, the laws of certain states impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose specific
statutory liabilities upon creditors who
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fail to comply with their provisions. In some cases, this liability could affect
the ability of a Trustee as an assignee to enforce noncomplying Contracts. Each
Seller will represent and warrant in the Sale and Servicing Agreement that each
of the Contracts, and the sale of the Financed Vehicles sold thereunder,
complied with all material requirements of such laws.
REPURCHASE OBLIGATION
In each Sale and Servicing Agreement the Master Servicer will make certain
representations, warranties and affirmative covenants regarding, among other
things, the maintenance of the security interest in each Financed Vehicle, the
breach of which would create an obligation of the Master Servicer to repurchase
any affected Contract unless the breach is cured.
WFAL
WFAL is a wholly owned, limited-purpose operating subsidiary of WFS which
was incorporated under the laws of the State of California on October 24, 1985.
The principal office of WFAL is 23 Pasteur, Irvine, California 92618. WFAL's
telephone number is (949) 727-1002.
WFAL was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from the Bank in connection
with its activities as a finance subsidiary of the Bank. Effective May 1, 1995,
ownership of WFAL was transferred to WFS and it is now a limited purpose
operating subsidiary of WFS. WFAL has not and will not engage in any activity
other than (i) acquiring, owning, holding, selling, transferring, assigning,
pledging or otherwise dealing in installment sales contracts and installment
loans secured by automobiles and light-duty trucks or (ii) authorizing, issuing,
selling and delivering one or more series of obligations consisting of one or
more classes of bonds or pass-through certificates collateralized by installment
sales contracts and installment loans secured by automobiles and light-duty
trucks, which bonds or pass-through certificates are rated in the highest
available category by at least one nationally recognized statistical rating
agency.
WFAL's Articles of Incorporation limit the activities of WFAL to the above
purposes and to any activities incidental to and necessary for such purposes.
WFSRC
WFSRC is a wholly owned, limited-purpose service corporation of WFS, and
was incorporated under the laws of the State of California on December 22, 1999.
The principal office of WFSRC is 6655 West Sahara Avenue, Las Vegas, Nevada
83102. WFSRC's telephone number is (702) 247-1442.
WFSRC was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from WFS in connection with
its activities as a finance subsidiary of WFS. WFSRC has not and will not engage
in any activity other than (i) acquiring, owning, holding, selling,
transferring, assigning, pledging or otherwise dealing in installment sales
contracts and installment loans secured by automobiles and light-duty trucks or
(ii) originating one or more grantor or owner trusts owning installment sales
contracts and installment loans secured by automobiles and light-duty trucks.
WFSRC's Articles of Incorporation limit the activities of WFSRC to the
above purposes and to any activities incidental to and necessary for such
purposes.
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WFS
GENERAL
WFS is an auto finance company incorporated in California in 1988. WFS was
formerly known as Westcorp Financial Services, Inc. ("Westcorp Financial"), a
wholly owned operating subsidiary of the Bank and a licensed consumer finance
company. Prior to May 1, 1995, the auto finance activities described in this
Prospectus were conducted separately by the Bank, through its auto finance
division, and by Westcorp Financial. Effective May 1, 1995, the Bank's auto
finance division was combined with the consumer auto finance activities of
Westcorp Financial, with Westcorp Financial then changing its corporate name to
WFS Financial Inc. In August 1995, WFS completed an initial public offering of
19.7% of its common stock. In February 2000, WFS completed a public offering of
additional common stock, following which the Bank owned 82.6% of WFS. WFS is a
majority owned operating subsidiary of the Bank.
WFS' revenues are derived principally from contractual servicing fees, the
retained interest on contracts sold for which servicing is retained, interest on
contracts not sold and fee income including late fees, deferment fees,
documentation fees and other fees, interest charged on its portfolio of
contracts and, to a lesser extent, gain on other investments. Interest on
borrowings and general and administrative costs are WFS' major expense items.
The principal executive offices of WFS are located at 23 Pasteur, Irvine,
California 92618 and its telephone number is (949) 727-1002.
BUSINESS ACTIVITIES
WFS is engaged principally in the business of originating contracts secured
by automobiles and light duty trucks from new and used car dealers and the
public. WFS currently conducts its operations through its principal office and
45 production offices serving 43 states.
FEDERAL AND CALIFORNIA INCOME TAX CONSEQUENCES
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Notes. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change. The discussion does not deal with
all federal tax consequences applicable to all categories of investors, some of
which may be subject to special rules contained within the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder.
Investors should consult their own tax advisors to determine the federal,
state, local and other tax consequences of the purchase, ownership and
disposition of the Notes. Prospective investors should note that no rulings have
been or will be sought from the Internal Revenue Service (the "IRS") with
respect to any of the federal income tax consequences discussed below, and no
assurance can be given that the IRS will not take contrary positions. Moreover,
there are no cases or IRS rulings on transactions similar to those described
herein with respect to the Trust, involving both debt and equity interests
issued by a trust with terms similar to those of the Notes. Prospective
investors are urged to consult their own tax advisors in determining the
federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Notes.
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This summary does not purport to deal with all aspects of federal income
taxation that may be relevant to investors in light of their individual
investment circumstances (e.g., financial institutions, broker-dealers, life
insurance companies and tax-exempt organizations).
TAX CHARACTERIZATION OF TRUSTS
In the opinion of Mitchell, Silberberg & Knupp LLP, special tax counsel to
the Sellers, the Trust will not be an association (or a publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion is based on the assumption that the terms of each Trust Agreement and
related documents will be complied with, and on that counsel's conclusions that
the nature of the income of such Trust will exempt it from the rule that certain
publicly traded partnerships are taxable as corporations.
If a Trust were taxable as a corporation for federal income tax purposes,
it would be subject to corporate income tax on its taxable income. Such Trust's
taxable income would include all its income on the related Contracts, which may
be reduced by its interest expense on the Notes. Any corporate income tax could
materially reduce cash available to make payments on the Notes.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Sellers will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Mitchell, Silberberg & Knupp LLP, special tax
counsel to the Sellers, will render an opinion that the Notes will be classified
as debt for federal income tax purposes. All of the discussion below assumes
this characterization of the Notes is correct.
OID. The discussion below assumes that all payments on the Notes are
denominated in U.S. dollars. Moreover, the discussion assumes that the interest
formula for the Notes meets the requirements for "qualified stated interest"
under Treasury regulations relating to original issue discount ("OID"), and that
any OID on the Notes (i.e., any excess of the principal amount of the Notes over
their issue price) does not exceed a de minimis amount (i.e., 1/4% of their
principal amount multiplied by the number of full years included in their term),
all within the meaning of such OID regulations.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon (and any premium received upon an Optional
Repurchase) will be taxable to a Noteholder as ordinary interest income when
received or accrued in accordance with such Noteholder's method of tax
accounting. Under the OID regulations, a holder of a Note issued with more than
a de minimis amount of OID must include such OID in income, on a pro rata basis,
as principal payments are made on the Note. A purchaser who buys a Note for more
or less than its principal amount will generally be subject, respectively, to
the premium amortization or market discount rules of the Code.
However, because a failure to pay interest currently on Notes is not a
default and does not give rise to a penalty, under the OID regulations Notes
might be viewed as having been issued with OID. This interpretation would not
significantly affect accrual basis holders of Notes, although it would somewhat
accelerate taxable income to cash basis holders by in effect requiring them to
report interest income on the accrual basis.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the
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holder's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included by such Noteholder in income with
respect to the Note and decreased by the amount of bond premium (if any)
previously amortized and by the amount of principal payments previously received
by such Noteholder with respect to such Note. Any gain or loss will be capital
gain or loss if the Note was held as a capital asset, except for gain
representing accrued interest and accrued market discount not previously
included in income. Capital losses generally may be used only to offset capital
gains.
Foreign holders. Interest payments made (or accrued) to a Noteholder who is
a nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of a Trust or the Seller (including a holder of 10% of outstanding Notes) or a
"controlled foreign corporation" with respect to which a Trust or the Seller is
a "related person" within the meaning of the Code and (ii) provides the Owner
Trustee or other person who is otherwise required to withhold U.S. tax with
respect to the Notes with an appropriate statement (on Form W-8 or a similar
form), signed under penalty of perjury, certifying that the beneficial owner of
a Note is a foreign person and providing the foreign person's name and address.
If a Note is held through a securities clearing organization or certain other
financial institutions, the organization or institution may provide the relevant
signed statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by the
foreign person that owns the Note. If that interest is not portfolio interest,
then it will be subject to United States federal income and withholding tax at a
rate of 30%, unless reduced or eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt holder such
as a corporation, tax exempt organization, qualified pension and profit sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide, under
penalty of perjury, a certificate containing the holder's name, address, correct
federal taxpayer identification number and a statement that the holder is not
subject to backup withholding. Should a nonexempt Noteholder fail to provide the
required certification, each Trust will be required to withhold 31% of the
amount otherwise payable to the holder, and remit the withheld amount to the IRS
as a credit against the holder's federal income tax liability.
The IRS has issued final regulations (the "Final Regulations") which, among
other things, affect the procedures to be followed by a Noteholder that is a
foreign person in establishing such person's exemption for the purpose of the
backup withholding rules discussed above. The Final Regulations generally will
be effective for payments made after December 31, 2000. Prospective investors
should consult their own tax advisors concerning the effect of the Final
Regulations on their purchase, ownership and disposition of the Notes.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of special tax counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, such Notes might
be treated as equity interests in a Trust. If so treated, a Trust might be
treated as a publicly traded partnership taxable as a corporation with the
adverse consequences
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described above (and the resulting taxable corporation would not be able to
reduce its taxable income by deductions for interest expense on Notes
recharacterized as equity). Alternatively, and most likely in the view of
special tax counsel, such Trust might be treated as a publicly traded
partnership that would not be taxable as a corporation because it would meet
certain qualifying income tests. Nonetheless, treatment of Notes as equity
interests in a publicly traded partnership could have adverse tax consequences
to certain holders. For example, income to certain tax-exempt entities
(including pension funds) would be "unrelated business taxable income", income
to foreign holders generally would be subject to U.S. tax and U.S. tax return
filing and withholding requirements, and individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
NOTEHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
CALIFORNIA INCOME TAX CONSEQUENCES
In the opinion of Mitchell, Silberberg & Knupp LLP, special tax counsel to
the Sellers, the Trust will not be an association taxable as a corporation for
California income tax purposes. This opinion will be based on the assumption
that the terms of the Trust Agreement and related documents will be complied
with. Mitchell, Silberberg & Knupp LLP has rendered an opinion that Noteholders
who are not residents of or otherwise subject to tax in California will not,
solely by reason of their acquisition of an interest in any class of Notes,
respectively, be subject to California income, franchise, excise or similar
taxes with respect to interest on any class of Notes or with respect to any of
the other Trust Property.
Investors should consult their own tax advisors to determine the state,
local and other tax consequences to them of the purchase, ownership and
disposition of the Notes.
ERISA CONSIDERATIONS
OVERVIEW
The Employee Retirement Income Security Act of 1974, as amended, and
Section 4975 of the Code imposes certain restrictions on employee and other
benefit plans and on certain other retirement plans and arrangements, such as
individual retirement accounts and annuities and Keough plans and on collective
investment funds and separate accounts, in which those plans, accounts or
arrangements are invested ("Plans") and on persons who are parties in interest
or disqualified persons ("parties in interest") with respect to such Plans which
could affect the decision to purchase the Notes by or on behalf of Plans.
Certain employee benefit plans, such as governmental plans and church plans (if
no election has been made under Section 410(d) of the Code), are not subject to
the requirements of ERISA or Section 4975 of the Code and assets of those plans
may be invested without regard to the ERISA considerations described below,
subject to the provisions of other applicable federal and state law, including,
for any government or church plan qualified under Section 401(a) of the Code and
exempt from taxation under Section 501(a) of the Code, the prohibited
transaction rules set forth in Section 503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification,
requirements respecting delegation of
49
<PAGE> 51
investment authority and the requirement that a Plan's investment be made in
accordance with the documents governing the Plan.
PROHIBITED TRANSACTIONS
Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving a Plan and its assets unless a
statutory, regulatory or administrative exemption applies to the transaction.
Section 4975 of the Code and Section 502(i) of ERISA impose certain excise taxes
on the parties to such prohibited transactions. Notes purchased by a Plan would
be assets of the Plan. Under regulations issued by the U.S. Department of Labor,
the Contracts in certain circumstances may also be deemed to be assets of each
Plan that purchases Notes. If this were so, persons that cause a Plan to acquire
Notes or that sponsor or insure the related Contracts or manage, control or
service the Contracts may be subject to the fiduciary responsibility provisions
of ERISA and the prohibited transaction provisions of Section 4975 of the Code
in the absence of a statutory, regulatory or administrative exemption.
Under a regulation issued by the United States Department of Labor, the
assets of the trust would be treated as assets of a plan for the purposes of
ERISA and the Code only if the plan acquires an "equity interest" in the trust
and none of the exceptions contained in this plan assets regulation is
applicable. An equity interest is defined under the plan assets regulation as an
interest other than an investment which is treated as indebtedness under
applicable local law and which has no substantial equity features. Although
there is little guidance on the subject, the Notes should be treated as
indebtedness without substantial equity features for purposes of the plan assets
regulation. This determination is based in part on the traditional debt features
of the Notes, including the reasonable expectation of purchasers of the Notes
that the Notes will be repaid when due, as well as the absence of conversion
rights, warrants and other typical equity features. The debt treatment of the
Notes could change if the trust incurs losses. However, even if the Notes are
treated as debt for such purposes, the acquisition or holding of notes by or on
behalf of a Plan could be considered to give rise to a prohibited transaction if
the trust or any of its affiliates is or becomes a party-in-interest or a
disqualified person with respect to such Plan. In such case, certain exemptions
from the prohibited transaction rules could be applicable depending on the type
and circumstances of the plan fiduciary making the decision to acquire a note.
Included among these exemptions are: PTCE 90-1, regarding investments by
insurance company pooled separate accounts; PTCE 95-60, regarding investments by
insurance company general accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 96-23, regarding transactions effected by
in-house asset managers; and PTCE 84-14, regarding transactions effected by
"qualified professional asset managers." Each investor using the assets of a
plan which acquires the notes, or to whom the notes are transferred, will be
deemed to have represented that the acquisition and continued holding of the
notes will be covered by one of the exemptions listed above or by another U.S.
Department of Labor class exemption.
THE NOTES
The Notes may be purchased by a Plan subject to ERISA or Section 4975 of
the Code. A fiduciary of a Plan must determine that the purchase of a Note is
consistent with its fiduciary duties under ERISA and does not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code.
The Notes may not be purchased with the assets of a Plan if the Sellers,
the Master Servicer, the Indenture Trustee, the Owner Trustee or any of their
affiliates (i) has investment or administrative discretion with respect to such
Plan assets; (ii) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets, for a fee and pursuant to an
50
<PAGE> 52
agreement or understanding that such advice (a) will serve as a primary basis
for investment decisions with respect to such Plan assets and (b) will be based
on the particular investment needs for such Plan; or (iii) is an employer
maintaining or contributing to that Plan.
PLAN OF DISTRIBUTION
The Notes will be offered through one or more of the methods described
below. The prospectus supplement will provide specific details as to the method
of distribution for particular offerings, and set forth the time and place for
delivery of Notes. Offerings may be made through one or more of the following
methods:
- By negotiated firm commitment or best efforts underwriting and public
re-offering by underwriters;
- By placements with institutional investors through dealers;
- By direct placements with institutional investors; and
- By competitive bid.
If underwriters are used for the sale of any securities, other than for
underwriting on a best efforts basis, the Notes will be acquired by the
underwriters for their own account and may be resold from time to time through
one or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices to be determined at the time of sale or at
the time of commitment. The Notes will be described on the cover of the
prospectus supplement and the members of the underwriting syndicate, if any,
will be named in the prospectus supplement.
In connection with the sale of Notes, underwriters may receive compensation
from the company or from purchasers of Notes in the form of discounts,
concessions or commissions. Underwriters and dealers participating in the
distribution of Notes may be deemed to be underwriters in connection with the
Notes, and any discounts or commissions received by them from the company and
any profit on the resale of Notes by them may be deemed to be underwriting
discounts and commissions under the Act. The prospectus supplement will describe
any compensation paid to underwriters.
It is anticipated that the underwriting agreement pertaining to the sale of
Notes will provide that the obligations of the underwriters will be subject to
conditions precedent providing that the underwriters will be obligated to
purchase all the Notes if any are purchased, other than in connection with
underwriting on a best efforts basis, and that, in limited circumstances, the
Sellers will indemnify the several underwriters and the underwriters will
indemnify the company against certain civil liabilities, including liabilities
under the Securities Act of 1933 (the "Act") or will contribute to payments
required to be made.
The prospectus supplement with respect to any Notes offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between the company and purchasers of
Notes.
Purchasers of Notes, including dealers, may, depending upon the facts and
circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Act in connection with reoffers and sales by them of securities.
Noteholders should consult with their legal advisors in this regard prior to any
reoffer or sale.
51
<PAGE> 53
LEGAL MATTERS
Certain legal matters with respect to the Notes, including certain federal
and California income tax matters, will be passed upon for the Sellers by
Mitchell, Silberberg & Knupp LLP, Los Angeles, California. Brown & Wood LLP, San
Francisco, California will act as counsel for the Underwriters. Certain legal
matters relating to the Note Policy will be passed upon for the Insurer by the
counsel identified in the prospectus supplement.
EXPERTS
Financial statements of the Insurer are contained in or incorporated by
reference in the related prospectus supplement.
52
<PAGE> 54
INDEX OF DEFINITIONS
Set forth below is a list of the defined capitalized terms used in this
Prospectus and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- -----
<S> <C>
Act......................................................... 51
Administration Agreement.................................... 32
Administrator............................................... 32
Advance..................................................... 38
Aggregate Scheduled Balance...............See prospectus supplement
Bank........................................................ 21
Business Day................................................ 35
Cede........................................................ 17
Closing Date................................................ 10
Code........................................................ 46
Contracts................................................... 6
Collection Account.......................................... 21
Cut-Off Date................................................ 10
Definitive Notes............................................ 19
Distribution Date Statement...............See prospectus supplement
DTC......................................................... 17
DTC Services................................................ 19
Due Period................................See prospectus supplement
Eligible Investments........................................ 21
Event of Default............................................ 17
Exchange Act................................................ 17
Final Scheduled Distribution Date........................... 16
Final Regulations........................................... 48
Financed Vehicles........................................... 10
Financial Security.......................................... 5
Holding Account............................................. 22
Holdings.................................................... 36
Indenture................................................... 15
Indenture Trustee........................................... 5
Indirect Participants....................................... 18
Insolvency Event............................................ 26
Insurance Agreement......................................... 33
Insurer..................................................... 5
Issuer...................................................... 5
IRS......................................................... 46
Liquidation Expenses........................................ 20
Master Servicer............................................. 5
Moody's..................................................... 28
Monthly P&I...............................See prospectus supplement
Net Collections............................................. 20
Net Insurance Proceeds...................................... 20
Net Liquidation Proceeds.................................... 20
Nonrecoverable Advance...................................... 39
Note Distributable Amount.................See prospectus supplement
Note Distribution Account................................... 22
</TABLE>
53
<PAGE> 55
<TABLE>
<CAPTION>
TERM PAGE
---- -----
<S> <C>
Note Interest Distributable Amount........See prospectus supplement
Note Policy................................................. 10
Note Pool Factor............................................ 15
Note Principal Distributable Amount.......See prospectus supplement
Noteholders................................................. 17
Notes....................................................... 5
Obligors.................................................... 11
Offered Securities.......................................... 5
OID......................................................... 47
Omnibus Proxy............................................... 18
Optional Purchase........................................... 7
Optional Repurchase......................................... 6
Order....................................................... 34
Owner....................................................... 17
Owner Trustee............................................... 5
Participants................................................ 17
Prefunding Account.......................................... 11
Rees-Levering Act........................................... 43
Receipt..................................................... 35
Received.................................................... 35
Reinvestment Contract....................................... 21
Rule of 78's Contract -- A Contract that provides for the
payment by the Obligor of a specified total number of
payments, payable in equal monthly installments, which
total represents the principal amount financed plus add-on
interest in an amount calculated by using the Rule of
78's. Under the Rule of 78's, the amount of a monthly
payment allocable to interest on a Contract is determined
by multiplying the total amount of add-on interest payable
over the term of the Contract by a fraction the
denominator of which is a number equal to the sum of a
series of numbers representing the number of each monthly
payment due under the Contract and the numerator of which
for a given month is the number of payments remaining
before the maturity of the Contract. For example, with a
Contract providing for 12 payments, the denominator of
each month's fraction will be 78, the sum of a series of
numbers from 1 to 12. Accordingly, in the example of a
twelve payment Contract, the fraction for the first
payment is 12/78, for the second payment 11/78, for the
third payment 10/78, and so on through the final payment,
for which the fraction is 1/78. The applicable fraction is
then multiplied by the total add-on interest payment over
the entire term of the Contract, and the resulting amount
is the amount of add-on interest earned that month. The
difference between the amount of the monthly payment by
the Obligor and the amount of earned add-on interest
calculated for the month is applied to principal
reduction. Under the law of Texas, a similar procedure is
permitted for calculating the amount of add-on interest
earned, except the fraction is derived by using the sum of
the monthly payments rather than the sum of the number of
months (the "sum of the balances"). As a Contract using
either the Rule of 78's or the sum of the balances method
to compute interest earned is payable in equal monthly
payments, the mathematical result is substantially
identical under either system. Accordingly, for purposes
of convenience, the term "Rule of 78's" is used herein in
referring to Contracts with add-on interest regardless of
which system is used to calculated interest earned.
</TABLE>
54
<PAGE> 56
<TABLE>
<CAPTION>
TERM PAGE
---- -----
<S> <C>
Sale and Servicing Agreement................................ 11
Scheduled Balance.........................See prospectus supplement
Scheduled Payments.......................................... 34
Seller...................................................... 5
Servicer Defaults........................................... 26
Servicing Fee............................................... 40
Servicing Fee Percent....................................... 40
Simple Interest Contract -- 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............................ 23
Spread Account.............................................. 6, 22
Spread Account Initial Deposit.............................. 23
Standard & Poor's........................................... 28
Statement to Noteholders.................................... 24
Subservicer................................................. 38
Systems..................................................... 19
Trust....................................................... 5
Trust Agreement............................................. 9
Trust Property.............................................. 5
Trustees.................................................... 31
Trust Insolvency............................................ 17
UCC......................................................... 41
Westcorp Financial.......................................... 46
WFAL........................................................ 5
WFS......................................................... 5
WFSRC....................................................... 5
</TABLE>
55
<PAGE> 57
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 3, 2000
PRELIMINARY PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 6, 2000
$ AUTOMOBILE LOAN ASSET-BACKED NOTES
WFS FINANCIAL 2000 - OWNER TRUST
WFS FINANCIAL AUTO LOANS, INC.
AND WFS RECEIVABLES CORPORATION
SELLERS
WFS FINANCIAL INC
MASTER SERVICER
The issuer will issue four classes of notes as listed below. The issuer
will pay interest quarterly on the 20th of , , and
. The first interest payment will be made on , 2000.
Full and timely payment of the noteholders' distributable amount on each
distribution date is unconditionally and irrevocably guaranteed under a
financial guaranty insurance policy issued by Financial Security Assurance Inc.
YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE S-10 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 8 OF THE PROSPECTUS. The securities are
automobile loan asset-backed securities issued by a trust. The securities are
not obligations of WFS Financial Auto Loans, Inc., WFS Receivables Corporation,
WFS Financial Inc or any of their affiliates, nor are the securities insured by
the Federal Deposit Insurance Corporation.
<TABLE>
<CAPTION>
FINAL
SCHEDULED PROCEEDS TO
PRINCIPAL INTEREST DISTRIBUTION PRICE TO UNDERWRITING THE
CLASS AMOUNT RATE DATE PUBLIC(1) DISCOUNTS SELLERS(1)(2)
- --------------------- ---------------- ------------- ----------------- ------------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
A-1 Note............. $ %
A-2 Note............. $ %
A-3 Note............. $ %
A-4 Note............. $ %
Total................ $ % $ $
</TABLE>
- -------------------------
(1) Plus accrued interest, if any, from , 2000.
(2) Before deducting expenses, estimated to be $ .
Delivery of the Notes, in book-entry form only, will be made through The
Depository Trust Company against payment in immediately available funds, on or
about March , 2000.
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
[UNDERWRITERS]
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH , 2000
<PAGE> 58
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS
SUPPLEMENT......................... S-3
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS.......................... S-3
INCORPORATION BY REFERENCE........... S-3
SUMMARY OF TERMS..................... S-5
The Parties........................ S-5
Important Dates.................... S-5
The Securities..................... S-5
The Trust Property................. S-6
Redemption of Securities and
Repurchase of Contracts......... S-8
Tax Status......................... S-9
Eligibility for Purchase by Money
Market Funds.................... S-9
ERISA Considerations............... S-9
RISK FACTORS......................... S-10
The Ratings of the Notes May be
Withdrawn or Revised Which May
Have an Adverse Effect on the
Market Price of the Notes....... S-10
Losses on Contracts May be Affected
Disproportionately Because of
Geographic Concentration of
Contracts in California......... S-10
FORMATION OF THE TRUST............... S-10
General............................ S-10
Capitalization..................... S-11
The Owner Trustee.................. S-12
THE CONTRACTS POOL................... S-12
Distribution of Contracts by APR... S-13
Geographic Concentration of the
Contracts....................... S-14
WEIGHTED AVERAGE LIVES OF THE
NOTES.............................. S-15
Percentage of Initial Note Balance
at Various ABS Percentages...... S-16
DELINQUENCY AND CONTRACT LOSS
INFORMATION........................ S-17
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
USE OF PROCEEDS...................... S-18
THE NOTES............................ S-18
General............................ S-18
Payments of Interest............... S-19
Payments of Principal.............. S-19
Optional Redemption................ S-20
Optional Repurchase................ S-20
The Indenture Trustee.............. S-20
Events of Default.................. S-21
CERTAIN INFORMATION REGARDING THE
SECURITIES......................... S-22
Payments on the Contracts.......... S-22
Distributions on the Notes......... S-22
Payment Priorities of the Notes;
The Spread Account.............. S-26
Withdrawals from the Spread
Account......................... S-27
Termination........................ S-28
Prepayment Considerations.......... S-28
CAPITALIZATION OF FINANCIAL SECURITY
ASSURANCE INC...................... S-29
THE SELLERS.......................... S-29
WFAL............................... S-29
WFSRC.............................. S-29
Breach of Representations and
Warranties; Defective Contract
Documentation................... S-30
WFS.................................. S-30
General............................ S-30
Business Activities................ S-31
THE BANK............................. S-31
General............................ S-31
Business Activities................ S-31
UNDERWRITING......................... S-32
LEGAL MATTERS........................ S-33
EXPERTS.............................. S-33
FORWARD-LOOKING STATEMENTS........... S-33
INDEX OF DEFINITIONS................. S-34
</TABLE>
S-2
<PAGE> 59
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that progressively provide more detail: (1) the accompanying
prospectus dated , 2000 (the "prospectus"), which provides general
information, some of which may not apply to your series of Notes, and (2) this
prospectus supplement, which describes the specific terms of your series of
Notes. This prospectus supplement does not contain complete information about
the offering of the Notes. Additional information is contained in the
prospectus. You are urged to read both this prospectus supplement and the
prospectus in full. We cannot sell the notes to you unless you have received
both this prospectus supplement and the prospectus.
You should rely on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. If the
information concerning your series of Notes varies between this prospectus
supplement and the accompanying prospectus, you should rely on the information
contained in this prospectus supplement. We have not authorized anyone to
provide you with different information. We do not claim the accuracy of the
information in this prospectus supplement as of any date other than the date
stated on the cover of this prospectus supplement.
If you purchase Notes, you will also be provided with unaudited quarterly
and annual reports concerning the automobile loan contracts which back the
Notes.
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
We have included cross-references to captions in this prospectus supplement
and the prospectus where you can find further related discussions. We have
started with an introductory section describing the trust and terms of this
offering in abbreviated form, followed by a more complete description of the
terms of this offering.
Cross-references may be contained in the introductory section which will
direct you elsewhere in this prospectus supplement. You can also find references
to key topics in the Table of Contents on the preceding pages.
You can find a listing of the pages where capitalized terms are defined
under the caption "Index of Definitions" beginning on page S-34. To the extent
not defined herein, capitalized terms have the meanings given in the prospectus.
WFS, as Master Servicer, will provide without charge to each person,
including any beneficial owner of Notes, to whom a copy of this prospectus
supplement is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference, except the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed to
Secretary, WFS Financial Inc, 23 Pasteur, Irvine, California 92618 or by calling
(949)727-1002.
INCORPORATION BY REFERENCE
All reports and other documents filed by WFS, as Master Servicer, on behalf
of the Sellers, or on behalf of the Trust, and the financial statements of
Financial Security Assurance, Inc. and Subsidiaries included in, or as exhibits
to, documents filed by Financial Security Assurance Holdings Ltd. (including
specifically the Annual Report on Form 10-K, as amended, for the year ended
December 31, 1998 and the Quarterly Report on Form 10-Q for the quarterly
periods ended
S-3
<PAGE> 60
March 31, June 30 and September 30, 1999), as filed in each case pursuant to
Section 13(a), 13(c), 14 or 14(d) of the Securities Act of 1934, as amended (the
"Exchange Act"), and those filed subsequent to the date of this prospectus
supplement and prior to the termination of the offering of the Notes offered
hereby shall be deemed to be incorporated by reference into this prospectus
supplement and the prospectus and to be a part hereof from the respective dates
of filing such documents. Any statement contained herein or in a document all or
a portion of which is incorporated herein by this reference shall be deemed to
be modified or superseded for purposes of this prospectus supplement and the
prospectus to the extent that a statement contained herein or in any
subsequently filed document which is or is also deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the Notes in any state where the offer of such
securities is not permitted.
We do not claim the accuracy of the information in this prospectus as of
any date other than the date stated on the cover of this prospectus supplement.
Until , 200 , all dealers that buy, sell or trade the Notes may be
required to deliver a prospectus and this prospectus supplement, regardless of
whether they are participating in the offer. This is in addition to the
obligation of dealers to deliver a prospectus and this prospectus supplement
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
S-4
<PAGE> 61
SUMMARY OF TERMS
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. You will find a detailed description of the offering of
securities following this summary.
THE PARTIES:
The Issuer................. WFS Financial 200 - Owner Trust ("Trust")
Sellers.................... WFS Financial Auto Loans, Inc. ("WFAL")
WFS Receivables Corporation ("WFSRC")
Master Servicer............ WFS Financial Inc ("WFS")
The Insurer................ Financial Security Assurance, Inc. ("Financial
Security")
Indenture Trustee.......... Bankers Trust Company
Owner Trustee.............. Chase Manhattan Bank Delaware
IMPORTANT DATES:
Statistical Calculation
Date....................... , 200
Cut-Off Date............... 1, 200
Closing Date............... Expected to be , 200
Distribution Dates......... Payments of interest will be made on the Notes on
each 20, 20, 20,
20, commencing on 20, 200
Final Scheduled
Distribution Dates......... If not paid earlier, the full outstanding principal
balance of the Class A-1 Notes will be paid on
20, 200 (the "Class A-1 Final Scheduled
Distribution Date"), of the Class A-2 Notes will be
paid on 20, 200 (the "Class A-2 Final
Scheduled Distribution Date"), of the Class A-3
Notes will be paid on 20, 200 (the "Class
A-3 Final Scheduled Distribution Date"), and of the
Class A-4 Notes will be paid on 20, 200
(the "Class A-4 Final Scheduled Distribution
Date").
THE SECURITIES:
The Notes.................. The WFS Financial 200 - Owner Trust Auto
Receivable Backed Notes will represent obligations
of the Trust secured by the assets of the Trust.
The Certificates........... The Trust will issue Certificates which are not
being offered by this prospectus supplement. All
payments in respect of the Certificates issued by
the Trust will be subordinated to payments on the
Notes.
S-5
<PAGE> 62
THE TERMS OF THE NOTES
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
NOTES NOTES NOTES NOTES
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Principal Amount.......... $ $ $
Interest Rate Per Annum... % % % %
Interest Accrual Method... [ ] [ ] [ ] [ ]
Distribution Dates........ * * * *
First Distribution Date... 20, 2000 20, 2000 20, 2000 20, 2000
Final Scheduled
Distribution Date
Anticipated Ratings
(Moody's/ Standard &
Poor's)**............... [ ] [ ] [ ] [ ]
</TABLE>
- -------------------------
* Payments of interest and principal on the Notes will be made on 20,
20, 20 and 20 of each year, or the first business day
thereafter, beginning on 20, 200 . Principal will be paid sequentially
to the earliest maturing class until paid in full.
** It is a condition to the offering of the Notes that these ratings be obtained
from Moody's Investors Services, Inc. ("Moody's") and Standard & Poor's, a
division of the McGraw-Hill Companies, Inc. ("Standard & Poor's" and,
together with Moody's, the "Rating Agencies"). However, a Rating Agency in
its discretion may lower or withdraw its rating in the future.
PRIORITY OF PRINCIPAL PAYMENTS
Principal of the Notes will be paid on each payment date in the following
order:
to the Class A-1 Notes until the Class A-1 Notes are paid in full;
to the Class A-2 Notes until the Class A-2 Notes are paid in full;
to the Class A-3 Notes until the Class A-3 Notes are paid in full; and
to the Class A-4 Notes until the Class A-4 Notes are paid in full.
THE TRUST PROPERTY:
General.................... The trust property will include:
- a pool of retail installment sales contracts and
a limited number of installment loans originated
by WFS, all of which are secured by new or used
automobiles or light duty trucks;
- the funds in the spread account; and
- an insurance policy written by Financial Security
guaranteeing all payments of principal and
interest to be made to holders of the Notes.
S-6
<PAGE> 63
THE CONTRACTS
[GRAPHIC]
- The Trust receives the right to payments due under the Contracts on and
after (the "Cut-off Date").
- The Contracts are secured by first liens on the vehicles purchased under
each Contract.
- The Contracts will have an expected weighted average annual percentage
rate of approximately % and an expected weighted average remaining
maturity of approximately months.
- Approximately % of the aggregate principal amount of the Contracts
will be "Rule of 78's Contracts" and approximately % will be "Simple
Interest Contracts". See "Index of Definitions" for the definition of
"Rule of 78's Contract" and "Simple Interest Contract".
THE SPREAD ACCOUNT
The Spread Account is a segregated trust account in the name of the
Indenture Trustee that will afford you some limited protection against losses on
the Contracts. The Spread Account will be part of the Trust. It will be created
with an initial deposit by WFAL of $ . On any Distribution Date, the
funds that are available from the Spread Account will be distributed to you to
cover any shortfalls in interest and principal required to be paid on the Notes.
The funds in the Spread Account will be supplemented on each Distribution Date
by any funds in the collection account remaining after making all of the
payments necessary on that Distribution Date. The funds in the Spread Account
will be supplemented until they are at least equal to % or % of the sum of
the remaining principal balance of the Simple Interest Contracts and the present
value of the remaining scheduled payments of the monthly principal and interest
due on the Rule of 78's Contracts. The rate to be applied will depend upon loss
and delinquency triggers.
S-7
<PAGE> 64
If on the last day of any month or on any payment date the amount on
deposit in the Spread Account is greater than the amount required to be in that
account on that date, the excess cash will be distributed first to Financial
Security, to the extent of any unreimbursed amounts due to it, then to WFAL
until WFAL has received an amount equal to the Spread Account Initial Deposit
and finally to the Sellers. You will have no further rights to any such excess
cash.
THE NOTE POLICY
Financial Security will issue a policy (the "Note Policy") that will
guarantee all payments of principal and interest due to the Noteholders.
REDEMPTION OF SECURITIES AND REPURCHASE OF CONTRACTS:
OPTIONAL REPURCHASE OF CONTRACTS BY WFSRC
WFSRC may repurchase all of the Contracts it has sold to the Trust on any
Distribution Date prior to which it has given notice that it is exercising its
right to repurchase all of those Contracts at which the aggregate principal
balance of the Simple Interest Contracts plus the aggregate of the present value
of the remaining monthly principal and interest due on the Rule of 78's
Contracts it has transferred to the Trust is equal to or less than $
(an "Optional Repurchase"). If WFSRC exercises its Optional Repurchase right,
WFSRC will pay the Trust, in addition to the Scheduled Balances of the Contracts
being repurchased, the Repurchase Premium which is an amount equal to a fraction
of the Scheduled Balances of the Contracts being repurchased. See "The
Notes -- Optional Repurchase -- Calculation of Repurchase Premium".
PREPAYMENT FOLLOWING OPTIONAL REPURCHASE BY WFSRC
If WFSRC exercises its Optional Repurchase right as described above:
- the amount received upon repurchase equal to the Scheduled Balances of
the repurchased Contracts will be treated as Collections and distributed
to the Noteholders on the related Distribution Date in addition to the
distributions to which the Noteholders would then otherwise be entitled
to receive,
- the amount received equal to the Repurchase Premium will be distributed
by the Trust on a pro rata basis to all classes of Notes then outstanding
based upon the principal amount of each such class outstanding following
all other payments made on the Distribution Date on which the
distribution occurs other than the amount paid equal to the Scheduled
Balances of the repurchased Contracts, and
- the repurchased Contracts will be transferred back to WFSRC on that
Distribution Date and will no longer be assets of the Trust.
OPTIONAL PURCHASE
WFAL (and WFSRC to the extent it has not exercised its Optional Repurchase
of the Contracts) may purchase all of the Contracts owned by the Trust at any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than $ .
S-8
<PAGE> 65
OPTIONAL REDEMPTION AND PREPAYMENT
If WFAL and WFSRC purchase all of the Contracts of the Trust pursuant to an
Optional Purchase as discussed above:
- each class of outstanding Notes will be redeemed in whole at a price
equal to the unpaid principal amount of that class of Notes plus the
accrued interest at that class of Notes' interest rate; and
- the Trust will be terminated.
MANDATORY REDEMPTION
The Notes may be accelerated if an Event of Default has occurred and is
continuing under the Indenture. If an Insurer Default has occurred and is
continuing and an Event of Default has occurred and is continuing, the Indenture
Trustee may be permitted to accelerate the Notes. If an Event of Default has
occurred and is continuing but no Insurer Default has occurred and is
continuing, Financial Security will have the right (in addition to its
obligation to make Scheduled Payments on the Notes in accordance with the terms
of the Note Policy), but not the obligation, to elect to accelerate the Notes.
If the Notes are accelerated, the Master Servicer or the Indenture Trustee will
sell or otherwise liquidate the property of the Trust and deliver the proceeds
to the Indenture Trustee for distribution in accordance with the terms of the
Indenture.
TAX STATUS:
In the opinion of Mitchell, Silberberg & Knupp LLP, special counsel for
federal income and California income tax purposes, as discussed in further
detail in the prospectus:
- the Notes will be characterized as debt; and
- the Trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
If you purchase a Note, you agree to treat it as debt for tax purposes.
ELIGIBILITY FOR PURCHASE BY MONEY MARKET FUNDS:
The Class A-1 Notes will be structured to be eligible securities for
purchase by money market funds under Rule 2a-7 under the Investment Company Act
of 1940, as amended. A money market fund should consult its legal advisers
regarding the eligibility of such Notes under Rule 2a-7 and whether an
investment in such notes satisfies the fund's investment policies and
objectives.
ERISA CONSIDERATIONS:
The Notes are generally eligible for purchase by employee benefit plans
that are subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code. However, administrators of
employee benefit plans should review the matters discussed under "ERISA
Considerations" in the prospectus and also should consult with their legal
advisors before purchasing Notes.
S-9
<PAGE> 66
RISK FACTORS
In addition to risk factors beginning on page 8 of the prospectus, you
should also consider the following risk factors in deciding whether to purchase
any of the Notes.
THE RATINGS OF THE NOTES MAY BE WITHDRAWN OR REVISED WHICH MAY HAVE AN ADVERSE
EFFECT ON THE MARKET PRICE OF THE NOTES
It is a condition of issuance that the Notes be rated as follows:
<TABLE>
<CAPTION>
STANDARD & POOR'S MOODY'S
----------------- -------
<S> <C> <C>
Class A-1 Notes...................................... [ ] [ ]
Class A-2, Class A-3 and Class A-4 Notes............. [ ] [ ]
</TABLE>
The ratings by Standard & Poor's and Moody's of the Notes will be based on
the issuance of the Note Policy by Financial Security.
The Rating Agencies can revise or withdraw their ratings at any time if
they feel the circumstances which lead to the existing ratings have changed
(including, with respect to Moody's, as a result of any change in the
claims-paying ability of Financial Security). A revision or withdrawal of the
existing rating may have an adverse effect on the market price of the related
Notes.
A security rating is not a recommendation to buy, sell or hold the Notes.
The ratings are an assessment by the Rating Agencies of the likelihood that a
class of Notes will be paid in full by the related Final Scheduled Distribution
Date. The ratings do not consider to what extent the Notes will be subject to
prepayment.
LOSSES ON CONTRACTS MAY BE AFFECTED DISPROPORTIONATELY BECAUSE OF GEOGRAPHIC
CONCENTRATION OF CONTRACTS IN CALIFORNIA
As of , 1999, WFS' records indicate that % of the aggregate
principal balance of the Contracts will be from Contracts originating in
California. No other state accounted for more than % of the aggregate
principal balance of the Contracts. Therefore, economic conditions or other
factors affecting California in particular could adversely affect the losses on
the Contracts.
FORMATION OF THE TRUST
GENERAL
The following information regarding the Trust supplements the information
in the prospectus under "Formation of the Trust".
The Trust will be a business trust formed for the transaction described in
this prospectus supplement and the prospectus under the laws of the State of
Delaware pursuant to a trust agreement which will be amended and restated as of
the date of initial issuance of the Notes (the "Closing Date") (the "Trust
Agreement").
On or before the Closing Date, WFS will sell and assign the Contracts, each
of which is an installment sales contract or installment loan secured by a new
or used automobile or light duty truck (the "Financed Vehicle"), to WFAL and
WFAL will divide the Contracts into two pools having relatively the same
characteristics. One pool containing Contracts representing % of the
Cut-Off Date Aggregate Scheduled Balance ($ ) will be sold and assigned
by WFAL to WFSRC
S-10
<PAGE> 67
and on the Closing Date will be transferred and assigned by WFSRC to the Trust.
WFAL will sell the other pool containing Contracts representing % of the
Cut-Off Date Aggregate Scheduled Balance ($ ) directly to the Trust on
the Closing Date. The Trust will be established by the sale and assignment of
Contracts by WFAL and the transfer and assignment of Contracts by WFSRC to the
Trust on the Closing Date. Certificates representing WFAL's and WFSRC's
beneficial interest in the Trust will be issued by the Trust. The Trust will
also issue the Certificates to WFAL and WFSRC as additional consideration for
the Contracts. Although the transfer of Contracts by WFSRC to the Trust will not
constitute a sale of those Contracts for accounting purposes, WFSRC and WFAL are
each referred to as a "Seller" and together as the "Sellers". WFS will act as
Master Servicer of the Contracts and will receive compensation and fees for
those services. See "The Master Servicer -- Servicing Compensation" in the
prospectus. WFS, as Master Servicer, may retain physical possession of the
original executed Contracts, and certain other documents or instruments relating
to the Contracts, as custodian for the Owner Trustee pursuant to the Sale and
Servicing Agreement, or may employ one or more Subservicers as custodians.
In order to protect the Trust's ownership and security interests in the
Contracts, the Trust's interests in the Contracts will be perfected by WFAL
filing UCC-1 financing statements in the State of California and WFSRC in the
State of Nevada to give notice of the Trust's ownership of and security
interests in the Contracts. Under the Sale and Servicing Agreement and the
Indenture, WFS will be obligated to take all necessary steps to preserve and
protect the interests of the Trustees in the Contracts. Neither the Indenture
Trustee nor the Owner Trustee will be responsible for the legality, validity or
enforceability of any security interest in respect of any Contract. WFS will not
physically segregate the Contracts from other retail installment sales contracts
and installment loans owned or serviced by it and will not stamp the Contracts
with notice of the sale to WFAL or by the Sellers to the Trust. See "Certain
Legal Aspects of the Contracts" in the prospectus.
Simultaneously with the issuance of the Notes, Financial Security will
issue a policy (the "Note Policy") to the Indenture Trustee for the benefit of
the Noteholders of insured classes of Notes. Under the Note Policy, Financial
Security will unconditionally and irrevocably guarantee to the related
Noteholders full and complete payment of the Scheduled Payments for each
Distribution Date, but not payment upon a default of WFSRC upon exercise of its
Optional Repurchase right. Financial Security will have a lien on the Contracts
and other documents relating to the Contracts subordinate to the interest of the
Noteholders, which lien cannot be executed upon until all required payments
under the Note Policy have been made. See "The Note Policy" in the prospectus.
The Trust's principal offices will be in Wilmington, Delaware, in care of
Chase Manhattan Bank Delaware, as Owner Trustee, at 1201 Market Street,
Wilmington, Delaware 19801.
CAPITALIZATION
The following table illustrates the capitalization of the Trust as of the
Cut-Off Date, as if the issuance and sale of the Notes had taken place on that
date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $
Class A-2 Notes.............................................
Class A-3 Notes.............................................
Class A-4 Notes.............................................
--------
Total..................................................... $
========
</TABLE>
S-11
<PAGE> 68
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware will be the Owner Trustee under the Trust
Agreement. Chase Manhattan Bank Delaware is a Delaware corporation and its
Corporate Trust Office is located at 1201 Market Street, Wilmington, Delaware
19801.
The Owner Trustee will have the rights and duties set forth in the
prospectus under "Certain Information Regarding the Securities -- The Trustees"
and "-- Duties of the Trustees".
THE CONTRACTS POOL
Each Contract is a retail installment sales contract secured by a Financed
Vehicle originated by a new or used car dealer located in California or one of
the other 42 states listed below or an installment loan secured by a Financed
Vehicle. Most of the Contracts were purchased by WFS; however, a limited number
of Contracts, no more than % of the Cut-Off Date Aggregate Scheduled
Balance, are installment loans originated by WFS directly to consumers or by
other independent auto finance companies which loans were then sold to WFS.
Except as otherwise noted, all references in this prospectus supplement, to
contracts include installment loans.
WFS will select the Contracts from its portfolio of fixed-interest rate
contracts. The Contracts were underwritten and purchased or originated by WFS in
the ordinary course of its business operations.
<TABLE>
<CAPTION>
CONTRACTS
ALL CONTRACTS CONTRACTS TRANSFERRED
IN THE TRUST SOLD BY WFAL BY WFSRC
------------- ------------ -------------
<S> <C> <C> <C>
Outstanding Principal Balance(1)
Minimum................................... $ $ $
Maximum................................... $ $ $
Average................................... $ $ $
Number of Contracts
Percentage of New Vehicles(1)............. % % %
Percentage of Used Vehicles(1)............ % % %
Financed Vehicles(1)
Automobiles............................... % % %
Light Duty Trucks......................... % % %
Percentage of Rule of 78's Contracts(1)..... % % %
Percentage of Simple Interest
Contracts(1).............................. % % %
Annual Percentage Rate ("APR")(1)
Minimum................................... % % %
Maximum................................... % % %
Weighted Average.......................... % % %
Remaining Maturities(1).....................
Minimum................................... Months Months Months
Maximum................................... Months Months Months
Weighted Average.......................... Months Months Months
Original Maturities
Minimum................................... Months Months Months
Maximum................................... Months Months Months
Weighted Average.......................... Months Months Months
Percent over 60 Months.................... % % %
</TABLE>
- -------------------------
(1) Information as of . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
Each of the Contracts is fully amortizing and provides for level payments
over its term, with the portions of principal and interest of each such level
payment being determined on the basis of the
S-12
<PAGE> 69
Rule of 78's or the simple interest (actual number of days) method. The
amortization of the Rule of 78's Contracts will result in the outstanding
principal balance on each of those Contracts being in excess of the Scheduled
Balance of that Contract. For purposes of the Trust, all Rule of 78's Contracts
are amortized on an actuarial basis to prevent shortfalls of principal payments
on the Notes. As amortization on an actuarial basis produces a faster
amortization than does application of the Rule of 78's, there will not be a
shortfall of principal in any event, including as a result of prepayments or
timely payment to maturity of a Rule of 78's Contract.
The information concerning the Contracts presented in this prospectus
supplement is based upon a pool of retail installment sales contracts and
installment loans originated through .
DISTRIBUTION OF CONTRACTS BY APR(1)
<TABLE>
<CAPTION>
ALL CONTRACTS IN THE TRUST CONTRACTS SOLD BY WFAL
------------------------------------- -------------------------------------
PERCENTAGE OF PERCENTAGE OF
AGGREGATE AGGREGATE AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE CONTRACTS BALANCE BALANCES(2) CONTRACTS BALANCE BALANCES(2)
--------- --------- --------- ------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
5.000% to 5.999%.... $ % $ %
6.000% to 6.999%....
7.000% to 7.999%....
8.000% to 8.999%....
9.000% to 9.999%....
10.000% to
10.999%...........
11.000% to
11.999%...........
12.000% to
12.999%...........
13.000% to
13.999%...........
14.000% to
14.999%...........
15.000% to
15.999%...........
16.000% to
16.999%...........
17.000% to
17.999%...........
18.000% to
18.999%...........
19.000% to
19.999%...........
20.000% to
20.999%...........
21.000% to
21.999%...........
22.000% to
22.999%...........
23.000% to
23.999%...........
24.000% to
24.999%...........
25.000% to
25.999%...........
26.000% to
26.999%...........
27.000% to
27.999%...........
28.000% to
28.999%...........
29.000% to
29.999%...........
30.000% and over....
------- -------- ------ ------- -------- ------
Total............. $ % $ %
======= ======== ====== ======= ======== ======
<CAPTION>
CONTRACTS TRANSFERRED BY WFSRC
-------------------------------------
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE CONTRACTS BALANCE BALANCES(2)
--------- --------- --------- -------------
<S> <C> <C> <C>
5.000% to 5.999%.... $ %
6.000% to 6.999%....
7.000% to 7.999%....
8.000% to 8.999%....
9.000% to 9.999%....
10.000% to
10.999%...........
11.000% to
11.999%...........
12.000% to
12.999%...........
13.000% to
13.999%...........
14.000% to
14.999%...........
15.000% to
15.999%...........
16.000% to
16.999%...........
17.000% to
17.999%...........
18.000% to
18.999%...........
19.000% to
19.999%...........
20.000% to
20.999%...........
21.000% to
21.999%...........
22.000% to
22.999%...........
23.000% to
23.999%...........
24.000% to
24.999%...........
25.000% to
25.999%...........
26.000% to
26.999%...........
27.000% to
27.999%...........
28.000% to
28.999%...........
29.000% to
29.999%...........
30.000% and over....
------- -------- ------
Total............. $ %
======= ======== ======
</TABLE>
- -------------------------
(1) Information as of . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
(2) Percentages may not add to 100.00% due to rounding.
S-13
<PAGE> 70
GEOGRAPHIC CONCENTRATION OF THE CONTRACTS(1)
<TABLE>
<CAPTION>
ALL CONTRACTS IN THE TRUST CONTRACTS SOLD BY WFAL
------------------------------------- -------------------------------------
PERCENTAGE OF PERCENTAGE OF
AGGREGATE AGGREGATE AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL NUMBER OF PRINCIPAL PRINCIPAL
STATE(2) CONTRACTS BALANCE BALANCES CONTRACTS BALANCE BALANCES
-------- --------- --------- ------------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
California........... $ % $ %
Arizona..............
Texas................
Washington...........
Florida..............
Oregon...............
Colorado.............
Ohio.................
Nevada...............
North Carolina.......
Virginia.............
Illinois.............
South Carolina.......
Alabama..............
Tennessee............
Missouri.............
Utah.................
Georgia..............
Idaho................
Pennsylvania.........
Maryland.............
Indiana..............
Kentucky.............
Michigan.............
Massachusetts........
New Jersey...........
Wisconsin............
Oklahoma.............
Connecticut..........
Kansas...............
Mississippi..........
New Mexico...........
Delaware.............
Iowa.................
West Virginia........
Wyoming..............
Rhode Island.........
New Hampshire........
Hawaii...............
Maine................
Minnesota............
New York.............
Nebraska.............
------- -------- ----- ------- -------- -----
Total.............. $ % $ %
======= ======== ===== ======= ======== =====
<CAPTION>
CONTRACTS TRANSFERRED BY WFSRC
-------------------------------------
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
STATE(2) CONTRACTS BALANCE BALANCES(2)
-------- --------- --------- -------------
<S> <C> <C> <C>
California........... $ %
Arizona..............
Texas................
Washington...........
Florida..............
Oregon...............
Colorado.............
Ohio.................
Nevada...............
North Carolina.......
Virginia.............
Illinois.............
South Carolina.......
Alabama..............
Tennessee............
Missouri.............
Utah.................
Georgia..............
Idaho................
Pennsylvania.........
Maryland.............
Indiana..............
Kentucky.............
Michigan.............
Massachusetts........
New Jersey...........
Wisconsin............
Oklahoma.............
Connecticut..........
Kansas...............
Mississippi..........
New Mexico...........
Delaware.............
Iowa.................
West Virginia........
Wyoming..............
Rhode Island.........
New Hampshire........
Hawaii...............
Maine................
Minnesota............
New York.............
Nebraska.............
------- -------- -----
Total.............. $ %
======= ======== =====
</TABLE>
- -------------------------
(1) Information as of , 2 . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
(2) Based upon the state in which the new or used car dealer which originated a
Contract is located, or in the case of an installment loan, the state in
which the office of the lender which originated the loan is located.
S-14
<PAGE> 71
WEIGHTED AVERAGE LIVES OF THE NOTES
Prepayments on contracts can be measured relative to a payment standard or
model. The model used in this prospectus supplement, the Absolute Prepayment
Model ("ABS"), represents an assumed rate of prepayment each month relative to
the original number of contracts in a pool of contracts. ABS further assumes
that all the Contracts in question are the same size and amortize at the same
rate and that each contract in each month of its life will either be paid as
scheduled or be paid in full. For example, in a pool of contracts originally
containing 10,000 contracts, a 1% ABS rate means that 100 contracts prepay each
month. ABS does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
contracts, including the Contracts.
As the rate of payment of principal of each class of Notes will depend on
the rate of payment (including prepayments) of the principal balance of the
Contracts, final payment of any class of Notes could occur significantly earlier
than its Final Scheduled Distribution Date. Reinvestment risk associated with
early payment of the Notes of any class will be borne exclusively by the holders
of those Notes.
The table captioned "Percent of Initial Note Principal Amount at Various
ABS Percentages" (the "ABS Table") has been prepared on the basis of the
characteristics of the Contracts described under "The Contract Pool". The ABS
Table assumes that:
- the Contracts prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases,
- the monthly principal and interest payment on each Contract is scheduled
to be made and is made on the last day of each month and each month has
30 days,
- payments are made on the Notes on each Distribution Date (and each such
date is assumed to be the twentieth day of each applicable month),
- WFSRC does not exercise its Optional Repurchase right, and
- the Sellers exercise their Optional Purchase on the earliest Distribution
Date on which such option may be exercised.
The ABS Table indicates the projected weighted average life of each class
of Notes and sets forth the percentage of the initial principal amount of each
class of Notes that is projected to be outstanding after each of the
Distribution Dates shown at various constant ABS percentages.
The ABS Table also assumes that the Contracts have been aggregated into
hypothetical pools with all of the Contracts within each such pool having the
following characteristics and that the level scheduled payment for each of the
pools (which is based on the Aggregate Scheduled Balance, APR, original term to
maturity and remaining term to maturity as of the assumed Cut-Off Date) will be
such that each pool will be fully amortized by the end of its remaining term to
maturity.
<TABLE>
<CAPTION>
REMAINING ORIGINAL
AGGREGATE TERM TERM
PRINCIPAL ASSUMED TO MATURITY TO MATURITY
POOL BALANCE APR CUT-OFF DATE (IN MONTHS) (IN MONTHS)
---- --------- ----- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
[ ].............................
[ ].............................
[ ].............................
Total.............................
</TABLE>
S-15
<PAGE> 72
The actual characteristics and performance of the Contracts will differ
from the assumptions used in preparing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Contracts will prepay at a constant ABS
rate until maturity or that all of the Contracts will prepay at the same ABS
rate. Moreover, the diverse terms of Contracts within each of the hypothetical
pools could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if the
original and remaining terms to maturity of the Contracts are as assumed. Any
difference between those assumptions and the actual characteristics and
performance of the Contracts, or actual prepayment experience, will affect the
percentages of initial amounts outstanding over time and the weighted average
lives of each class of Notes.
PERCENTAGE OF INITIAL NOTE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES
--------------------------------- ---------------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.8% 2.5% 0.0% 1.0% 1.8% 2.5%
----------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Life
(years)(1)................
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
--------------------------------- ---------------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.8% 2.5% 0.0% 1.0% 1.8% 2.5%
----------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Life
(years)(1)................
</TABLE>
- -------------------------
(1) The weighted average life of a Note is determined by (x) multiplying the
amount of each principal payment on a Note by the number of periods (months)
from the date of issuance of the Note to the related Distribution Date, (y)
adding the results and (z) dividing the sum by the original principal amount
of the Note.
This Table has been prepared based on the assumptions described on Page
S-15 (including the assumptions regarding the characteristics and performance of
the Contracts, which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S-16
<PAGE> 73
DELINQUENCY AND CONTRACT LOSS INFORMATION
The following tables set forth (i) the delinquency experience in regard to
contracts originated and serviced by WFS and its affiliates, including contracts
subsequently sold to WFAL as of December 31, 1995 through 1999 and (ii) the loss
experience for such contracts originated and serviced by WFS and its affiliates,
including contracts subsequently sold to WFAL for the years ended December 31,
1995 through 1999. There is no assurance that the future delinquency and loss
experience of the Contracts will be similar to that set forth below. WFS defines
delinquency as being past due based on the contractual due date of the
underlying contract.
CONTRACT DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------------------------------------
1999 1998 1997 1996
---------------------- ---------------------- ---------------------- ---------
NUMBER NUMBER NUMBER NUMBER
OF AMOUNT OF AMOUNT OF AMOUNT OF
CONTRACTS (2) CONTRACTS (2) CONTRACTS (2) CONTRACTS
--------- ---------- --------- ---------- --------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Contracts serviced...... 524,709 $5,354,385 464,257 $4,367,099 408,958 $3,680,817 341,486
======= ========== ======= ========== ======= ========== =======
Period of delinquency(3)
31 - 59 days........... 12,868 $ 107,416 13,885 $ 112,208 6,605 $ 54,450 4,511
60 - 89 days........... 3,511 29,738 3,966 32,100 2,161 18,652 1,305
90 days or more........ 1,711 14,872 1,768 14,441 918 7,762 567
------- ---------- ------- ---------- ------- ---------- -------
Total contracts
and amount
delinquent...... 18,090 $ 152,026 19,619 $ 158,749 9,684 $ 80,864 6,383
======= ========== ======= ========== ======= ========== =======
Delinquencies as a
percentage of number
and amount of contracts
outstanding............ 3.45% 2.84% 4.23% 3.64% 2.37% 2.20% 1.87%
======= ========== ======= ========== ======= ========== =======
<CAPTION>
DECEMBER 31,
-----------------------------------
1996 1995
---------- ----------------------
NUMBER
AMOUNT OF AMOUNT
(2) CONTRACTS (2)
---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Contracts serviced...... $3,046,585 258,665 $2,209,594
========== ======= ==========
Period of delinquency(3)
31 - 59 days........... $ 38,173 2,180 $ 18,557
60 - 89 days........... 11,470 690 6,143
90 days or more........ 5,144 308 2,701
---------- ------- ----------
Total contracts
and amount
delinquent...... $ 54,787 3,178 $ 27,401
========== ======= ==========
Delinquencies as a
percentage of number
and amount of contracts
outstanding............ 1.80% 1.23% 1.24%
========== ======= ==========
</TABLE>
- -------------------------
(1) Includes delinquency information relating to those contracts that are owned
by WFS and contracts that were sold to a grantor or owner trust but which
are serviced by WFS.
(2) This amount is net of unearned add-on interest.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
CONTRACT LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Contracts serviced
At end of period(2)........................................ $5,354,385 $4,367,099 $3,680,817 $3,046,585 $2,209,594
========== ========== ========== ========== ==========
Average during period(2)................................... $4,839,514 $4,006,185 $3,383,570 $2,627,622 $1,886,359
========== ========== ========== ========== ==========
Gross charge offs of contracts during period............... $ 150,518 $ 173,422 $ 136,773 $ 86,464 $ 48,999
Recoveries of contracts charged off in current and prior
periods.................................................. 47,581 36,230 34,634 25,946 18,715
---------- ---------- ---------- ---------- ----------
Net charge offs............................................ $ 102,937 $ 137,192 $ 102,139 $ 60,518 $ 30,284
========== ========== ========== ========== ==========
Net charge offs as a percentage of contracts outstanding
during period............................................ 2.13% 3.42% 3.02% 2.30% 1.61%
</TABLE>
- -------------------------
(1) Includes loss information for contracts that are owned by WFS and contracts
that were sold to a grantor or owner trust but which are serviced by WFS. It
is the policy of WFS to charge-off all contracts when they become 120 days
delinquent, whether such contract is owned by WFS or serviced by WFS for
others. WFS believes that its charge-off policy is consistent with that
customarily used in the automobile finance industry.
(2) This amount is net of unearned add-on interest.
Net charge-offs as a percentage of contracts outstanding for contracts
originated or purchased and serviced by WFS decreased in 1999 to 2.13%, a 37.7%
decrease from the 3.42% experienced in 1998 following a 13.25% increase over the
3.02% net charge-off level experienced in 1997.
S-17
<PAGE> 74
Delinquencies, as a percentage of amount of contracts outstanding increased from
2.20% at year end 1997 to 3.64% at year end 1998 and decreased to 2.84% in 1999,
an increase of 65.5% and decrease of 22.0%, respectively. The decrease in loss
and delinquency experience in 1999 resulted from an increase in the origination
of contracts originally underwritten as prime contracts and completion of WFS'
restructuring efforts. Loss and delinquency experience during 1998 and 1997 for
contracts originated and serviced by WFS was impacted by a variety of factors
including an increase in the percentage of the outstanding contracts which were
originally underwritten in 1997 and 1998 as non-prime contracts, an increase in
the number of personal bankruptcy filings and general economic conditions. Loss
and delinquency experience in 1998 was also impacted by a disruption of
collection efforts arising from WFS' restructuring of its offices throughout the
United States and the continued transitory effect of moving post-repossession
collection efforts to recently created centralized asset recovery and vehicle
recovery centers. As the characteristics of the Contracts may be different than
that of the entire portfolio of contracts originated and serviced by WFS, no
assurances can be given that the performance of the Contracts will be similar.
USE OF PROCEEDS
WFAL will apply the net proceeds from the sale of the Notes (i.e., the
proceeds of the public offering of the Notes minus expenses relating thereto) to
the purchase of the Contracts from WFS. WFSRC will apply the net proceeds of the
sale of the Notes by it to the purchase of Contracts from WFAL which it has
transferred to the Trust.
THE NOTES
GENERAL
The Notes will be issued pursuant to an indenture between the Trust and the
Indenture Trustee to be dated as of (the "Indenture"), a form of
which has been filed as an exhibit to the Registration Statement. You can obtain
a copy of the Indenture (without exhibits) by writing to the Indenture Trustee
at its corporate trust office. The following summary and the information
contained under "Certain Information Regarding the Securities" describes the
material terms of the Indenture and the Notes. You should, however, review the
provisions of the Notes and the Indenture along with the following summary in
order to have more complete information. Where particular provisions or terms
used in the Notes or the Indenture are referred to, the actual provisions of
such documents (including definitions of terms) are incorporated by reference as
part of such summaries.
Distributions of interest and principal on the Notes will be made on
20, 20, 20 and 20 of each year (or, if
any such day is not a Business Day, on the next succeeding Business Day) (each,
a "Distribution Date"), commencing 20, 200. Payments on the Notes on
each Distribution Date will be paid to the holders of record of the related
Notes on the Business Day immediately preceding such Distribution Date or, in
the event that Definitive Notes are issued, as of the 15th day of the month
immediately preceding the month in which such Distribution Date occurs (each, a
"Record Date").
A "Business Day" will be any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Wilmington, Delaware or Los
Angeles, California are authorized or obligated by law, executive order or
government decree to be closed.
S-18
<PAGE> 75
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each Class of Notes will
accrue at the applicable Interest Rate and will be payable to the Noteholders of
each Class on each Distribution Date. Interest on the Class A-1 Notes will be
calculated on the basis of the actual days elapsed in an Interest Period and a
360-day year. Interest on the Class A-2, Class A-3 and Class A-4 Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest accrued but not paid on any Distribution Date will be due on the
immediately succeeding Distribution Date, together with, to the extent permitted
by applicable law, interest on that unpaid interest at the related Interest Rate
set forth under "Summary of Terms -- The Securities -- The Terms of the Notes".
An "Interest Period" with respect to any Distribution Date will be the period
from and including the most recent Distribution Date on which interest has been
paid (or from and including the Cut-Off Date with respect to the first
Distribution Date) to but excluding the current Distribution Date. Interest
payments on the Notes will be made from Net Collections after all accrued and
unpaid Trustees' fees and other administrative fees of the Trust and payment of
all applicable servicing compensation to the Master Servicer (collectively,
"Trust Fees and Expenses") have been paid. See "Certain Information Regarding
the Securities -- Distributions on the Notes -- Deposits to the Distribution
Accounts; Priority of Payments".
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders, to the extent described
below, on each Distribution Date in an amount equal to the related Principal
Distributable Amount, in each case calculated as described under "Certain
Information Regarding the Securities -- Distributions on the Notes -- Deposits
to the Distribution Accounts; Priority of Payments." Principal payments on the
Notes will be made from Net Collections after all Trust Fees and Expenses have
been paid, and after the Note Interest Distributable Amount has been
distributed. See "Certain Information Regarding the Notes -- Distributions on
the Securities -- Deposits to the Distribution Accounts; Priority of Payments".
We will make principal payments on the Notes on each Distribution Date from
the Note Distribution Account in the following order:
(1) to the Class A-1 Notes until the principal amount of the Class A-1
Notes has been reduced to zero;
(2) to the Class A-2 Notes until the principal amount of the Class A-2
Notes has been reduced to zero;
(3) to the Class A-3 Notes until the principal amount of the Class A-3
Notes has been reduced to zero; and
(4) to the Class A-4 Notes until the principal amount of the Class A-4
Notes has been reduced to zero.
To the extent not previously paid prior to such dates, the outstanding
principal amount of each Class of Notes will be paid on the related Final
Scheduled Distribution Date set forth under "Summary of Terms -- The
Securities -- The Terms of the Notes". The Final Scheduled Distribution Date for
a class of Notes represents the last day on which the outstanding principal
amount of the related Notes will be paid. In no event may the principal paid in
respect of a class of Notes exceed the unpaid principal balance of that class of
Notes. See "Certain Information Regarding the Securities -- Distributions on the
Notes -- Deposits to the Distribution Accounts; Priority of Payments".
S-19
<PAGE> 76
The actual date on which the outstanding principal amount of any class of
Notes is paid may be earlier than its Final Scheduled Distribution Date based on
a variety of factors, including the factors described under "Certain Information
Regarding the Securities -- Prepayment Considerations", "Certain Legal Aspects
of the Contracts -- Repurchase Obligation" in the prospectus and "The
Sellers -- Breach of Representations and Warranties; Defective Contract
Documentation".
OPTIONAL REDEMPTION
Each class of outstanding Notes will be subject to redemption in whole, but
not in part, on any Distribution Date following the last day of a Due Period as
of which an Optional Purchase occurs. An Optional Purchase may occur on any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than $ . The redemption price will equal the
unpaid principal amount of that Class of Notes plus accrued interest on that
amount at the applicable Interest Rate for the related Interest Period.
OPTIONAL REPURCHASE
If WFSRC exercises its Optional Repurchase right as described above, it
will give not less than days notice to the Trustee and will affect the
repurchase at the next following Distribution Date. The repurchase price payable
by WFSRC will be equal to the Scheduled Balances of the Contracts it is
repurchasing as of the Distribution Date preceding the Distribution Date as of
which the repurchase is to occur (the "Base Price"), plus the Repurchase Premium
described in the next paragraph.
Calculation of Repurchase Premium. The "Repurchase Premium" payable by
WFSRC in connection with an exercise of the Optional Repurchase will be a
fraction of the Base Price:
<TABLE>
<CAPTION>
IF THE BASE PRICE IS: THE REPURCHASE PRICE IS:
---------------------------------------- ----------------------------------------
<S> <C>
$ or less, but not more than % of the Base Price
$ ,
$ or less, but not more than % of the Base Price
$ ,
</TABLE>
The Base Price will be treated as Collections and distributed to the
Noteholders in the order of priority specified above under "-- Payments of
Principal" in addition to the distributions to which the Noteholders would then
otherwise be entitled to receive.
In addition to any distribution which those Holders are otherwise then
entitled to receive, the Repurchase Premium will be distributed on a pro rata
basis, after giving effect to distributions on that Distribution Date other than
of the Base Price, to the Holders of record as of the related Record Date for
the Distribution Date on which WFSRC is repurchasing the balance of the
Contracts sold by it to the Trust.
The repurchased Contracts will be transferred back to WFSRC and will no
longer be assets of the Trust.
THE INDENTURE TRUSTEE
Bankers Trust Company will be the Indenture Trustee. The Indenture Trustee
is a New York corporation and its Corporate Trust Office is located at Four
Albany Street, New York, New York 10006.
The Indenture Trustee will have the rights and duties set forth in the
prospectus under "Certain Information Regarding the Securities -- The Trustees"
and "-- Duties of the Trustees".
S-20
<PAGE> 77
EVENTS OF DEFAULT
Upon the occurrence of an Event of Default under the Indenture (as
described under "The Notes -- Events of Default" in the prospectus):
(1) If an Insurer Default has not occurred or is not continuing,
Financial Security can (in addition to its obligation to make Scheduled
Payments on the Notes in accordance with the terms of the Note Policy), but
it is not obligated to, elect to:
- subject to the limitations listed below, first accelerate the
principal of the Notes and then cause the Master Servicer or the
Trustee to sell or otherwise liquidate all or part of the property of
the Trust, in whole or in part on any date or dates following such
acceleration as Financial Security, in its sole discretion, shall
elect, and finally to deliver the proceeds to the Indenture Trustee to
distribute in accordance with the terms of the Note Policy.
(2) If an Insurer Default has occurred and is continuing, the Trustee
may, or if requested in writing by holders of at least 66 2/3% of the
voting interests of all the Notes, shall:
- subject to the limitations listed below, declare the Notes due and
payable at par, together with accrued interest on the Notes.
(3) Notwithstanding any of the foregoing, upon the occurrence of a
Trust Insolvency, if an Insurer Default has occurred and is continuing:
- subject to the limitations listed below, the Notes will become
immediately due and payable at par, together with accrued interest on
the Notes.
(4) No sale or liquidation of the property of the Trust pursuant to
the above provisions may occur if the proceeds from the sale or liquidation
are not sufficient to pay all of the outstanding principal and accrued
interest on the Notes; unless:
- an Insurer Default has not occurred or is not continuing and the
related Event of Default relates to failure of the Trust to pay
interest or principal on any class of Notes or a Trust Insolvency; or
- an Insurer Default has occurred and is continuing and:
(i) holders of 100% of the voting interests of all the Notes
consent to such sale or liquidation; or
(ii) the Trustee determines that the property of the Trust will not
continue to provide sufficient funds for the payment of the principal of
and interest on the Notes, the Trustee provides prior written notice of
that sale or liquidation to each Rating Agency, and holder of at least
66 2/3% of the voting interests of all the Notes consent to that sale or
liquidation.
It is an "Insurer Default" if:
(1) Financial Security fails to perform any of its obligations under
the Note Policy, or
(2) certain events of bankruptcy, insolvency, receivership or
liquidation relating to Financial Security occur.
Further, in the event that an Insurer Default has not occurred or is not
continuing, following the occurrence of an Event of Default, if Financial
Security has not elected to accelerate the principal of the Notes and such Event
of Default is subsequently cured, Financial Security shall not thereafter have
the right to elect to accelerate the principal of the Notes or to cause the
property of the Trust
S-21
<PAGE> 78
to be sold or liquidated by reason of that Event of Default and the rights of
all parties shall thereupon be restored as though that Event of Default had not
occurred.
Following the occurrence of an Event of Default and provided that (i) an
Insurer Default has not occurred or is not continuing and (ii) Financial
Security has not elected to accelerate the principal of the Notes, the Indenture
Trustee and the Owner Trustee will continue to submit claims under the Note
Policy for any shortfalls in Scheduled Payments on the Notes. See "The Note
Policy" in the prospectus.
CERTAIN INFORMATION REGARDING THE SECURITIES
PAYMENTS ON THE CONTRACTS
As more fully described in the prospectus under "Certain Information
Regarding the Securities -- Payments on the Contracts", all Net Collections on
or in respect of the Contracts will be deposited in or credited to the
Collection Account or, in limited instances, the Holding Account.
Subject to the remainder of this paragraph, distributions on the Notes will
be made on each Distribution Date out of Net Collections for the related Due
Period plus certain reinvestment earnings on Eligible Investments and any
Advance made by the Master Servicer as described under "The Master
Servicer -- Advances" in the prospectus. The amount of those Net Collections,
reinvestment earnings and Advances on each Distribution Date will be applied as
described under "-- Distributions on the Notes". Amounts, to the extent
available, will be withdrawn from the Spread Account to cover any shortfalls in
distributions to Noteholders. Under the Note Policy, Financial Security will be
obligated to provide for distribution on the insured Notes on each Distribution
Date the amount, if any, by which the amount of Net Collections and funds
available in the Spread Account is less than the sum of the interest and
principal due on the insured Notes for that Distribution Date and will be
obligated to provide for the payment of Scheduled Payments on the Notes on the
respective Final Scheduled Distribution Dates.
If WFSRC exercises its Optional Repurchase right, the amount payable by it
equal to the Base Price will be treated as Net Collections and will be deposited
into the Collection Account and distributed as any other Net Collections at the
time of their receipt. The amount payable by WFSRC equal to the Repurchase
Premium will not be treated as Net Collections and will not be, directly or
indirectly, distributed as any other Net Collections. Instead, the Repurchase
Premium will be distributed to the Noteholders separately by the Indenture
Trustee, on the Distribution Date as of which the Contracts sold to the Trust by
WFSRC are to be repurchased by WFSRC on a pro rata basis after giving effect to
payments otherwise made on that Distribution Date. The Indenture Trustee will
deliver a report (the "Prepayment Report") concurrently with the distribution of
the Repurchase Premium reflecting the total amounts of Repurchase Premium
received by the Indenture Trustee expressed as a dollar amount per $1,000 of
each class of Notes then outstanding.
DISTRIBUTIONS ON THE NOTES
General. On or before the fifth Business Day prior to each Distribution
Date (each such date, a "Determination Date"), the Master Servicer will deliver
to the Indenture Trustee, the Owner Trustee, Financial Security and the Rating
Agencies a statement (the "Distribution Date
S-22
<PAGE> 79
Statement") setting forth, among other things, the following amounts with
respect to the related Due Period and such Distribution Date:
- the amount of funds in the Collection Account allocable to collections on
the Contracts in the related Due Period (excluding any Advances and
Repurchase Amounts);
- the amount required to repurchase all Contracts repurchased by the Seller
or the Master Servicer during the related Due Period;
- the Advances made by the Master Servicer and the amounts for which the
Master Servicer is entitled to be reimbursed for unreimbursed Advances;
- the amount of Net Collections;
- the Note Interest Distributable Amount;
- the Note Principal Distributable Amount;
- the Repurchase Premium, if any; and
- the Servicing Fee.
Deposits to the Distribution Accounts; Priority of Payments. On each
Distribution Date, the Master Servicer will allocate amounts on deposit in the
Collection Account with respect to the related Due Period and that Distribution
Date as described below and will instruct the Indenture Trustee to make the
following deposits and distributions in the following amounts and order of
priority (in each case after giving effect to all deposits and distributions of
higher priority):
(1) to the Master Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Due Periods;
(2) to the Indenture Trustee and the Owner Trustee, any accrued and
unpaid Trustees' fees;
(3) to the Note Distribution Account, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses (1)
and (2) above), the Note Interest Distributable Amount to be distributed to
the holders of the Notes at their respective Interest Rates;
(4) to the Note Distribution Account, from any remaining Net
Collections, the Note Principal Distributable Amount (which amount
includes, if such Distribution Date is a Final Scheduled Distribution Date,
the remaining principal amount of the related class of Notes to be
distributed to the holders of such class of Notes), to be distributed to
the holders of the Class A-1 Notes until the principal amount of the Class
A-1 Notes has been reduced to zero, second to the holders of the Class A-2
Notes until the principal amount of the Class A-2 Notes has been reduced to
zero, third to the holders of the Class A-3 Notes until the principal
amount of the Class A-3 Notes has been reduced to zero and fourth to the
holders of Class A-4 Notes until the principal amount of the Class A-4
Notes has been reduced to zero;
(5) to Financial Security, from any remaining Net Collections, any
amounts owing to Financial Security in respect of all payments, if any,
made under the Note Policy for which reimbursement has not yet been made to
Financial Security and any unreimbursed fees, expenses or other amounts
owing to Financial Security under the Insurance Agreement (collectively,
"Unreimbursed Insurer Amounts"); and
S-23
<PAGE> 80
(6) in the event that the distributions described in clauses (1)
through (5) above have been funded exclusively from Net Collections, any
remaining Net Collections ("Excess Amounts") will be deposited into the
Spread Account, until the amount on deposit therein equals the Specified
Spread Account Balance, with any remaining Excess Amounts being distributed
as described under "-- Withdrawals from the Spread Account".
In addition, upon the exercise by WFSRC of its Optional Repurchase, the
Indenture Trustee will distribute the Repurchase Premium to Noteholders on a pro
rata basis after giving effect to payments otherwise made on the Distribution
Date.
If the Notes are accelerated following an Event of Default, amounts
collected following the sale or liquidation of the property of the Trust will be
distributed in the priority described above. See "The Notes -- Events of
Default".
For the purposes hereof, the following terms will have the following
meanings:
The "Aggregate Scheduled Balance" will equal the sum of the Scheduled
Balances of the outstanding Contracts. At the time of initial issuance of the
Notes, the initial aggregate principal amount of the Notes will equal the
Cut-Off Date Aggregate Scheduled Balance.
The "Aggregate Scheduled Balance Decline" will mean, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period (or as of the Cut-Off Date in the case of
the first Distribution Date) exceeds the Aggregate Scheduled Balance as of the
end of such Due Period.
A "Defaulted Contract" will mean, with respect to any Due Period, a
Contract (i) which is, at the end of such Due Period, delinquent in the amount
of at least two monthly payments or (ii) with respect to which the related
Financed Vehicle has been repossessed or repossession efforts have been
commenced.
A "Due Period" will mean, with respect to any Distribution Date, the
three-month period commencing on the first day of the third month preceding the
month in which that Distribution Date occurs (or commencing on the Cut-Off Date
in the case of the first Distribution Date) to the last day of the month
immediately preceding the month in which that Distribution Date occurs.
A "Liquidated Contract" will be a Contract that (i) has been repurchased by
the Seller of that Contract or Master Servicer or as to which all of the
principal has been paid prior to its scheduled maturity; (ii) is a Defaulted
Contract 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 four-month period referenced in clause (iv)
below; (iii) has been paid in full on or after its scheduled maturity; or (iv)
is delinquent as to all or part of four or more payments of Monthly P&I.
Contracts that become Liquidated Contracts pursuant to clause (ii) or (iv) above
and any collections thereon will thereupon no longer be part of the Trust,
although collections thereon will be deposited in the Collection Account.
The "Note Distributable Amount" will mean, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for that Distribution Date.
The "Note Interest Carryover Shortfall" will mean, with respect to any
Distribution Date and a class of Notes, the excess, if any, of the sum of the
Note Quarterly Interest Distributable Amount for that class for the immediately
preceding Distribution Date plus any outstanding Note Interest Carryover
Shortfall for that class on such preceding Distribution Date, over the amount in
respect of interest that is actually deposited in the Note Distribution Account
with respect to that class on that
S-24
<PAGE> 81
preceding Distribution Date, plus, to the extent permitted by applicable law,
interest on the amount of interest due but not paid to Noteholders of such class
on that preceding Distribution Date at the related Interest Rate for the related
Interest Period.
The "Note Interest Distributable Amount" will mean, with respect to any
Distribution Date and a class of Notes, the sum of the Note Quarterly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such class of
Notes for that Distribution Date.
The "Note Principal Carryover Shortfall" will mean, as of the close of any
Distribution Date, the excess of the sum of the Note Quarterly Principal
Distributable Amount and any outstanding Note Principal Carryover Shortfall for
the immediately preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on that
Distribution Date.
The "Note Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
for that Distribution Date and any outstanding Note Principal Carryover
Shortfall for the immediately preceding Distribution Date; provided, however,
that the Note Principal Distributable Amount with respect to a class of Notes
shall not exceed the outstanding principal amount of such class of Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount on each
Final Scheduled Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the outstanding principal amount of the related class of Notes to zero.
The "Note Quarterly Interest Distributable Amount" will mean, with respect
to any Distribution Date, 90 days of interest (or in the case of the first
Distribution Date, interest accrued from and including the Cut-Off Date to but
excluding such Distribution Date, or in the case of the Class A-1 Notes,
interest for the actual number of days in the applicable Interest Period, based
on a 360-day year) at the related Interest Rate for each class of Notes on the
outstanding principal amount of the Notes of that Class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
Noteholders of that class on or prior to that Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of that class
of Notes).
The "Note Quarterly Principal Distributable Amount" will mean, with respect
to any Distribution Date, the Principal Distributable Amount for that
Distribution Date.
The "Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of (i) the Aggregate Scheduled Balance Decline for
such Distribution Date, plus (ii) the aggregate Scheduled Balances as of such
Distribution Date of all Contracts that became Liquidated Contracts pursuant to
clause (i), (ii) or (iv) of the definition of the term "Liquidated Contract"
during the related Due Period.
The "Scheduled Balance" of a Rule of 78's Contract will represent the
present value of the remaining scheduled payments of Monthly P&I due on that
Contract discounted on a monthly basis as described below, while the Scheduled
Balance of a Simple Interest Contract will be its actual principal balance. The
"Monthly P&I" for a Contract will be the installment of principal and interest
due thereunder each month (each such date, a "Due Date") and will be
substantially equal for the term of the Contract. The Scheduled Balance of a
Rule of 78's Contract for the Cut-Off Date and each Due Date will be set forth
in a schedule to the Sale and Servicing Agreement and will be equal to the
present value (determined as discussed below) at each of those dates of all
payments of Monthly P&I on the Contract that are due after such Due Date. That
present value will be determined by discounting (on a monthly basis) each
payment of Monthly P&I from the last day of the month in which that payment of
Monthly P&I is due to the first day of the month in which that
S-25
<PAGE> 82
Due Date occurs using a discount rate that will produce a present value at the
Cut-Off Date equal to the outstanding principal balance of the Contract as of
the Cut-Off Date. The interest rate borne by substantially all of the Contracts
will not be less than the weighted average of the Interest Rates on the Closing
Date plus the Servicing Fee Percent.
PAYMENT PRIORITIES OF THE NOTES; THE SPREAD ACCOUNT
General. The rights of the Noteholders to receive distributions with
respect to the Contracts will be subordinated to the rights of the Master
Servicer (to the extent that the Master Servicer has not been reimbursed for any
outstanding Advances and has not been paid all Servicing Fees), the Trustees (to
the extent the Trustees and such other entities have not received all Trust Fees
and Expenses payable to them) and Financial Security (to the extent of any
Unreimbursed Insurer Amounts). In addition, the rights of the Noteholders to
receive distributions with respect to the Contracts will be subject to the
priorities set forth under "-- Distributions on the Notes -- Deposits to the
Distribution Accounts; Priority of Payments," "-- Distributions on the
Notes -- Prepayment Premium; Priority of Payments". Such priorities and
subordination are intended to enhance the likelihood of timely receipt by
Noteholders of the full amount of interest and principal required to be paid to
them, and to afford such Noteholders limited protection against losses in
respect of the Contracts.
The Spread Account. In the event of delinquencies or losses on the
Contracts, the foregoing protection will be affected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Contracts and by the establishment of a segregated trust account in the name of
the Indenture Trustee (the "Spread Account"). The Spread Account will be part of
the Trust. The Indenture Trustee will have a perfected security interest in the
Spread Account and in all amounts deposited in or credited to the Spread Account
as well as all investments made with such deposits and earnings. The Spread
Account will be created with an initial deposit by WFAL on the Closing Date of
an amount equal to $ (the "Spread Account Initial Deposit"). The Spread
Account will thereafter be funded by the deposit therein of any Excess Amounts
in respect of each Distribution Date, until the amount on deposit in the Spread
Account is at least equal to the Specified Spread Account Balance.
Amounts held from time to time in the Spread Account will continue to be
held for the benefit of holders of the Notes and Financial Security and those
amounts will be invested in Eligible Investments. Investment income on monies on
deposit in the Spread Account will be credited to the Spread Account. Any loss
on that investment will be charged to the Spread Account.
Calculation of Specified Spread Account Balance. The "Specified Spread
Account Balance" will be calculated as of the last day of each month (each, a
"Calculation Day") and will equal % of the Aggregate Scheduled Balance on
such Calculation Day, except that if on any Calculation Day (i) the Charge-Off
Percentage for the three calendar month period ending on that Calculation Day
exceeds % or (ii) the Delinquency Percentage for the three calendar month
period ending on that Calculation Day exceeds %, then the Specified Spread
Account Balance shall equal % of the Aggregate Scheduled Balance on that
Calculation Day (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent
Calculation Day). Notwithstanding the foregoing, in no event can the Specified
Spread Account Balance be greater than $ ( % of the Cut-off Date
Aggregate Scheduled Balance) or less than $ (the amount required by the
Rating Agencies and Financial Security); provided, however, it shall not be
greater than the outstanding aggregate principal amount of the Notes if such
amount is less than $ . At no time after the Closing Date will the
Sellers, the Master Servicer, Financial Security or any other entity be required
to deposit their own funds into the Spread Account.
S-26
<PAGE> 83
The "Charge-Off Percentage" will mean, with respect to any three calendar
month period, the annualized percentage equivalent of the average of the
percentages of charged-off Contracts for each month in such period. For each
month, the percentage of charged-off Contracts shall be the percentage
equivalent of a fraction, the numerator of which is the aggregate Scheduled
Balance for that month of all Contracts that have become Liquidated Contracts
(as specified in clause (ii) or (iv) of the definition of Liquidated Contracts)
during that month, less any Net Liquidation Proceeds received during that month
(and not reflected in prior periods) with respect to those Contracts or from any
Contracts charged-off in prior periods, and the denominator of which is the
aggregate Scheduled Balance of all outstanding Contracts as of the end of the
immediately preceding month. The "Delinquency Percentage" will mean, with
respect to any three calendar month period, the average of the percentages of
delinquent Contracts for each month in that period. For each month the
percentage of delinquent Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the sum of (i) the aggregate Scheduled
Balance of all outstanding Contracts 61 days or more delinquent (after taking
into account permitted extensions), plus (ii) the aggregate Scheduled Balance of
all Contracts in respect of which the related Financed Vehicles have been
repossessed but have not been liquidated (to the extent the related Contract is
not otherwise reflected in clause (i) above), and the denominator of which is
the aggregate Scheduled Balance of all outstanding Contracts, in each case on
the last day of that calendar month.
The Master Servicer may, from time to time after the date of this
prospectus supplement, and with the approval of Financial Security, request the
Rating Agencies to approve a formula for determining the Specified Spread
Account Balance that is different from that described above and would result in
a decrease in the amount of the Specified Spread Account Balance or the manner
by which the Spread Account is funded. If the Rating Agencies deliver a letter
to the Indenture Trustee, the Owner Trustee and Financial Security to the effect
that the use of any new formulation will not in and of itself result in a
qualification, reduction or withdrawal of its then-current rating of any class
of Notes (without giving effect to the guaranty under the Note Policy of
payments owing to the Noteholders), then the Specified Spread Account Balance
will be determined in accordance with such new formula. The Sale and Servicing
Agreement will accordingly be amended to reflect that new calculation without
the consent of any Noteholder.
WITHDRAWALS FROM THE SPREAD ACCOUNT
Amounts held from time to time in the Spread Account will be withdrawn from
the Spread Account to the extent that the amount on deposit in the Note
Distribution Account is less than the Note Distributable Amount and will be
deposited in the Note Distribution Account.
If the amount on deposit in the Spread Account on any Calculation Day or
any Distribution Date (after giving effect to all deposits thereto or
withdrawals therefrom on that Distribution Date) is greater than the Specified
Spread Account Balance, the Indenture Trustee will distribute any excess first,
to Financial Security, to the extent of any Unreimbursed Insurer Amounts, then
to WFAL until WFAL has received from the Spread Account an aggregate amount
equal to the Spread Account Initial Deposit and finally to WFAL and WFSRC
according to their certificate percentage interests.
Upon any distributions to Financial Security or the Sellers, the
Noteholders will have no further rights in, or claims to, such amounts. None of
the Noteholders, the Indenture Trustee, the Owner Trustee, the Sellers or
Financial Security will be required to refund any amounts properly distributed
or paid to them, whether or not there are sufficient funds on any subsequent
Distribution Date to make full distributions to the Noteholders. The obligations
of Financial Security under the Note Policy will not be diminished or otherwise
affected by any amounts distributed to Financial Security.
S-27
<PAGE> 84
TERMINATION
The obligations of the Master Servicer, the Sellers, the Owner Trustee and
Indenture Trustee pursuant to the Trust Agreement, Sale and Servicing Agreement
and the Indenture will terminate upon the earliest to occur of (i) the maturity
or other liquidation of the last Contract and the disposition of any amounts
received upon liquidation of any property remaining in the Trust, (ii) the
payment to you of all amounts required to be paid to you pursuant to such
agreements and (iii) the occurrence of the event described below.
In order to avoid excessive administrative expenses, WFAL will be permitted
to purchase the remaining Contracts from the Trust on any Distribution Date
following the last day of a Due Period as of which the Aggregate Scheduled
Balance is less than 10% of the Cut-Off Date Aggregate Scheduled Balance at a
price equal to the aggregate unpaid principal amount of the Notes, together with
accrued interest thereon for the related Interest Period. If WFSRC has not
previously exercised its Option Repurchase right, it will join WFAL in the
repurchase of the remaining Contracts (for which no Repurchase Premium will be
due), in the proportions of % and %, respectively.
The Owner Trustee and Indenture Trustee will give you written notice of
termination at least 20 days prior to such termination. The final distribution
to you will be made only upon surrender and cancellation of your Notes at the
office or agency of the related Trustee specified in the notice of termination.
Any funds remaining in the Trust at least 18 months after the date of
termination and after such Trustee has attempted to locate a Noteholder and such
measures have failed, will be distributed to a charity designated by the Master
Servicer.
Any outstanding Notes will be redeemed concurrently with any Optional
Purchase, and the subsequent distribution to the Sellers of all amounts required
to be distributed to them pursuant to the Trust Agreement will terminate the
Trust.
PREPAYMENT CONSIDERATIONS
The following information supplements the discussion of prepayment
considerations associated with the purchase of Notes under "Certain Information
Regarding the Securities--Prepayment Considerations" in the prospectus.
While WFS does not maintain specific records for this purpose, it estimates
that, based on its experience over the past five years, the monthly prepayment
rate on the outstanding principal amount of the retail installment sales
contracts and installment loans secured by automobiles and light duty trucks it
has originated and serviced, for itself or others, has been approximately 1.8%
of the outstanding principal amount. However, no assurance can be given that the
Contracts will experience this rate of prepayment or any greater or lesser rate.
WFS does not maintain specific records which would suggest any difference in
prepayment rate for Rule of 78's Contracts as compared with Simple Interest
Contracts.
S-28
<PAGE> 85
CAPITALIZATION OF FINANCIAL SECURITY ASSURANCE INC.
The following table sets forth the capitalization of Financial Security and
its wholly owned subsidiaries on the basis of generally accepted accounting
principles as of September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
ACTUAL
------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
Deferred Premium Revenue (net of prepaid reinsurance
premiums)................................................. $ 550,165
----------
Surplus Notes............................................... 120,000
----------
Minority Interest........................................... 22,002
----------
Shareholder's Equity:
Common Stock.............................................. 15,000
Additional Paid-In Capital................................ 706,117
Accumulated Other Comprehensive Income (net of deferred
income taxes).......................................... (23,005)
Accumulated Earnings...................................... 450,593
----------
Total Shareholder's Equity................................ 1,148,705
----------
Total Deferred Premium Revenue, Surplus Notes, Minority
Interest and Shareholder's Equity......................... $1,840,872
==========
</TABLE>
For further information regarding Financial Security, see the prospectus
and the documents incorporated therein by reference.
THE SELLERS
WFAL
WFAL is a wholly owned, limited-purpose operating subsidiary of WFS which
was incorporated under the laws of the State of California on October 24, 1985.
The principal office of WFAL is 23 Pasteur, Irvine, California 92618. WFAL's
telephone number is (949) 727-1002.
WFAL was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from the Bank in connection
with its activities as a finance subsidiary of the Bank. Effective May 1, 1995,
ownership of WFAL was transferred to WFS and it is now a limited purpose
operating subsidiary of WFS. WFAL has not and will not engage in any activity
other than (i) acquiring, owning, holding, selling, transferring, assigning,
pledging or otherwise dealing in installment sales contracts and installment
loans secured by vehicles or (ii) authorizing, issuing, selling and delivering
one or more series of obligations consisting of one or more classes of bonds or
pass-through certificates collateralized by installment sales contracts and
installment loans secured by vehicles, which bonds or pass-through certificates
are rated in one of the four highest available categories by at least one
nationally recognized statistical rating agency.
WFAL's articles of incorporation limit its activities to the above purposes
and to any activities incidental to and necessary for such purposes.
WFSRC
WFSRC is a wholly owned, limited-purpose service operation of WFS, and was
incorporated under the laws of the State of California on December 22, 1999. The
principal office of WFSRC is
S-29
<PAGE> 86
6655 West Sahara Avenue, Las Vegas, Nevada 83102. WFSRC's telephone number is
(702) 247-1442.
WFSRC was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from WFS in connection with
its activities as a finance subsidiary of WFS. WFSRC has not and will not engage
in any activity other than (i) acquiring, owning, holding, selling,
transferring, assigning, pledging or otherwise dealing in installment sales
contracts and installment loans secured by vehicles or (ii) originating one or
more grantor or owner trusts owning installment sales contracts and installment
loans secured by vehicles.
WFSRC's articles of incorporation limit the activities of WFSRC to the
above purposes and to any activities incidental to and necessary for such
purposes.
BREACH OF REPRESENTATIONS AND WARRANTIES; DEFECTIVE CONTRACT DOCUMENTATION
In the Sale and Servicing Agreement, the Seller or Sellers, as the case may
be, will make certain representations and warranties with respect to each
Contract sold by them to the Trust as of the Closing Date, including but not
limited to, perfection, validity, enforceability of and the absence of liens
prior to the security interest granted pursuant to each Contract, title of the
Trust in and to the Contracts, validity and enforceability of the Contracts as
against the related Obligor, and collision and comprehensive insurance coverage
related to each Financed Vehicle. If any of those representations and warranties
is found to have been incorrect as of the time it was made or any document
evidencing or securing a Contract is found to be defective or not to be
contained in the Contract files, the Indenture Trustee, the Owner Trustee or
Financial Security in and to that Contract, the affected Seller must cure the
defect or eliminate or otherwise cure the circumstances or condition in respect
of which such representation or warranty is incorrect within 90 days of the
discovery thereof. If the defect is not cured within that 90-day period, that
Seller must repurchase the Contract affected by the defect at a price equal to
the outstanding principal amount of that Contract plus accrued interest thereon
to the last Due Date in the Due Period in which the repurchase occurs.
WFS
GENERAL
WFS Financial Inc ("WFS" or, in its capacity as Master Servicer, the
"Master Servicer") is an auto finance company incorporated in California in
1988. WFS purchases contracts in both the prime and non-prime credit quality
segments of the auto finance market. During the year ended December 31, 1999,
WFS purchased approximately 70% of its contracts from the prime credit quality
segment and 30% from the non-prime segment. WFS purchases the majority of its
contracts from franchised dealers and to a lesser extent from independent
dealers. During the year ended December 31, 1999, contracts for new and used
vehicles represented 22% and 76%, respectively, of WFS volume of contracts
purchased.
WFS is an operating subsidiary of the Bank. As an operating subsidiary, WFS
is subject to regulation and supervision by the OTS and the Federal Deposit
Insurance Corporation ("FDIC"). At December 31, 1999, WFS had total assets of
$2.1 billion, total liabilities of $1.9 billion and stockholders' equity of $212
million. As of December 31, 1999, WFS' net portfolio of contracts totaled
approximately $1.4 billion.
WFS' revenues are derived principally from contractual servicing fees, the
retained interest on contracts sold for which servicing is retained, interest on
contracts not sold and fee income including late fees, deferment fees,
documentation fees and other fees, and, to a lesser extent, gain on other
S-30
<PAGE> 87
investments. Interest on borrowings and general and administrative costs are
WFS' major expense items.
The principal executive offices of WFS are located at 23 Pasteur, Irvine,
California 92618 and its telephone number is (949) 727-1002.
BUSINESS ACTIVITIES
WFS is engaged principally in the business of originating contracts secured
by automobiles and light duty trucks from new and used car dealers and the
public. WFS currently conducts its operations through its principal office and
45 production offices serving 43 states.
THE BANK
GENERAL
Western Financial Bank (the "Bank") is a federally chartered savings
association. At December 31, 1999, the Bank had total assets of $4.5 billion,
total deposits of $2.2 billion and stockholder's equity of $351 million on a
generally accepted accounting principles basis. The Bank is a wholly owned
subsidiary of Westcorp. Westcorp is a financial services holding company which
operates principally through the Bank, its wholly owned subsidiary, and through
WFS.
As a federally chartered savings association, the Bank is subject to
regulation and supervision by the OTS and the FDIC. The Bank is a member of the
Federal Home Loan Bank of San Francisco.
The principal executive office of the Bank is located at 15750 Alton
Parkway, Irvine, California 92618 and its telephone number is (949) 727-1100.
BUSINESS ACTIVITIES
The Bank provides a wide range of financial services through its community
banking group which includes retail and commercial operations. Retail banking
services are available through a network of 25 retail banking offices located
throughout California. Commercial banking operations target selected southern
California markets. Western Financial Bank maintains an ownership interest in
WFS which exceeds 80 percent.
S-31
<PAGE> 88
UNDERWRITING
Subject to certain conditions contained in an underwriting agreement (the
"Underwriting Agreement"), (the "Underwriters"), for whom is
acting as representative (the "Representative"), have agreed to severally
purchase from the Sellers, and the Sellers have jointly and severally agreed to
sell to the Underwriters, the respective principal amounts of each Class of
Notes as set forth opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A-1 NOTES OF CLASS A-2 NOTES OF CLASS A-3 NOTES OF CLASS A-4 NOTES
----------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
................... $ $ $ $
...................
-------- -------- -------- --------
Total...... $ $ $ $
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SELLING REALLOWANCE
CLASS CONCESSION DISCOUNT
----- ---------- -----------
<S> <C> <C>
Class A-1 Notes............................................. % %
Class A-2 Notes............................................. % %
Class A-3 Notes............................................. % %
Class A-4 Notes............................................. % %
</TABLE>
After the initial public offering, the public offering prices of the Notes
and these concessions and discounts may be changed.
The Underwriting Agreement provides that the Underwriters' obligations
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to severally purchase all the Notes offered hereby if
any of the Notes are purchased. In the event of a default under the Underwriting
Agreement by any Underwriter, the Underwriting Agreement provides that, in some
circumstances, purchase commitments of the non-defaulting underwriters may be
increased or the Underwriting Agreement may be terminated.
The Sellers and WFS have agreed to jointly and severally indemnify the
Underwriters against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriters may be required to
make in respect thereof.
The Representative has informed the Sellers that it does not expect
discretionary sales by the underwriters to exceed 5% of the principal amount of
the Notes being offered hereby.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
of the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the securities to be higher than it would be
in the absence of such transactions.
The closing of the sale of the Notes is conditioned on the issuance of the
Certificates.
S-32
<PAGE> 89
Upon receipt of a request by an investor who has received an electronic
prospectus from an underwriter or a request by the investor's representative
within the period during which there is an obligation to deliver a prospectus,
the Sellers or the underwriters will promptly deliver, or cause to be delivered,
without charge, a paper copy of the prospectus.
LEGAL MATTERS
Certain legal matters with respect to the Notes, including certain federal
and California income tax matters, will be passed upon for the Sellers by
Mitchell, Silberberg & Knupp LLP, Los Angeles, California. Brown & Wood LLP, San
Francisco, California will act as counsel for the Underwriters. Certain legal
matters relating to the Note Policy will be passed upon for Financial Security
by Bruce E. Stern, Esq., General Counsel, Financial Security or an Associate
General Counsel of Financial Security and by Clifford Chance Rogers & Wells LLP,
New York, New York.
EXPERTS
The consolidated balance sheets of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for each of
the three years in the period ended December 31, 1998, incorporated by reference
in this prospectus supplement, have been incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
This prospectus supplement contains "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 which provides a
"safe harbor" for these types of statements. The forward-looking statements
reflect the Sellers' current views with respect to future events and financial
performance and are subject to certain risks and uncertainties, including those
identified below, which could cause actual results to differ materially from
historical results or those anticipated. The forward-looking terminology such as
"believe," "expect," "may," "will," "should," "continue," and/or the negative
thereof or other comparable expressions which indicate future events and trends
identify forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Sellers undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The level of demand for contracts, which is affected by
such external factors as the level of interest rates, the strength of the
various segments of the economy, debt burden held by consumers and demographics
of WFS' lending markets could cause actual results to differ materially from
historical results or those anticipated.
S-33
<PAGE> 90
INDEX OF DEFINITIONS
Set forth below is a list of the capitalized terms used in this prospectus
supplement and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
ABS................................. S-15
Aggregate Scheduled Balance......... S-24
Aggregate Scheduled Balance
Decline........................... S-24
APR................................. S-12
Bank................................ S-31
Base Price.......................... S-20
Business Day........................ S-19
Calculation Day..................... S-26
Charge-Off Percentage............... S-27
Closing Date........................ S-5
Cut-Off Date........................ S-5
Cut-Off Date Aggregate Scheduled
Balance........................... S-10
Defaulted Contract.................. S-24
Delinquency Percentage.............. S-27
Determination Date.................. S-22
Distribution Dates.................. S-5
Due Date............................ S-25
Due Period.......................... S-24
ERISA............................... S-9
Event of Default.................... S-21
Excess Amounts...................... S-24
Exchange Act........................ S-3
FDIC................................ S-31
Final Scheduled Distribution Date... S-5
Financed Vehicle.................... S-9
Financial Security.................. S-5
Indenture........................... S-18
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Indenture Trustee................... S-5
Insurer Default..................... S-21
Interest Period..................... S-19
Interest Rate....................... S-6
Issuer.............................. S-5
Liquidated Contract................. S-24
Master Servicer..................... S-5
Monthly P&I......................... S-25
Moody's............................. S-6
Note Distributable Amount........... S-24
Note Interest Carryover Shortfall... S-24
Note Interest Distributable
Amount............................ S-25
Note Policy......................... S-8
Note Principal Carryover
Shortfall......................... S-25
Note Principal Distributable
Amount............................ S-25
Note Quarterly Interest
Distributable Amount.............. S-25
Note Quarterly Principal
Distributable Amount.............. S-25
Notes............................... S-5
Optional Purchase................... S-8
Optional Repurchase................. S-8
OTS................................. S-31
Owner Trustee....................... S-5
Principal Distributable Amount...... S-25
Rating Agencies..................... S-6
Record Date......................... S-18
</TABLE>
S-34
<PAGE> 91
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Rule of 78's Contract -- A Contract
that provides for the payment by
the Obligor of a specified total
number of payments, payable in
equal monthly installments, which
total represents the principal
amount financed plus add-on
interest in an amount calculated
by using the Rule of 78's. Under
the Rule of 78's, the amount of a
monthly payment allocable to
interest on a Contract is
determined by multiplying the
total amount of add-on interest
payable over the term of the
Contract by a fraction the
denominator of which is a number
equal to the sum of a series of
numbers representing the number of
each monthly payment due under the
Contract and the numerator of
which for a given month is the
number of payments remaining
before the maturity of the
Contract. For example, with a
Contract providing for 12
payments, the denominator of each
month's fraction will be 78, the
sum of a series of numbers from 1
to 12. Accordingly, in the example
of a twelve payment Contract, the
fraction for the first payment is
12/78, for the second payment
11/78, for the third payment
10/78, and so on through the final
payment, for which the fraction is
1/78. The applicable fraction is
then multiplied by the total
add-on interest payment over the
entire term of the Contract, and
the resulting amount is the amount
of add-on interest earned that
month. The difference between the
amount of the monthly payment by
the Obligor and the amount of
earned add-on interest calculated
for the month is applied to
principal
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
reduction. Under the law of Texas,
a similar procedure is permitted
for calculating the amount of
add-on interest earned, except the
fraction is derived by using the
sum of the monthly payments rather
than the sum of the number of
months (the "sum of the
balances"). As a Contract using
either the Rule of 78's or the sum
of the balances method to compute
interest earned is payable in
equal monthly payments, the
mathematical result is
substantially identical under
either system. Accordingly, for
purposes of convenience, the term
"Rule of 78's" is used herein in
referring to Contracts with add-on
interest regardless of which
system is used to calculated
interest earned.
Scheduled Balance................... S-25
Securities.......................... S-5
Sellers............................. S-5
Simple Interest Contract -- 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.... S-26
Spread Account...................... S-26
Spread Account Initial Deposit...... S-26
Standard & Poor's................... S-6
Trust............................... S-5
Trust Agreement..................... S-10
Trust Property...................... S-6
UCC-I............................... S-11
Underwriters........................ S-32
Underwriting Agreement.............. S-32
Unreimbursed Insurer Amounts........ S-23
Westcorp Financial.................. S-30
WFAL................................ S-5
WFS................................. S-5
WFSRC............................... S-5
</TABLE>
S-35
<PAGE> 92
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$ AUTOMOBILE LOAN ASSET-BACKED NOTES
WFS FINANCIAL 2000 - OWNER TRUST
WFS FINANCIAL AUTO LOANS, INC
SELLER
WFS FINANCIAL INC
SERVICER
--------------------
PROSPECTUS SUPPLEMENT
--------------------
[UNDERWRITERS]
MARCH , 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 93
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 3, 2000
PRELIMINARY PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 6, 2000
$ AUTOMOBILE LOAN ASSET-BACKED NOTES
WFS FINANCIAL 2000 - OWNER TRUST
WFS FINANCIAL AUTO LOANS, INC.
SELLER
WFS FINANCIAL INC
MASTER SERVICER
The issuer will issue four classes of notes as listed below. The issuer
will pay interest quarterly on the 20th of , , and
. The first interest payment will be made on , 2000.
Full and timely payment of the noteholders' distributable amount on each
distribution date is unconditionally and irrevocably guaranteed under a
financial guaranty insurance policy issued by Financial Security Assurance Inc.
YOU SHOULD CAREFULLY REVIEW THE RISK FACTORS BEGINNING ON PAGE S-10 OF THIS
PROSPECTUS SUPPLEMENT AND PAGE 8 OF THE PROSPECTUS. The securities are
automobile loan asset-backed securities issued by a trust. The securities are
not obligations of WFS Financial Auto Loans, Inc., WFS Financial Inc or any of
their affiliates, nor are the securities insured by the Federal Deposit
Insurance Corporation.
<TABLE>
<CAPTION>
FINAL
SCHEDULED PROCEEDS TO
PRINCIPAL INTEREST DISTRIBUTION PRICE TO UNDERWRITING THE
CLASS AMOUNT RATE DATE PUBLIC(1) DISCOUNTS SELLER(1)(2)
- --------------------- ---------------- ------------- ----------------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
A-1 Note............. $ %
A-2 Note............. $ %
A-3 Note............. $ %
A-4 Note............. $ %
Total................ $ % $ $
</TABLE>
- -------------------------
(1) Plus accrued interest, if any, from , 200 .
(2) Before deducting expenses, estimated to be $ .
Delivery of the Notes, in book-entry form only, will be made through The
Depository Trust Company against payment in immediately available funds, on or
about , 200 .
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
[UNDERWRITERS]
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH , 2000
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS
SUPPLEMENT........................ S-3
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS......................... S-3
INCORPORATION BY REFERENCE.......... S-3
SUMMARY OF TERMS.................... S-5
The Parties....................... S-5
Important Dates................... S-5
The Securities.................... S-5
The Trust Property................ S-6
Redemption of Securities and
Repurchase of Contracts........ S-8
Tax Status........................ S-8
Eligibility for Purchase by Money
Market Funds................... S-9
ERISA Considerations.............. S-9
RISK FACTORS........................ S-10
The Ratings of the Notes May be
Withdrawn or Revised Which May
Have an Adverse Effect on the
Market Price of the Notes...... S-10
Losses on Contracts May be
Affected Disproportionately
Because of Geographic
Concentration of Contracts in
California..................... S-10
FORMATION OF THE TRUST.............. S-10
General........................... S-10
Capitalization.................... S-11
The Owner Trustee................. S-11
THE CONTRACTS POOL.................. S-12
Distribution of Contracts by
APR............................ S-13
Geographic Concentration of the
Contracts...................... S-14
WEIGHTED AVERAGE LIVES OF THE
NOTES............................. S-15
Percentage of Initial Note Balance
at Various ABS Percentages..... S-16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DELINQUENCY AND CONTRACT LOSS
INFORMATION....................... S-17
USE OF PROCEEDS..................... S-18
THE NOTES........................... S-18
General........................... S-18
Payments of Interest.............. S-19
Payments of Principal............. S-19
Optional Redemption............... S-20
The Indenture Trustee............. S-20
Events of Default................. S-21
CERTAIN INFORMATION REGARDING THE
SECURITIES........................ S-22
Payments on the Contracts......... S-22
Distributions on the Notes........ S-22
Payment Priorities of the Notes;
The Spread Account............. S-25
Withdrawals from the Spread
Account........................ S-27
Termination....................... S-27
Prepayment Considerations......... S-28
CAPITALIZATION OF FINANCIAL SECURITY
ASSURANCE INC..................... S-28
THE SELLER.......................... S-29
WFAL.............................. S-29
Breach of Representations and
Warranties; Defective Contract
Documentation.................. S-29
WFS................................. S-29
General........................... S-29
Business Activities............... S-30
THE BANK............................ S-30
General........................... S-30
Business Activities............... S-30
WII................................. S-31
UNDERWRITING........................ S-32
LEGAL MATTERS....................... S-33
EXPERTS............................. S-33
FORWARD-LOOKING STATEMENTS.......... S-33
INDEX OF DEFINITIONS................ S-34
</TABLE>
S-2
<PAGE> 95
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that progressively provide more detail: (1) the accompanying
prospectus dated March 6, 2000 (the "prospectus"), which provides general
information, some of which may not apply to your series of Notes, and (2) this
prospectus supplement, which describes the specific terms of your series of
Notes. This prospectus supplement does not contain complete information about
the offering of the Notes. Additional information is contained in the
prospectus. You are urged to read both this prospectus supplement and the
prospectus in full. We cannot sell the notes to you unless you have received
both this prospectus supplement and the prospectus.
You should rely on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. If the
information concerning your series of Notes varies between this prospectus
supplement and the accompanying prospectus, you should rely on the information
contained in this prospectus supplement. We have not authorized anyone to
provide you with different information. We do not claim the accuracy of the
information in this prospectus supplement as of any date other than the date
stated on the cover of this prospectus supplement.
If you purchase Notes, you will also be provided with unaudited quarterly
and annual reports concerning the automobile loan contracts which back the
Notes.
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
We have included cross-references to captions in this prospectus supplement
and the prospectus where you can find further related discussions. We have
started with an introductory section describing the trust and terms of this
offering in abbreviated form, followed by a more complete description of the
terms of this offering.
Cross-references may be contained in the introductory section which will
direct you elsewhere in this prospectus supplement. You can also find references
to key topics in the Table of Contents on the preceding pages.
You can find a listing of the pages where capitalized terms are defined
under the caption "Index of Definitions" beginning on page S-34. To the extent
not defined herein, capitalized terms have the meanings given in the prospectus.
WFS, as Master Servicer, will provide without charge to each person,
including any beneficial owner of Notes, to whom a copy of this prospectus
supplement is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference, except the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed to
Secretary, WFS Financial Inc, 23 Pasteur, Irvine, California 92618 or by calling
(949)727-1002.
INCORPORATION BY REFERENCE
All reports and other documents filed by WFS, as Master Servicer, on behalf
of the Seller, or on behalf of the Trust, and the financial statements of
Financial Security Assurance, Inc. and Subsidiaries included in, or as exhibits
to, documents filed by Financial Security Assurance Holdings Ltd. (including
specifically the Annual Report on Form 10-K, as amended, for the year ended
December 31, 1998 and the Quarterly Report on Form 10-Q for the quarterly
periods ended
S-3
<PAGE> 96
March 31, June 30 and September 30, 1999), as filed in each case pursuant to
Section 13(a), 13(c), 14 or 14(d) of the Securities Act of 1934, as amended (the
"Exchange Act"), and those filed subsequent to the date of this prospectus
supplement and prior to the termination of the offering of the Notes offered
hereby shall be deemed to be incorporated by reference into this prospectus
supplement and the prospectus and to be a part hereof from the respective dates
of filing such documents. Any statement contained herein or in a document all or
a portion of which is incorporated herein by this reference shall be deemed to
be modified or superseded for purposes of this prospectus supplement and the
prospectus to the extent that a statement contained herein or in any
subsequently filed document which is or is also deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the Notes in any state where the offer of such
securities is not permitted.
We do not claim the accuracy of the information in this prospectus as of
any date other than the date stated on the cover of this prospectus supplement.
Until , 200 , all dealers that buy, sell or trade the Notes
may be required to deliver a prospectus and this prospectus supplement,
regardless of whether they are participating in the offer. This is in addition
to the obligation of dealers to deliver a prospectus and this prospectus
supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
S-4
<PAGE> 97
SUMMARY OF TERMS
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. You will find a detailed description of the offering of
securities following this summary.
THE PARTIES:
The Issuer................. WFS Financial 2 - Owner Trust ("Trust")
Seller..................... WFS Financial Auto Loans, Inc. ("WFAL")
Master Servicer............ WFS Financial Inc ("WFS")
The Insurer................ Financial Security Assurance, Inc. ("Financial
Security")
Indenture Trustee.......... Bankers Trust Company
Owner Trustee.............. Chase Manhattan Bank Delaware
IMPORTANT DATES:
Statistical Calculation
Date....................... , 200
Cut-Off Date............... 1, 200
Closing Date............... Expected to be , 200
Distribution Dates......... Payments of principal and interest will be made on
the Notes on each 20, 20,
20, 20, commencing on
20, 200
Final Scheduled
Distribution Dates......... If not paid earlier, the full outstanding principal
balance of the Class A-1 Notes will be paid on
20, 200 (the "Class A-1 Final Scheduled
Distribution Date"), of the Class A-2 Notes will be
paid on 20, 200 (the "Class A-2 Final
Scheduled Distribution Date"), of the Class A-3
Notes will be paid on 20, 200 (the "Class
A-3 Final Scheduled Distribution Date"), and of the
Class A-4 Notes will be paid on 20, 200
(the "Class A-4 Final Scheduled Distribution
Date").
SECURITIES:
The Notes.................. The WFS Financial 200 - Owner Trust Auto
Receivable Backed Notes will represent obligations
of the Trust secured by the assets of the Trust.
The Certificates........... The Trust will issue Certificates which are not
being offered by this prospectus supplement. All
payments in respect of the Certificates issued by
the Trust will be subordinated to payments on the
Notes.
S-5
<PAGE> 98
THE TERMS OF THE NOTES
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
NOTES NOTES NOTES NOTES
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Principal Amount...... $ $ $
Interest Rate Per
Annum............... % % % %
Interest Accrual
Method.............. [ ] [ ] [ ] [ ]
Distribution Dates.... * * * *
First Distribution
Date................ 20, 2000 20, 2000 20, 2000 20, 2000
Final Scheduled
Distribution Date...
Anticipated Ratings
(Moody's/Standard &
Poor's)**........... [ ] [ ] [ ] [ ]
</TABLE>
- -------------------------
* Payments of interest and principal on the Notes will be made on 20,
20, 20 and 20 of each year, or the first
business day thereafter, beginning on 20, 200. Principal will be
paid sequentially to the earliest maturing class until paid in full.
** It is a condition to the offering of the Notes that these ratings be obtained
from Moody's Investors Services, Inc. ("Moody's") and Standard & Poor's, a
division of the McGraw-Hill Companies, Inc. ("Standard & Poor's" and,
together with Moody's, the "Rating Agencies"). However, a Rating Agency in
its discretion may lower or withdraw its rating in the future.
PRIORITY OF PRINCIPAL PAYMENTS
Principal of the Notes will be paid on each distribution date in the
following order:
to the Class A-1 Notes until the Class A-1 Notes are paid in full;
to the Class A-2 Notes until the Class A-2 Notes are paid in full;
to the Class A-3 Notes until the Class A-3 Notes are paid in full; and
to the Class A-4 Notes until the Class A-4 Notes are paid in full.
THE TRUST PROPERTY:
GENERAL.................... The trust property will include:
- a pool of retail installment sales contracts and
a limited number of installment loans originated
by WFS, all of which are secured by new or used
automobiles or light duty trucks;
- the funds in the spread account; and
- an insurance policy written by Financial Security
guaranteeing all payments of principal and
interest to be made to holders of the Notes.
S-6
<PAGE> 99
THE CONTRACTS
[GRAPHIC]
- The Trust also receives the right to payments due under the Contracts on
and after (the "Cut-Off Date").
- The Contracts are secured by first liens on the vehicles purchased under
each Contract.
- The Contracts will have an expected weighted average annual percentage
rate of approximately % and an expected weighted average remaining
maturity of approximately months.
- Approximately % of the aggregate principal amount of the Contracts
will be "Rule of 78's Contracts" and approximately % will be "Simple
Interest Contracts". See "Index of Definitions" for the definitions of
"Rule of 78's Contract" and "Simple Interest Contract".
THE SPREAD ACCOUNT
The Spread Account is a segregated trust account in the name of the
Indenture Trustee that will afford you some limited protection against losses on
the Contracts. The Spread Account will be part of the Trust. It will be created
with an initial deposit by WFAL of $ . On any Distribution Date, the
funds that are available from the Spread Account will be distributed to you to
cover any shortfalls in interest and principal required to be paid on the Notes.
The funds in the Spread Account will be supplemented on each Distribution Date
by any funds in the collection account remaining after making all of the
payments necessary on that Distribution Date. The funds in the Spread Account
will be supplemented until they are at least equal to % or % of the sum of
the remaining principal balance of the Simple Interest Contracts and the present
value of the remaining scheduled payments of the monthly principal and interest
due on the Rule of 78's Contracts. The rate to be applied will depend upon loss
and delinquency triggers.
S-7
<PAGE> 100
If on the last day of any month or on any payment date the amount on
deposit in the Spread Account is greater than the amount required to be in that
account on that date, the excess cash will be distributed first to Financial
Security, to the extent of any unreimbursed amounts due to it, then to the
Seller until the Seller has received an amount equal to the Spread Account
Initial Deposit and finally to the Seller and WFS Investments, Inc. ("WII"). You
will have no further rights to any such excess cash.
THE NOTE POLICY
Financial Security will issue a policy (the "Note Policy") that will
guarantee all payments of principal and interest due to the Noteholders.
REDEMPTION OF SECURITIES AND REPURCHASE OF CONTRACTS:
OPTIONAL PURCHASE
WFAL may purchase all of the Contracts owned by the Trust at any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than $ .
OPTIONAL REDEMPTION AND PREPAYMENT
If WFAL purchases all of the Contracts of the Trust pursuant to an Optional
Purchase as discussed above:
- each class of outstanding Notes will be redeemed in whole at a price
equal to the unpaid principal amount of that class of Notes plus the
accrued interest at that class of Notes' interest rate; and
- the Trust will be terminated.
MANDATORY REDEMPTION
The Notes may be accelerated if an Event of Default has occurred and is
continuing under the Indenture. If an Insurer Default has occurred and is
continuing and an Event of Default has occurred and is continuing, the Indenture
Trustee may be permitted to accelerate the Notes. If an Event of Default has
occurred and is continuing but no Insurer Default has occurred and is
continuing, Financial Security will have the right (in addition to its
obligation to make Scheduled Payments on the Notes in accordance with the terms
of the Note Policy), but not the obligation, to elect to accelerate the Notes.
If the Notes are accelerated, the Master Servicer or the Indenture Trustee will
sell or otherwise liquidate the property of the Trust and deliver the proceeds
to the Indenture Trustee for distribution in accordance with the terms of the
Indenture.
TAX STATUS:
In the opinion of Mitchell, Silberberg & Knupp LLP, special counsel for
federal income and California income tax purposes, as discussed in further
detail in the prospectus:
- the Notes will be characterized as debt; and
- the Trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
S-8
<PAGE> 101
If you purchase a Note, you agree to treat it as debt for tax purposes.
ELIGIBILITY FOR PURCHASE BY MONEY MARKET FUNDS:
The Class A-1 Notes will be structured to be eligible securities for
purchase by money market funds under Rule 2a-7 under the Investment Company Act
of 1940, as amended. A money market fund should consult its legal advisers
regarding the eligibility of such Notes under Rule 2a-7 and whether an
investment in such notes satisfies the fund's investment policies and
objectives.
ERISA CONSIDERATIONS:
The Notes are generally eligible for purchase by employee benefit plans
that are subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code. However, administrators of
employee benefit plans should review the matters discussed under "ERISA
Considerations" in the prospectus and also should consult with their legal
advisors before purchasing Notes.
S-9
<PAGE> 102
RISK FACTORS
In addition to risk factors on page 8 of the prospectus, you should also
consider the following risk factors in deciding whether to purchase any of the
Notes.
THE RATINGS OF THE NOTES MAY BE WITHDRAWN OR REVISED WHICH MAY HAVE AN ADVERSE
EFFECT ON THE MARKET PRICE OF THE NOTES
It is a condition of issuance that the Notes be rated as follows:
<TABLE>
<CAPTION>
STANDARD & POOR'S MOODY'S
----------------- -------
<S> <C> <C>
Class A-1 Notes...................................... [ ] [ ]
Class A-2, Class A-3 and Class A-4 Notes............. [ ] [ ]
</TABLE>
The ratings by Standard & Poor's and Moody's of the Notes will be based on
the issuance of the Note Policy by Financial Security.
The Rating Agencies can revise or withdraw their ratings at any time if
they feel the circumstances which lead to the existing ratings have changed
(including, with respect to Moody's, as a result of any change in the
claims-paying ability of Financial Security). A revision or withdrawal of the
existing rating may have an adverse effect on the market price of the related
Notes.
A security rating is not a recommendation to buy, sell or hold the Notes.
The ratings are an assessment by the Rating Agencies of the likelihood that a
class of Notes will be paid in full by the related Final Scheduled Distribution
Date. The ratings do not consider to what extent the Notes will be subject to
prepayment.
LOSSES ON CONTRACTS MAY BE AFFECTED DISPROPORTIONATELY BECAUSE OF GEOGRAPHIC
CONCENTRATION OF CONTRACTS IN CALIFORNIA
As of , 1999, WFS' records indicate that % of the
aggregate principal balance of the Contracts will be from Contracts originating
in California. No other state accounted for more than % of the aggregate
principal balance of the Contracts. Therefore, economic conditions or other
factors affecting California in particular could adversely affect the losses on
the Contracts.
FORMATION OF THE TRUST
GENERAL
The following information regarding the Trust supplements the information
in the prospectus under "Formation of the Trust".
The Trust will be a business trust formed for the transaction described in
this prospectus supplement and the prospectus under the laws of the State of
Delaware pursuant to a trust agreement which will be amended and restated as of
the date of initial issuance of the Notes (the "Closing Date") (the "Trust
Agreement").
On or before the Closing Date, WFS will sell and assign the Contracts, each
of which is an installment sales contract or installment loan secured by a new
or used automobile or light duty truck (the "Financed Vehicle"), to WFAL. The
Trust will be established by the sale and assignment of the Contracts to the
Trust by WFAL on the Closing Date. Certificates representing WFAL's and WII's
beneficial interests in the Trust will be issued by the Trust in the relative
amounts of 99% and 1%.
S-10
<PAGE> 103
The Trust will also issue the Notes to WFAL as additional consideration for the
Contracts. WFS will act as Master Servicer of the Contracts and will receive
compensation and fees for those services. See "The Master Servicer -- Servicing
Compensation" in the prospectus. WFS, as Master Servicer, may retain physical
possession of the original executed Contracts, and certain other documents or
instruments relating to the Contracts, as custodian for the Owner Trustee
pursuant to the Sale and Servicing Agreement, or may employ one or more
Subservicers as custodians.
In order to protect the Trust's ownership and security interests in the
Contracts, the Trust's interests in the Contracts will be perfected by WFAL
filing UCC-1 financing statements in the State of California to give notice of
the Trust's ownership of and security interests in the Contracts. Under the Sale
and Servicing Agreement and the Indenture, WFS will be obligated to take all
necessary steps to preserve and protect the interests of the Trustees in the
Contracts. Neither the Indenture Trustee nor the Owner Trustee will be
responsible for the legality, validity or enforceability of any security
interest in respect of any Contract. WFS will not physically segregate the
Contracts from other retail installment sales contracts and installment loans
owned or serviced by it and will not stamp the Contracts with notice of the sale
to WFAL or by the Seller to the Trust. See "Certain Legal Aspects of the
Contracts" in the prospectus.
Simultaneously with the issuance of the Notes, Financial Security will
issue a policy (the "Note Policy") to the Indenture Trustee for the benefit of
the Noteholders of insured classes of Notes. Under the Note Policy, Financial
Security will unconditionally and irrevocably guarantee to the related
Noteholders full and complete payment of the Scheduled Payments for each
Distribution Date. Financial Security will have a lien on the Contracts and
other documents relating to the Contracts subordinate to the interest of the
Noteholders, which lien cannot be executed upon until all required payments
under the Note Policy have been made. See "The Note Policy" in the prospectus.
The Trust's principal offices will be in Wilmington, Delaware, in care of
Chase Manhattan Bank Delaware, as Owner Trustee, at 1201 Market Street,
Wilmington, Delaware 19801.
CAPITALIZATION
The following table illustrates the capitalization of the Trust as of the
Cut-Off Date, as if the issuance and sale of the Notes had taken place on that
date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $
Class A-2 Notes.............................................
Class A-3 Notes.............................................
Class A-4 Notes.............................................
--------
Total..................................................... $
========
</TABLE>
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware will be the Owner Trustee under the Trust
Agreement. Chase Manhattan Bank Delaware is a Delaware corporation and its
Corporate Trust Office is located at 1201 Market Street, Wilmington, Delaware
19801.
The Owner Trustee will have the rights and duties set forth in the
prospectus under "Certain Information Regarding the Securities -- The Trustees"
and "-- Duties of the Trustees".
S-11
<PAGE> 104
THE CONTRACTS POOL
Each Contract is a retail installment sales contract secured by a Financed
Vehicle originated by a new or used car dealer located in California or one of
the other 42 states listed below or an installment loan secured by a Financed
Vehicle. Most of the Contracts were purchased by WFS; however, a limited number
of Contracts, no more than % of the Cut-Off Date Aggregate Scheduled
Balance, are installment loans originated by WFS directly to consumers or by
other independent auto finance companies which loans were then sold to WFS.
Except as otherwise noted, all references to contracts in this prospectus
supplement include installment loans.
WFS will select the Contracts from its portfolio of fixed-interest rate
contracts. The Contracts were underwritten and purchased or originated by WFS in
the ordinary course of its business operations.
<TABLE>
<S> <C>
Outstanding Principal Balance(1)
Minimum................................................... $
Maximum................................................... $
Average................................................... $
Number of Contracts.........................................
Percentage of New Vehicles(1)............................. %
Percentage of Used Vehicles(1)............................ %
Financed Vehicles(1)........................................
Automobiles............................................... %
Light Duty Trucks......................................... %
Percentage of Rule of 78's Contracts(1)..................... %
Percentage of Simple Interest Contracts(1).................. %
Annual Percentage Rate, ("APR")(1)
Minimum................................................... %
Maximum................................................... %
Weighted Average.......................................... %
Remaining Maturities(1)
Minimum................................................... Months
Maximum................................................... Months
Weighted Average ......................................... Months
Original Maturities
Minimum................................................... Months
Maximum................................................... Months
Weighted Average ......................................... Months
Percent over 60 Months.................................... %
</TABLE>
- -------------------------
(1) Information as of . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
Each of the Contracts is fully amortizing and provides for level payments
over its term, with the portions of principal and interest of each such level
payment being determined on the basis of the Rule of 78's or the simple interest
(actual number of days) method. The amortization of the Rule of 78's Contracts
will result in the outstanding principal balance on each of those Contract being
in excess of the Scheduled Balance of that Contract. For purposes of the Trust,
all Rule of 78's Contracts are amortized on an actuarial basis to prevent
shortfalls of principal payments on the Notes. As amortization on an actuarial
basis produces a faster amortization than does application of
S-12
<PAGE> 105
the Rule of 78's, there will not be a shortfall of principal in any event,
including as a result of prepayments or timely payment to maturity of a Rule of
78's Contract.
The information concerning the Contracts presented in this prospectus
supplement is based upon a pool of retail installment sales contracts and
installment loans originated through .
DISTRIBUTION OF CONTRACTS BY APR(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE CONTRACTS BALANCE BALANCES(2)
--------- --------- --------- -------------
<S> <C> <C> <C>
5.000% to 5.999%........................................... $ %
6.000% to 6.999%...........................................
7.000% to 7.999%...........................................
8.000% to 8.999%...........................................
9.000% to 9.999%...........................................
10.000% to 10.999%..........................................
11.000% to 11.999%..........................................
12.000% to 12.999%..........................................
13.000% to 13.999%..........................................
14.000% to 14.999%..........................................
15.000% to 15.999%..........................................
16.000% to 16.999%..........................................
17.000% to 17.999%..........................................
18.000% to 18.999%..........................................
19.000% to 19.999%..........................................
20.000% to 20.999%..........................................
21.000% to 21.999%..........................................
22.000% to 22.999%..........................................
23.000% to 23.999%..........................................
24.000% to 24.999%..........................................
25.000% to 25.999%..........................................
26.000% to 26.999%..........................................
27.000% to 27.999%..........................................
28.000% to 28.999%..........................................
29.000% to 29.999%..........................................
30.000% and over............................................
-------- -------- ---
Total..................................................... $ %
======== ======== ===
</TABLE>
- -------------------------
(1) Information as of . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
(2) Percentages may not add to 100.00% due to rounding.
S-13
<PAGE> 106
GEOGRAPHIC CONCENTRATION OF THE CONTRACTS(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
STATE(2) CONTRACTS BALANCE BALANCES
-------- --------- --------- -------------
<S> <C> <C> <C>
California..................................................
Arizona.....................................................
Texas.......................................................
Washington..................................................
Florida.....................................................
Oregon......................................................
Colorado....................................................
Ohio........................................................
Nevada......................................................
North Carolina..............................................
Virginia....................................................
Illinois....................................................
South Carolina..............................................
Alabama.....................................................
Tennessee...................................................
Missouri....................................................
Utah........................................................
Georgia.....................................................
Idaho.......................................................
Pennsylvania................................................
Maryland....................................................
Indiana.....................................................
Kentucky....................................................
Michigan....................................................
Massachusetts...............................................
New Jersey..................................................
Wisconsin...................................................
Oklahoma....................................................
Connecticut.................................................
Kansas......................................................
Mississippi.................................................
New Mexico..................................................
Delaware....................................................
Iowa........................................................
West Virginia...............................................
Wyoming.....................................................
Rhode Island................................................
New Hampshire...............................................
Hawaii......................................................
Maine.......................................................
Minnesota...................................................
New York....................................................
Nebraska....................................................
------- -------- ---
Total $ %
======= ======== ===
</TABLE>
- -------------------------
(1) Information as of , 2 . Contracts having Cut-Off Date Aggregate
Scheduled Balances of $ will be included in the Trust.
(2) Based upon the state in which the new or used car dealer which originated a
Contract is located, or in the case of an installment loan, the state in
which the office of the lender which originated the loan is located.
S-14
<PAGE> 107
WEIGHTED AVERAGE LIVES OF THE NOTES
Prepayments on contracts can be measured relative to a payment standard or
model. The model used in this prospectus supplement, the Absolute Prepayment
Model ("ABS"), represents an assumed rate of prepayment each month relative to
the original number of contracts in a pool of contracts. ABS further assumes
that all the contracts in question are the same size and amortize at the same
rate and that each contract in each month of its life will either be paid as
scheduled or be paid in full. For example, in a pool of contracts originally
containing 10,000 contracts, a 1% ABS rate means that 100 contracts prepay each
month. ABS does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
contracts, including the Contracts.
As the rate of payment of principal of each class of Notes will depend on
the rate of payment (including prepayments) of the principal balance of the
Contracts, final payment of any class of Notes could occur significantly earlier
than its Final Scheduled Distribution Date. Reinvestment risk associated with
early payment of the Notes of any class will be borne exclusively by the holders
of those Notes.
The table captioned "Percent of Initial Note Principal Amount at Various
ABS Percentages" (the "ABS Table") has been prepared on the basis of the
characteristics of the Contracts described under "The Contract Pool". The ABS
Table assumes that:
- the Contracts prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases,
- the monthly principal and interest payment on each Contract is scheduled
to be made and is made on the last day of each month and each month has
30 days,
- payments are made on the Notes on each Distribution Date (and each such
date is assumed to be the twentieth day of each applicable month), and
- the Seller does not exercise its Optional Purchase on the earliest
Distribution Date on which such option may be exercised.
The ABS Table indicates the projected weighted average life of each class
of Notes and sets forth the percentage of the initial principal amount of each
class of Notes that is projected to be outstanding after each of the
Distribution Dates shown at various constant ABS percentages.
The ABS Table also assumes that the Contracts have been aggregated into
hypothetical pools with all of the Contracts within each such pool having the
following characteristics and that the level scheduled payment for each of the
pools (which is based on the Aggregate Scheduled Balance, APR, original term to
maturity and remaining term to maturity as of the assumed Cut-Off Date) will be
such that each pool will be fully amortized by the end of its remaining term to
maturity.
<TABLE>
<CAPTION>
REMAINING ORIGINAL
AGGREGATE ASSUMED TERM TO TERM TO
PRINCIPAL CUT-OFF MATURITY MATURITY
POOL BALANCE APR DATE (IN MONTHS) (IN MONTHS)
---- --------- ----- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
[ ].............................................
[ ].............................................
[ ].............................................
Total................................................
</TABLE>
S-15
<PAGE> 108
The actual characteristics and performance of the Contracts will differ
from the assumptions used in preparing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Contracts will prepay at a constant ABS
rate until maturity or that all of the Contracts will prepay at the same ABS
rate. Moreover, the diverse terms of Contracts within each of the hypothetical
pools could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if the
original and remaining terms to maturity of the Contracts are as assumed. Any
difference between those assumptions and the actual characteristics and
performance of the Contracts, or actual prepayment experience, will affect the
percentages of initial amounts outstanding over time and the weighted average
lives of each class of Notes.
PERCENTAGE OF INITIAL NOTE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES
------------------------- ------------------------- -------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.8% 2.5% 0.0% 1.0% 1.8% 2.5% 0.0% 1.0% 1.8% 2.5%
----------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Life (years)(1).......
<CAPTION>
CLASS A-4 NOTES
-------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.8% 2.5%
----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted Average Life (years)(1).......
</TABLE>
- -------------------------
(1) The weighted average life of a Note is determined by (x) multiplying the
amount of each principal payment on a Note by the number of periods (months)
from the date of issuance of the Note to the related Distribution Date, (y)
adding the results and (z) dividing the sum by the original principal amount
of the Note.
This Table has been prepared based on the assumptions described on Page
S-15 (including the assumptions regarding the characteristics and performance of
the Contracts, which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S-16
<PAGE> 109
DELINQUENCY AND CONTRACT LOSS INFORMATION
The following tables set forth (i) the delinquency experience in regard to
contracts originated and serviced by WFS and its affiliates, including contracts
subsequently sold to WFAL as of December 31, 1995 through 1999 and (ii) the loss
experience for such contracts originated and serviced by WFS and its affiliates,
including contracts subsequently sold to WFAL for the years ended December 31,
1995 through 1999. There is no assurance that the future delinquency and loss
experience of the Contracts will be similar to that set forth below. WFS defines
delinquency as being past due based on the contractual due date of the
underlying contract.
CONTRACT DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------------------------------
1999 1998 1997 1996
---------------------- ---------------------- ---------------------- ---------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT(2) CONTRACTS AMOUNT(2) CONTRACTS AMOUNT(2) CONTRACTS
--------- ---------- --------- ---------- --------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Contracts serviced... 524,709 $5,354,385 464,257 $4,367,099 408,958 $3,680,817 341,486
======== ========== ======= ========== ======= ========== =======
Period of
delinquency(3)
31-59 days......... 12,868 $ 107,416 13,885 $ 112,208 6,605 $ 54,450 4,511
60-89 days......... 3,511 29,738 3,966 32,100 2,161 18,652 1,305
90 days or more.... 1,711 14,872 1,768 14,441 918 7,762 567
-------- ---------- ------- ---------- ------- ---------- -------
Total contracts and
amount
delinquent......... 18,090 $ 152,026 19,619 $ 158,749 9,684 $ 80,864 6,383
======== ========== ======= ========== ======= ========== =======
Delinquencies as a
percentage of
number and amount
of contracts
outstanding........ 3.45% 2.84% 4.23% 3.64% 2.37% 2.20% 1.87%
======== ========== ======= ========== ======= ========== =======
<CAPTION>
AT DECEMBER 31,
-----------------------------------
1996 1995
---------- ----------------------
NUMBER OF
AMOUNT(2) CONTRACTS AMOUNT(2)
---------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Contracts serviced... $3,046,585 258,665 $2,209,594
========== ======= ==========
Period of
delinquency(3)
31-59 days......... $ 38,173 2,180 $ 18,557
60-89 days......... 11,470 690 6,143
90 days or more.... 5,144 308 2,701
---------- ------- ----------
Total contracts and
amount
delinquent......... $ 54,787 3,178 $ 27,401
========== ======= ==========
Delinquencies as a
percentage of
number and amount
of contracts
outstanding........ 1.80% 1.23% 1.24%
========== ======= ==========
</TABLE>
- -------------------------
(1) Includes delinquency information relating to those contracts that are owned
by WFS and contracts that were sold to a grantor or owner trust but which
are serviced by WFS.
(2) This amount is net of unearned add-on interest.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
S-17
<PAGE> 110
CONTRACT LOSS EXPERIENCE(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Contracts serviced
At end of period(2)...................................... $5,354,385 $4,367,099 $3,680,817 $3,046,585 $2,209,594
========== ========== ========== ========== ==========
Average during period(2)................................. $4,839,514 $4,006,185 $3,383,570 $2,627,622 $1,886,359
========== ========== ========== ========== ==========
Gross charge offs of contracts during period............. $ 150,518 $ 173,422 $ 136,773 $ 86,464 $ 48,999
Recoveries of contracts charged off in current and prior
periods................................................ 47,581 36,230 34,634 25,946 18,715
---------- ---------- ---------- ---------- ----------
Net charge offs.......................................... $ 102,937 $ 137,192 $ 102,139 $ 60,518 $ 30,284
========== ========== ========== ========== ==========
Net charge offs as a percentage of contracts outstanding
during period.......................................... 2.13% 3.42% 3.02% 2.30% 1.61%
</TABLE>
- -------------------------
(1) Includes loss information for contracts that are owned by WFS and contracts
that were sold to a grantor or owner trust but which are serviced by WFS. It
is the policy of WFS to charge-off all contracts when they become 120 days
delinquent, whether such contract is owned by WFS or serviced by WFS for
others. WFS believes that its charge-off policy is consistent with that
customarily used in the automobile finance industry.
(2) This amount is net of unearned add-on interest.
Net charge-offs as a percentage of contracts outstanding for contracts
originated or purchased and serviced by WFS decreased in 1999 to 2.13%, a 37.7%
decrease from the 3.42% experienced in 1998 following a 13.25% increase over the
3.02% net charge-off level experienced in 1997. Delinquencies, as a percentage
of amount of contracts outstanding increased from 2.20% at year end 1997 to
3.64% at year end 1998 and decreased to 2.84% in 1999, an increase of 65.5% and
decrease of 22.0%, respectively. The decrease in loss and delinquency experience
for 1999 resulted from an increase in the origination of contracts originally
underwritten as prime contracts and completion of WFS' restructuring efforts.
Loss and delinquency experience during 1998 and 1997 for contracts originated
and serviced by WFS was impacted by a variety of factors including an increase
in the percentage of the outstanding contracts which were originally
underwritten in 1997 and 1998 as non-prime contracts, an increase in the number
of personal bankruptcy filings and general economic conditions. Loss and
delinquency experience in 1998 was also impacted by a disruption of collection
efforts arising from WFS' restructuring of its offices throughout the United
States and the continued transitory effect of moving post-repossession
collection efforts to recently created centralized asset recovery and vehicle
recovery centers. As the characteristics of the Contracts may be different than
that of the entire portfolio of contracts originated and serviced by WFS, no
assurances can be given that the performance of the Contracts will be similar.
USE OF PROCEEDS
WFAL will apply the net proceeds from the sale of the Notes (i.e., the
proceeds of the public offering of the Notes minus expenses relating thereto) to
the purchase of the Contracts from WFS.
THE NOTES
GENERAL
The Notes will be issued pursuant to an indenture between the Trust and the
Indenture Trustee to be dated as of (the "Indenture"), a form of
which has been filed as an exhibit to the Registration Statement. You can obtain
a copy of the Indenture (without exhibits) by writing to the Indenture Trustee
at its corporate trust office. The following summary and the information
S-18
<PAGE> 111
contained under "Certain Information Regarding the Securities" describes the
material terms of the Indenture and the Notes. You should, however, review the
provisions of the Notes and the Indenture along with the following summary in
order to have more complete information. Where particular provisions or terms
used in the Notes or the Indenture are referred to, the actual provisions of
such documents (including definitions of terms) are incorporated by reference as
part of such summaries.
Distributions of interest and principal on the Notes will be made on
20, 20, 20 and 20 of
each year (or, if any such day is not a Business Day, on the next succeeding
Business Day) (each, a "Distribution Date"), commencing 20, 2000.
Payments on the Notes on each Distribution Date will be paid to the holders of
record of the related Notes on the Business Day immediately preceding such
Distribution Date or, in the event that Definitive Notes are issued, as of the
15th day of the month immediately preceding the month in which such Distribution
Date occurs (each, a "Record Date").
A "Business Day" will be any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Wilmington, Delaware or Los
Angeles, California are authorized or obligated by law, executive order or
government decree to be closed.
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each Class of Notes will
accrue at the applicable Interest Rate and will be payable to the Noteholders of
each Class on each Distribution Date. Interest on the Class A-1 Notes will be
calculated on the basis of the actual days elapsed in an Interest Period and a
360-day year. Interest on the Class A-2, Class A-3 and Class A-4 Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest accrued but not paid on any Distribution Date will be due on the
immediately succeeding Distribution Date, together with, to the extent permitted
by applicable law, interest on that unpaid interest at the related Interest Rate
set forth under "Summary of Terms -- Securities -- The Terms of the Notes". An
"Interest Period" with respect to any Distribution Date will be the period from
and including the most recent Distribution Date on which interest has been paid
(or from and including the Cut-Off Date with respect to the first Distribution
Date) to but excluding the current Distribution Date. Interest payments on the
Notes will be made from Net Collections after all accrued and unpaid Trustees'
fees and other administrative fees of the Trust and payment of all applicable
servicing compensation to the Master Servicer (collectively, "Trust Fees and
Expenses") have been paid. See "Certain Information Regarding the
Securities -- Distributions on the Notes -- Deposits to the Distribution
Accounts; Priority of Payments".
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders, to the extent described
below, on each Distribution Date in an amount equal to the Note Percentage of
the related Principal Distributable Amount, in each case calculated as described
under "Certain Information Regarding the Securities -- Distributions on the
Notes -- Deposits to the Distribution Accounts; Priority of Payments." Principal
payments on the Notes will be made from Net Collections after all Trust Fees and
Expenses have been paid, and after the Note Interest Distributable Amount has
been distributed. See "Certain Information Regarding the
Securities -- Distributions on the Notes -- Deposits to the Distribution
Accounts; Priority of Payments".
S-19
<PAGE> 112
We will make principal payments on the Notes on each Distribution Date from
the Note Distribution Account in the following order:
(1) to the Class A-1 Notes until the principal amount of the Class A-1
Notes has been reduced to zero;
(2) to the Class A-2 Notes until the principal amount of the Class A-2
Notes has been reduced to zero;
(3) to the Class A-3 Notes until the principal amount of the Class A-3
Notes has been reduced to zero; and
(4) to the Class A-4 Notes until the principal amount of the Class A-4
Notes has been reduced to zero.
The Final Scheduled Distribution Date for a class of Notes represents the
last day on which the outstanding principal amount of the related Notes will be
paid. In no event may the principal paid in respect of a class of Notes exceed
the unpaid principal balance of that class of Notes. See "Certain Information
Regarding the Securities -- Distributions on the Notes -- Deposits to the
Distribution Accounts; Priority of Payments".
The actual date on which the outstanding principal amount of any class of
Notes is paid may be earlier than its Note Final Scheduled Distribution Date
based on a variety of factors, including the factors described under "Certain
Information Regarding the Securities -- Prepayment Considerations", "Certain
Legal Aspects of the Contracts -- Repurchase Obligation" in the prospectus and
"The Seller -- Breach of Representations and Warranties; Defective Contract
Documentation".
OPTIONAL REDEMPTION
Each class of outstanding Notes will be subject to redemption in whole, but
not in part, on any Distribution Date following the last day of a Due Period as
of which an Optional Purchase occurs. An Optional Purchase may occur on any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than $ . The redemption price will equal the
unpaid principal amount of that Class of Notes plus accrued interest on that
amount at the applicable Interest Rate for the related Interest Period.
THE INDENTURE TRUSTEE
Bankers Trust Company will be the Indenture Trustee. The Indenture Trustee
is a New York corporation and its Corporate Trust Office is located at Four
Albany Street, New York, New York 10006.
The Indenture Trustee will have the rights and duties set forth in the
prospectus under "Certain Information Regarding the Securities -- The Trustees"
and "-- Duties of the Trustees".
S-20
<PAGE> 113
EVENTS OF DEFAULT
Upon the occurrence of an Event of Default under the Indenture (as
described under "The Notes -- Events of Default" in the prospectus):
(1) If an Insurer Default has not occurred or is not continuing,
Financial Security can (in addition to its obligation to make Scheduled
Payments on the Notes in accordance with the terms of the Note Policy), but
it is not obligated to, elect to:
- subject to the limitations listed below, first accelerate the
principal of the Notes and then cause the Master Servicer or the
Indenture Trustee to sell or otherwise liquidate all or part of the
property of the Trust, in whole or in part, on any date or dates
following such acceleration as Financial Security, in its sole
discretion, shall elect, and finally to deliver the proceeds to the
Indenture Trustee to distribute in accordance with the terms of the
Note Policy.
(2) If an Insurer Default has occurred and is continuing, the
Indenture Trustee may, or if requested in writing by holders of at least
66 2/3% of the voting interests of all the Notes, shall:
- subject to the limitations listed below, declare the Notes due and
payable at par, together with accrued interest on the Notes.
(3) Notwithstanding any of the foregoing, upon the occurrence of a
Trust Insolvency, if an Insurer Default has occurred and is continuing:
- subject to the limitations listed below, the Notes will become
immediately due and payable at par, together with accrued interest on
the Notes.
(4) No sale or liquidation of the property of the Trust pursuant to
the above provisions may occur if the proceeds from the sale or liquidation
are not sufficient to pay all of the outstanding principal and accrued
interest on the Notes; unless:
- an Insurer Default has not occurred or is not continuing and the
related Event of Default relates to failure of the Trust to pay
interest or principal on any class of Notes or a Trust Insolvency; or
- an Insurer Default has occurred and is continuing and:
(i) holders of 100% of the voting interests of all the Notes
consent to such sale or liquidation; or
(ii) the Trustee determines that the property of the Trust will not
continue to provide sufficient funds for the payment of the principal of
and interest on the Notes, the Trustee provides prior written notice of
that sale or liquidation to each Rating Agency, and holder of at least
66 2/3% of the voting interests of all the Notes consent to that sale or
liquidation.
It is an "Insurer Default" if:
(1) Financial Security fails to perform any of its obligations under
the Note Policy; or
(2) certain events of bankruptcy, insolvency, receivership or
liquidation relating to Financial Security occur.
Further, in the event that an Insurer Default has not occurred or is not
continuing, following the occurrence of an Event of Default, if Financial
Security has not elected to accelerate the principal of the Notes and such Event
of Default is subsequently cured, Financial Security shall not thereafter
S-21
<PAGE> 114
have the right to elect to accelerate the principal of the Notes or to cause the
property of the Trust to be sold or liquidated by reason of that Event of
Default and the rights of all parties shall thereupon be restored as though that
Event of Default had not occurred.
Following the occurrence of an Event of Default and provided that (i) an
Insurer Default has not occurred or is not continuing and (ii) Financial
Security has not elected to accelerate the principal of the Notes, the Indenture
Trustee and the Owner Trustee will continue to submit claims under the Note
Policy for any shortfalls in Scheduled Payments on the Notes. See "The Note
Policy" in the prospectus.
CERTAIN INFORMATION REGARDING THE SECURITIES
PAYMENTS ON THE CONTRACTS
As more fully described in the prospectus under "Certain Information
Regarding the Securities -- Payments on the Contracts", all Net Collections on
or in respect of the Contracts will be deposited in or credited to the
Collection Account or, in limited instances, the Holding Account.
Subject to the remainder of this paragraph, distributions on the Notes will
be made on each Distribution Date out of Net Collections for the related Due
Period plus certain reinvestment earnings on Eligible Investments and any
Advance made by the Master Servicer as described under "The Master
Servicer -- Advances" in the prospectus. The amount of those Net Collections,
reinvestment earnings and Advances on each Distribution Date will be applied as
described under "Distributions on the Notes". Amounts, to the extent available,
will be withdrawn from the Spread Account to cover any shortfalls in
distributions to Noteholders. Under the Note Policy, Financial Security will be
obligated to provide for distribution on the insured Notes on each Distribution
Date the amount, if any, by which the amount of Net Collections and funds
available in the Spread Account is less than the sum of the interest and
principal due on the insured Notes for that Distribution Date and will be
obligated to provide for the payment of Scheduled Payments on the Notes on the
respective Final Scheduled Distribution Dates.
DISTRIBUTIONS ON THE NOTES
General. On or before the fifth Business Day prior to each Distribution
Date (each such date, a "Determination Date"), the Master Servicer will deliver
to the Indenture Trustee, the Owner Trustee, Financial Security and the Rating
Agencies a statement (the "Distribution Date Statement") setting forth, among
other things, the following amounts with respect to the related Due Period and
such Distribution Date:
- the amount of funds in the Collection Account allocable to collections on
the Contracts in the related Due Period (excluding any Advances and
Repurchase Amounts);
- the amount required to repurchase all Contracts repurchased by the Seller
or the Master Servicer during the related Due Period;
- the Advances made by the Master Servicer and the amounts for which the
Master Servicer is entitled to be reimbursed for unreimbursed Advances;
- the amount of Net Collections;
- the Note Interest Distributable Amount;
S-22
<PAGE> 115
- the Note Principal Distributable Amount; and
- the Servicing Fee.
Deposits to the Distribution Accounts; Priority of Payments. On each
Distribution Date, the Master Servicer will allocate amounts on deposit in the
Collection Account with respect to the related Due Period and that Distribution
Date as described below and will instruct the Indenture Trustee to make the
following deposits and distributions in the following amounts and order of
priority (in each case after giving effect to all deposits and distributions of
higher priority):
(1) to the Master Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Due Periods;
(2) to the Indenture Trustee and the Owner Trustee, any accrued and
unpaid Trustees' fees;
(3) to the Note Distribution Account, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses (1)
and (2) above), the Note Interest Distributable Amount to be distributed to
the holders of the Notes at their respective Interest Rates;
(4) to the Note Distribution Account, from any remaining Net
Collections, the Note Principal Distributable Amount (which amount
includes, if such Distribution Date is a Final Scheduled Distribution Date,
the remaining principal amount of the related class of Notes to be
distributed to the holders of such class of Notes), to be distributed to
the holders of the Class A-1 Notes until the principal amount of the Class
A-1 Notes has been reduced to zero, second to the holders of the Class A-2
Notes until the principal amount of the Class A-2 Notes has been reduced to
zero, third to the holders of the Class A-3 Notes until the principal
amount of the Class A-3 Notes has been reduced to zero and fourth to the
holders of Class A-4 Notes until the principal amount of the Class A-4
Notes has been reduced to zero;
(5) to Financial Security, from any remaining Net Collections, any
amounts owing to Financial Security in respect of all payments, if any,
made under the Note Policy for which reimbursement has not yet been made to
Financial Security and any unreimbursed fees, expenses or other amounts
owing to Financial Security under the Insurance Agreement (collectively,
"Unreimbursed Insurer Amounts"); and
(6) in the event that the distributions described in clauses (1)
through (5) above have been funded exclusively from Net Collections, any
remaining Net Collections ("Excess Amounts") will be deposited into the
Spread Account, until the amount on deposit therein equals the Specified
Spread Account Balance, with any remaining Excess Amounts being distributed
as described under "-- Withdrawals from the Spread Account".
If the Notes are accelerated following an Event of Default, amounts
collected following the sale or liquidation of the property of the Trust will be
distributed in the priority described above. See "The Notes -- Events of
Default".
For the purposes hereof, the following terms will have the following
meanings:
The "Aggregate Scheduled Balance" will equal the sum of the Scheduled
Balances of the outstanding Contracts. At the time of initial issuance of the
Notes, the initial aggregate principal amount of the Notes will equal the
Cut-Off Date Aggregate Scheduled Balance.
The "Aggregate Scheduled Balance Decline" will mean, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period
S-23
<PAGE> 116
(or as of the Cut-Off Date in the case of the first Distribution Date) exceeds
the Aggregate Scheduled Balance as of the end of such Due Period.
A "Defaulted Contract" will mean, with respect to any Due Period, a
Contract (i) which is, at the end of such Due Period, delinquent in the amount
of at least two monthly payments or (ii) with respect to which the related
Financed Vehicle has been repossessed or repossession efforts have been
commenced.
A "Due Period" will mean, with respect to any Distribution Date, the
three-month period commencing on the first day of the third month preceding the
month in which that Distribution Date occurs (or commencing on the Cut-Off Date
in the case of the first Distribution Date) to the last day of the month
immediately preceding the month in which that Distribution Date occurs.
A "Liquidated Contract" will be a Contract that (i) has been repurchased by
the Seller or Master Servicer or as to which all of the principal has been paid
prior to its scheduled maturity; (ii) is a Defaulted Contract 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 four-month period referenced in clause (iv) below; (iii) has been
paid in full on or after its scheduled maturity; or (iv) is delinquent as to all
or part of four or more payments of Monthly P&I. Contracts that become
Liquidated Contracts pursuant to clause (ii) or (iv) above and any collections
thereon will thereupon no longer be part of the Trust, although collections
thereon will be deposited in the Collection Account.
The "Note Distributable Amount" will mean, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for that Distribution Date.
The "Note Interest Carryover Shortfall" will mean, with respect to any
Distribution Date and a class of Notes, the excess, if any, of the sum of the
Note Quarterly Interest Distributable Amount for that class for the immediately
preceding Distribution Date plus any outstanding Note Interest Carryover
Shortfall for that class on such preceding Distribution Date, over the amount in
respect of interest that is actually deposited in the Note Distribution Account
with respect to that class on that preceding Distribution Date, plus, to the
extent permitted by applicable law, interest on the amount of interest due but
not paid to Noteholders of such class on that preceding Distribution Date at the
related Interest Rate for the related Interest Period.
The "Note Interest Distributable Amount" will mean, with respect to any
Distribution Date and a class of Notes, the sum of the Note Quarterly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such class of
Notes for that Distribution Date.
The "Note Principal Carryover Shortfall" will mean, as of the close of any
Distribution Date, the excess of the sum of the Note Quarterly Principal
Distributable Amount and any outstanding Note Principal Carryover Shortfall for
the immediately preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on that
Distribution Date.
The "Note Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
for that Distribution Date and any outstanding Note Principal Carryover
Shortfall for the immediately preceding Distribution Date; provided, however,
that the Note Principal Distributable Amount with respect to a class of Notes
shall not exceed the outstanding principal amount of such class of Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount on each
Final Scheduled Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be
S-24
<PAGE> 117
deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the
related class of Notes to zero.
The "Note Quarterly Interest Distributable Amount" will mean, with respect
to any Distribution Date, 90 days of interest (or in the case of the first
Distribution Date, interest accrued from and including the Cut-Off Date to but
excluding such Distribution Date, or in the case of the Class A-1 Notes,
interest for the actual number of days in the applicable Interest Period, based
on a 360-day year) at the related Interest Rate for each class of Notes on the
outstanding principal amount of the Notes of that class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
Noteholders of that class on or prior to that Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of that class
of Notes).
The "Note Quarterly Principal Distributable Amount" will mean, with respect
to any Distribution Date, the Principal Distributable Amount for that
Distribution Date.
The "Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of (i) the Aggregate Scheduled Balance Decline for
such Distribution Date, plus (ii) the aggregate Scheduled Balances as of such
Distribution Date of all Contracts that became Liquidated Contracts pursuant to
clause (i), (ii) or (iv) of the definition of the term "Liquidated Contract"
during the related Due Period.
The "Scheduled Balance" of a Rule of 78's Contract will represent the
present value of the remaining scheduled payments of Monthly P&I due on that
Contract discounted on a monthly basis as described below, while the Scheduled
Balance of a Simple Interest Contract will be its actual principal balance. The
"Monthly P&I" for a Contract will be the installment of principal and interest
due thereunder each month (each such date, a "Due Date") and will be
substantially equal for the term of the Contract. The Scheduled Balance of a
Rule of 78's Contract for the Cut-Off Date and each Due Date will be set forth
in a schedule to the Sale and Servicing Agreement and will be equal to the
present value (determined as discussed below) at each of those dates of all
payments of Monthly P&I on the Contract that are due after such Due Date. That
present value will be determined by discounting (on a monthly basis) each
payment of Monthly P&I from the last day of the month in which that payment of
Monthly P&I is due to the first day of the month in which that Due Date occurs
using a discount rate that will produce a present value at the Cut-Off Date
equal to the outstanding principal balance of the Contract as of the Cut-Off
Date. The interest rate borne by substantially all of the Contracts will not be
less than the weighted average of the Interest Rates on the Closing Date plus
the Servicing Fee Percent.
PAYMENT PRIORITIES OF THE NOTES; THE SPREAD ACCOUNT
General. The rights of the Noteholders to receive distributions with
respect to the Contracts will be subordinated to the rights of the Master
Servicer (to the extent that the Master Servicer has not been reimbursed for any
outstanding Advances and has not been paid all Servicing Fees), the Trustees (to
the extent the Trustees and such other entities have not received all Trust Fees
and Expenses payable to them) and Financial Security (to the extent of any
Unreimbursed Insurer Amounts). In addition, the rights of the Noteholders to
receive distributions with respect to the Contracts will be subject to the
priorities set forth under "-- Distributions on the Notes -- Deposits to the
Distribution Accounts; Priority of Payments," to the extent described above.
Such priorities and subordination are intended to enhance the likelihood of
timely receipt by Noteholders of the full amount of interest and principal
required to be paid to them, and to afford such Noteholders limited protection
against losses in respect of the Contracts.
S-25
<PAGE> 118
The Spread Account. In the event of delinquencies or losses on the
Contracts, the foregoing protection will be affected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Contracts and by the establishment of a segregated trust account in the name of
the Indenture Trustee (the "Spread Account"). The Spread Account will be part of
the Trust. The Indenture Trustee will have a perfected security interest in the
Spread Account and in all amounts deposited in or credited to the Spread Account
as well as all investments made with such deposits and earnings. The Spread
Account will be created with an initial deposit by WFAL on the Closing Date of
an amount equal to $ (the "Spread Account Initial Deposit"). The
Spread Account will thereafter be funded by the deposit therein of any Excess
Amounts in respect of each Distribution Date, until the amount on deposit in the
Spread Account is at least equal to the Specified Spread Account Balance.
Amounts held from time to time in the Spread Account will continue to be
held for the benefit of holders of the Notes and Financial Security and those
amounts will be invested in Eligible Investments. Investment income on monies on
deposit in the Spread Account will be credited to the Spread Account. Any loss
on that investment will be charged to the Spread Account.
Calculation of Specified Spread Account Balance. The "Specified Spread
Account Balance" will be calculated as of the last day of each month (each, a
"Calculation Day") and will equal % of the Aggregate Scheduled Balance on
such Calculation Day, except that if on any Calculation Day (i) the Charge-Off
Percentage for the three calendar month period ending on that Calculation Day
exceeds % or (ii) the Delinquency Percentage for the three calendar month
period ending on that Calculation Day exceeds %, then the Specified Spread
Account Balance shall equal % of the Aggregate Scheduled Balance on that
Calculation Day (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent
Calculation Day). Notwithstanding the foregoing, in no event can the Specified
Spread Account Balance be greater than $ ( % of the Cut-off Date
Aggregate Scheduled Balance) or less than $ (the amount required by the
Rating Agencies and Financial Security); provided, however, it shall not be
greater than the outstanding aggregate principal amount of the Notes if such
amount is less than $ . At no time after the Closing Date will the
Seller, WII, the Master Servicer, Financial Security or any other entity be
required to deposit their own funds into the Spread Account.
The "Charge-Off Percentage" will mean, with respect to any three calendar
month period, the annualized percentage equivalent of the average of the
percentages of charged-off Contracts for each month in such period. For each
month, the percentage of charged-off Contracts shall be the percentage
equivalent of a fraction, the numerator of which is the aggregate Scheduled
Balance for that month of all Contracts that have become Liquidated Contracts
(as specified in clause (ii) or (iv) of the definition of Liquidated Contracts)
during that month, less any Net Liquidation Proceeds received during that month
(and not reflected in prior periods) with respect to those Contracts or from any
Contracts charged-off in prior periods, and the denominator of which is the
aggregate Scheduled Balance of all outstanding Contracts as of the end of the
immediately preceding month. The "Delinquency Percentage" will mean, with
respect to any three calendar month period, the average of the percentages of
delinquent Contracts for each month in that period. For each month the
percentage of delinquent Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the sum of (i) the aggregate Scheduled
Balance of all outstanding Contracts 61 days or more delinquent (after taking
into account permitted extensions), plus (ii) the aggregate Scheduled Balance of
all Contracts in respect of which the related Financed Vehicles have been
repossessed but have not been liquidated (to the extent the related Contract is
not otherwise reflected in clause (i) above), and the denominator of which is
the aggregate Scheduled Balance of all outstanding Contracts, in each case on
the last day of that calendar month.
S-26
<PAGE> 119
The Master Servicer may, from time to time after the date of this
prospectus supplement, and with the approval of Financial Security, request the
Rating Agencies to approve a formula for determining the Specified Spread
Account Balance that is different from that described above and would result in
a decrease in the amount of the Specified Spread Account Balance or the manner
by which the Spread Account is funded. If the Rating Agencies deliver a letter
to the Indenture Trustee, the Owner Trustee and Financial Security to the effect
that the use of any new formulation will not in and of itself result in a
qualification, reduction or withdrawal of its then-current rating of any class
of Notes (without giving effect to the guaranty under the Note Policy of
payments owing to the Noteholders), then the Specified Spread Account Balance
will be determined in accordance with such new formula. The Sale and Servicing
Agreement will accordingly be amended to reflect that new calculation without
the consent of any Noteholder.
WITHDRAWALS FROM THE SPREAD ACCOUNT
Amounts held from time to time in the Spread Account will be withdrawn from
the Spread Account to the extent that the amount on deposit in the Note
Distribution Account is less than the Note Distributable Amount and will be
deposited in the Note Distribution Account.
If the amount on deposit in the Spread Account on any Calculation Day or
any Distribution Date (after giving effect to all deposits thereto or
withdrawals therefrom on that Distribution Date) is greater than the Specified
Spread Account Balance, the Indenture Trustee will distribute any excess first,
to Financial Security, to the extent of any Unreimbursed Insurer Amounts, then
to the Seller until the Seller has received from the Spread Account an aggregate
amount equal to the Spread Account Initial Deposit and finally to the Seller and
WII in the proportions of 99% and 1%, respectively.
Upon any distributions to Financial Security, the Seller or WII, the
Noteholders will have no further rights in, or claims to, such amounts. None of
the Noteholders, the Indenture Trustee, the Owner Trustee, the Seller, WII or
Financial Security will be required to refund any amounts properly distributed
or paid to them, whether or not there are sufficient funds on any subsequent
Distribution Date to make full distributions to the Noteholders. The obligations
of Financial Security under the Note Policy will not be diminished or otherwise
affected by any amounts distributed to Financial Security.
TERMINATION
The obligations of the Master Servicer, the Seller, the Owner Trustee and
Indenture Trustee pursuant to the Trust Agreement, Sale and Servicing Agreement
and the Indenture will terminate upon the earliest to occur of (i) the maturity
or other liquidation of the last Contract and the disposition of any amounts
received upon liquidation of any property remaining in the Trust, (ii) the
payment to you of all amounts required to be paid to you pursuant to such
agreements and (iii) the occurrence of the event described below.
In order to avoid excessive administrative expenses, the Seller will be
permitted to purchase the remaining Contracts from the Trust on any Distribution
Date following the last day of a Due Period as of which the Aggregate Scheduled
Balance is less than 10% of the Cut-Off Date Aggregate Scheduled Balance at a
price equal to the aggregate unpaid principal amount of the Notes, together with
accrued interest thereon for the related Interest Period.
S-27
<PAGE> 120
The Owner Trustee and Indenture Trustee will give you written notice of
termination at least 20 days prior to such termination. The final distribution
to you will be made only upon surrender and cancellation of your Notes at the
office or agency of the related Trustee specified in the notice of termination.
Any funds remaining in the Trust at least 18 months after the date of
termination and after such Trustee has attempted to locate a Noteholder and such
measures have failed, will be distributed to a charity designated by the Master
Servicer.
Any outstanding Notes will be redeemed concurrently with any Optional
Purchase, and the subsequent distribution to the Seller of all amounts required
to be distributed to the Seller pursuant to the Trust Agreement will terminate
the Trust.
PREPAYMENT CONSIDERATIONS
The following information supplements the discussion of prepayment
considerations associated with the purchase of Notes under "Certain Information
Regarding the Securities--Prepayment Considerations" in the prospectus.
While WFS does not maintain specific records for this purpose, it estimates
that, based on its experience over the past five years, the monthly prepayment
rate on the outstanding principal amount of the retail installment sales
contracts and installment loans secured by automobiles and light duty trucks it
has originated and serviced, for itself or others, has been approximately 1.8%
of the outstanding principal amount. However, no assurance can be given that the
Contracts will experience this rate of prepayment or any greater or lesser rate.
WFS does not maintain specific records which would suggest any difference in
prepayment rate for Rule of 78's Contracts as compared with Simple Interest
Contracts.
CAPITALIZATION OF FINANCIAL SECURITY ASSURANCE INC.
The following table sets forth the capitalization of Financial Security and
its wholly owned subsidiaries on the basis of generally accepted accounting
principles as of September 30, 1999 (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
ACTUAL
------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
Deferred Premium Revenue (net of prepaid reinsurance
premiums)................................................. $ 550,165
----------
Surplus Notes............................................... 120,000
----------
Minority Interest........................................... 22,002
----------
Shareholder's Equity:
Common Stock.............................................. 15,000
Additional Paid-In Capital................................ 706,117
Accumulated Other Comprehensive Income (net of deferred
income taxes).......................................... (23,005)
Accumulated Earnings...................................... 450,593
----------
Total Shareholder's Equity.................................. 1,148,705
----------
Total Deferred Premium Revenue, Surplus Notes, Minority.....
Interest and Shareholder's Equity......................... $1,840,872
==========
</TABLE>
For further information regarding Financial Security, see the prospectus
and the documents incorporated therein by reference.
S-28
<PAGE> 121
THE SELLER
WFAL
WFAL is a wholly owned, limited-purpose operating subsidiary of WFS which
was incorporated under the laws of the State of California on October 24, 1985.
The principal office of the Seller is 23 Pasteur, Irvine, California 92618.
WFAL's telephone number is (949) 727-1002.
The Seller was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from the Bank in connection
with its activities as a finance subsidiary of the Bank. Effective May 1, 1995,
ownership of the Seller was transferred to WFS and it is now a limited purpose
operating subsidiary of WFS. WFAL has not and will not engage in any activity
other than (i) acquiring, owning, holding, selling, transferring, assigning,
pledging or otherwise dealing in installment sales contracts and installment
loans secured by vehicles or (ii) authorizing, issuing, selling and delivering
one or more series of obligations consisting of one or more classes of bonds or
pass-through certificates collateralized by installment sales contracts and
installment loans secured by vehicles, which bonds or pass-through certificates
are rated in one of the four highest available categories by at least one
nationally recognized statistical rating agency.
The Seller's articles of incorporation limit its activities to the above
purposes and to any activities incidental to and necessary for such purposes.
BREACH OF REPRESENTATIONS AND WARRANTIES; DEFECTIVE CONTRACT DOCUMENTATION
In the Sale and Servicing Agreement, the Seller will make certain
representations and warranties with respect to each Contract sold by them to the
Trust as of the Closing Date, including but not limited to, perfection,
validity, enforceability of and the absence of liens prior to the security
interest granted pursuant to each Contract, title of the Trust in and to the
Contracts, validity and enforceability of the Contracts as against the related
Obligor, and collision and comprehensive insurance coverage related to each
Financed Vehicle. If any of those representations and warranties is found to
have been incorrect as of the time it was made or any document evidencing or
securing a Contract is found to be defective or not to be contained in the
Contract files, the Indenture Trustee, the Owner Trustee or Financial Security
in and to that Contract, the Seller must cure the defect or eliminate or
otherwise cure the circumstances or condition in respect of which such
representation or warranty is incorrect within 90 days of the discovery thereof.
If the defect is not cured within that 90-day period, the Seller must repurchase
the Contract affected by the defect at a price equal to the outstanding
principal amount of that Contract plus accrued interest thereon to the last Due
Date in the Due Period in which the repurchase occurs.
WFS
GENERAL
WFS Financial Inc ("WFS" or, in its capacity as Master Servicer, the
"Master Servicer") is an auto finance company incorporated in California in
1988. WFS purchases contracts in both the prime and non-prime credit quality
segments of the auto finance market. During the year ended December 31, 1999,
WFS purchased approximately 70% of its contracts from the prime credit quality
segment and 30% from the non-prime segment. WFS purchases the majority of its
contracts from franchised dealers and to a lesser extent from independent
dealers. During the year ended December 31, 1999, contracts for new and used
vehicles represented 22% and 76%, respectively, of WFS volume of contracts
purchased.
S-29
<PAGE> 122
WFS is an operating subsidiary of the Bank. As an operating subsidiary, WFS
is subject to regulation and supervision by the OTS and the Federal Deposit
Insurance Corporation ("FDIC"). At December 31, 1999, WFS had total assets of
$2.1 billion, total liabilities of $1.9 billion and stockholders' equity of $212
million. As of December 31, 1999, WFS' net portfolio of contracts totaled
approximately $1.4 billion.
WFS' revenues are derived principally from contractual servicing fees, the
retained interest on contracts sold for which servicing is retained, interest on
contracts not sold and fee income including late fees, deferment fees,
documentation fees and other fees, and, to a lesser extent, gain on other
investments. Interest on borrowings and general and administrative costs are
WFS' major expense items.
The principal executive offices of WFS are located at 23 Pasteur, Irvine,
California 92618 and its telephone number is (949) 727-1002.
BUSINESS ACTIVITIES
WFS is engaged principally in the business of originating contracts secured
by automobiles and light duty trucks from new and used car dealers and the
public. WFS currently conducts its operations through its principal office and
45 production offices serving 43 states.
THE BANK
GENERAL
Western Financial Bank (the "Bank") is a federally chartered savings
association. As of December 31, 1999, the Bank had total assets of $4.5 billion,
total deposits of $2.2 billion and stockholder's equity of $351 million on a
generally accepted accounting principles basis. The Bank is a wholly owned
subsidiary of Westcorp. Westcorp is a financial services holding company which
operates principally through the Bank, its wholly owned subsidiary, and through
WFS.
As a federally chartered savings association, the Bank is subject to
regulation and supervision by the OTS and the FDIC. The Bank is a member of the
Federal Home Loan Bank of San Francisco.
The principal executive office of the Bank is located at 15750 Alton
Parkway, Irvine, California 92618 and its telephone number is (949) 727-1100.
BUSINESS ACTIVITIES
The Bank provides a wide range of financial services through its community
banking group which includes retail and commercial operations. Retail banking
services are available through a network of 25 retail banking offices located
throughout California. Commercial banking operations
S-30
<PAGE> 123
target selected southern California markets. Western Financial Bank maintains an
ownership interest in WFS which exceeds 80 percent.
WII
WFS Investments, Inc. ("WII") is a wholly owned limited-purpose, operating
subsidiary of WFS. WII was incorporated in California on June 11, 1996, for the
purpose of purchasing an ownership interest in the Trust and similar trusts. WII
is limited by its Articles of Incorporation from engaging in any business
activities not incidental or necessary to its stated purpose.
The principal executive office of WII is located at 23 Pasteur, Irvine,
California 92618 and its telephone number is (949) 727-1002.
S-31
<PAGE> 124
UNDERWRITING
Subject to certain conditions contained in an underwriting agreement (the
"Underwriting Agreement"), (the "Underwriters"), for whom
is acting as representative (the "Representative"), have agreed
to severally purchase from the Seller, and the Seller has agreed to sell to the
Underwriters, the respective principal amounts of each Class of Notes as set
forth opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A-1 NOTES OF CLASS A-2 NOTES OF CLASS A-3 NOTES OF CLASS A-4 NOTES
----------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
................... $ $ $ $
...................
-------- -------- -------- --------
Total...... $ $ $ $
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SELLING REALLOWANCE
CLASS CONCESSION DISCOUNT
----- ---------- -----------
<S> <C> <C>
Class A-1 Notes............................................. % %
Class A-2 Notes............................................. % %
Class A-3 Notes............................................. % %
Class A-4 Notes............................................. % %
</TABLE>
After the initial public offering, the public offering prices of the Notes
and these concessions and discounts may be changed.
The Underwriting Agreement provides that the Underwriters' obligations
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to severally purchase all the Notes offered hereby if
any of the Notes are purchased. In the event of a default under the Underwriting
Agreement by any Underwriter, the Underwriting Agreement provides that, in some
circumstances, purchase commitments of the non-defaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
The Seller and WFS have agreed to jointly and severally indemnify the
Underwriters against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriters may be required to
make in respect thereof.
The Representative has informed the Seller that it does not expect
discretionary sales by the Underwriters to exceed 5% of the principal amount of
the Notes being offered hereby.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
of the Exchange Act of 1934, as amended. Over-allotment involves syndicate sales
in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such
S-32
<PAGE> 125
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the securities to be higher than it would be in the absence
of such transactions.
The closing of the sale of the Notes is conditioned on the issuance of the
Certificates.
Upon receipt of a request by an investor who has received an electronic
prospectus from an Underwriter or a request by the investor's representative
within the period during which there is an obligation to deliver a prospectus,
the Seller or the Underwriters will promptly deliver, or cause to be delivered,
without charge, a paper copy of the prospectus.
LEGAL MATTERS
Certain legal matters with respect to the Notes, including certain federal
and California income tax matters, will be passed upon for the Seller by
Mitchell, Silberberg & Knupp LLP, Los Angeles, California. Brown & Wood LLP, San
Francisco, California will act as counsel for the Underwriters. Certain legal
matters relating to the Note Policy will be passed upon for Financial Security
by Bruce E. Stern, Esq., General Counsel, Financial Security or an Associate
General Counsel of Financial Security and by Clifford Chance Rogers & Wells LLP,
New York, New York.
EXPERTS
The consolidated balance sheets of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for each of
the three years in the period ended December 31, 1998, incorporated by reference
in this prospectus supplement, have been incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
This prospectus supplement contains "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 which provides a
"safe harbor" for these types of statements. The forward-looking statements
reflect the Seller's current views with respect to future events and financial
performance and are subject to certain risks and uncertainties, including those
identified below, which could cause actual results to differ materially from
historical results or those anticipated. The forward-looking terminology such as
"believe," "expect," "may," "will," "should," "continue," and/or the negative
thereof or other comparable expressions which indicate future events and trends
identify forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Seller undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The level of demand for contracts, which is affected by
such external factors as the level of interest rates, the strength of the
various segments of the economy, debt burden held by consumers and demographics
of WFS' lending markets could cause actual results to differ materially from
historical results or those anticipated.
S-33
<PAGE> 126
INDEX OF DEFINITIONS
Set forth below is a list of the capitalized terms used in this prospectus
supplement and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
ABS................................. S-15
Aggregate Scheduled Balance......... S-23
Aggregate Scheduled Balance
Decline........................... S-23
APR................................. S-12
Bank................................ S-30
Business Day........................ S-19
Calculation Day..................... S-26
Closing Date........................ S-5
Cut Off Date........................ S-5
Defaulted Contract.................. S-24
Delinquency Percentage.............. S-26
Determination Date.................. S-22
Distribution Dates.................. S-5
Distribution Date Statement......... S-22
Due Date............................ S-25
Due Period.......................... S-24
ERISA............................... S-9
Event of Default.................... S-21
Excess Amounts...................... S-23
Exchange Act........................ S-3
FDIC................................ S-30
Final Scheduled Distribution Date... S-5
Financed Vehicles................... S-10
Financial Security.................. S-5
Indenture........................... S-18
Indenture Trustee................... S-5
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Insurer Default..................... S-21
Interest Period..................... S-19
Interest Rate....................... S-6
Issuer.............................. S-5
Liquidated Contract................. S-24
Master Servicer..................... S-5
Monthly P&I......................... S-25
Moody's............................. S-6
Note Distributable Amount........... S-24
Note Interest Carryover Shortfall... S-24
Note Interest Distributable
Amount............................ S-24
Note Policy......................... S-8
Note Principal Carryover
Shortfall......................... S-24
Note Principal Distributable
Amount............................ S-24
Note Quarterly Interest
Distributable Amount.............. S-25
Note Quarterly Principal
Distributable Amount.............. S-25
Notes............................... S-5
Optional Purchase................... S-8
OTS................................. S-30
Owner Trustee....................... S-5
Principal Distributable Amount...... S-25
Rating Agencies..................... S-6
Record Date......................... S-19
</TABLE>
S-34
<PAGE> 127
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Rule of 78's Contract -- A Contract
that provides for the payment
by the Obligor of a specified
total number of payments,
payable in equal monthly
installments, which total
represents the principal amount
financed plus add-on interest
in an amount calculated by
using the Rule of 78's. Under
the Rule of 78's, the amount of
a monthly payment allocable to
interest on a Contract is
determined by multiplying the
total amount of add-on interest
payable over the term of the
Contract by a fraction the
denominator of which is a
number equal to the sum of a
series of numbers representing
the number of each monthly
payment due under the Contract
and the numerator of which for
a given month is the number of
payments remaining before the
maturity of the Contract. For
example, with a Contract
providing for 12 payments, the
denominator of each month's
fraction will be 78, the sum of
a series of numbers from 1 to
12. Accordingly, in the example
of a twelve payment Contract,
the fraction for the first
payment is 12/78, for the
second payment 11/78, for the
third payment 10/78, and so on
through the final payment, for
which the fraction is 1/78. The
applicable fraction is then
multiplied by the total add-on
interest payment over the
entire term of the Contract,
and the resulting amount is the
amount of add-on interest
earned that month. The
difference between the amount
of the monthly payment by the
Obligor and the amount of
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
earned add-on interest
calculated for the month is
applied to principal reduction.
Under the law of Texas, a
similar procedure is permitted
for calculating the amount of
add-on interest earned, except
the fraction is derived by
using the sum of the monthly
payments rather than the sum of
the number of months (the 'sum
of the balances'). As a
Contract using either the Rule
of 78's or the sum of the
balances method to compute
interest earned is payable in
equal monthly payments, the
mathematical result is
substantially identical under
either system. Accordingly, for
purposes of convenience, the
term "Rule of 78's" is used
herein in referring to
Contracts with add-on interest
regardless of which system is
used to calculated interest
earned.
Scheduled Balance................... S-25
Securities.......................... S-5
Seller.............................. S-5
Simple Interest Contract -- 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.... S-26
Spread Account...................... S-26
Spread Account Initial Deposit...... S-26
Standard & Poor's................... S-6
Trust............................... S-5
Trust Agreement..................... S-10
Trust Property...................... S-6
UCC-I............................... S-11
Underwriters........................ S-32
Underwriting Agreement.............. S-32
Unreimbursed Insurer Amounts........ S-23
WFAL................................ S-5
WFS................................. S-5
</TABLE>
S-35
<PAGE> 128
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$ AUTOMOBILE LOAN ASSET-BACKED NOTES
WFS FINANCIAL 2000 - OWNER TRUST
WFS FINANCIAL AUTO LOANS, INC
SELLER
WFS FINANCIAL INC
SERVICER
--------------------
PROSPECTUS SUPPLEMENT
--------------------
[UNDERWRITERS]
MARCH , 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 129
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Notes being registered
hereby are estimated as follows:
<TABLE>
<S> <C>
Registration Fee............................................ $ 924,000
Printing and Engraving...................................... 35,000*
Trustees' Fees.............................................. 6,500*
Accounting Fees............................................. 15,000*
Legal Fees and Expenses..................................... 65,000*
Blue Sky Fees and Expenses.................................. 15,000*
Rating Agency Fees.......................................... 35,000*
Miscellaneous Fees.......................................... 4,500*
----------
Total..................................................... $1,100,000
==========
</TABLE>
- ---------------
* Estimated with respect to a typical offering of the Notes.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following applies to both co-registrants WFS Financial Auto Loans, Inc.
and WFS Receivables Corporation:
Section 317(b) of the California Corporations Code (the "Corporations
Code") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any "proceeding" (as defined in
Section 317(a) of the Corporations Code), other than an action by or in the
right of the corporation to procure a judgment in its favor, by reason of the
fact that such person is or was a director, officer, employee or other agent of
the corporation (collectively, an "Agent"), against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if the Agent acted in good faith and in a manner the Agent
reasonably believed to be in the best interest of the corporation and, in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful.
Section 317(c) of the Corporations Code provides that a corporation shall
have power to indemnify any Agent who was or is a party or is threatened to be
made a party to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was an Agent, against expenses actually and reasonably
incurred by the Agent in connection with the defense or settlement of such
action if the Agent acted in good faith and in a manner such Agent believed to
be in the best interest of the corporation and its shareholders.
Section 317(c) further provides that no indemnification may be made
thereunder for any of the following: (i) in respect of any matter as to which an
Agent shall have been adjudged to be liable to the corporation, unless the court
in which such proceeding is or was pending shall determine that such Agent is
fairly and reasonably entitled to indemnity for expenses, (ii) of amounts paid
in settling or otherwise disposing of a pending action without court approval
and (iii) of expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
II-1
<PAGE> 130
Section 317(d) of the Corporations Code requires that an Agent be
indemnified against expenses actually and reasonably incurred to the extent the
Agent has been successful on the merits in the defense of proceedings referred
to in subdivisions (b) or (c) of Section 317.
Except as provided in Section 317(d), and pursuant to Section 317(e),
indemnification under Section 317 shall be made by the corporation only if
specifically authorized and upon a determination that indemnification is proper
in the circumstances because the Agent has met the applicable standard of
conduct, by any of the following: (i) a majority vote of a quorum consisting of
directors who are not parties to the proceeding, (ii) if such a quorum of
directors is not obtainable, by independent legal counsel in a written opinion,
(iii) approval of the shareholders, provided that any shares owned by the Agent
may not vote thereon, or (iv) the court in which such proceeding is or was
pending.
Pursuant to Section 317(f) of the Corporations Code, the corporation may
advance expenses incurred in defending any proceeding upon receipt of an
undertaking by the Agent to repay such amount if it is ultimately determined
that the Agent is not entitled to be indemnified.
Section 317(h) provides, with certain exceptions, that no indemnification
shall be made under Section 317 where it appears that it would be inconsistent
with a provision of the corporation's articles, bylaws, a shareholder resolution
or an agreement which prohibits or otherwise limits indemnification, or where it
would be inconsistent with any condition expressly imposed by a court in
approving a settlement.
Section 317(i) authorizes a corporation to purchase and maintain insurance
on behalf of an Agent for liabilities arising by reason of the Agent's status,
whether or not the corporation would have the power to indemnify the Agent
against such liability under the provisions of Section 317.
The Bylaws (the "Bylaws") of co-registrants WFAL and WFSRC
("Co-Registrants") provide for the indemnification of officers and directors of
the Co-Registrants, to the maximum extent permitted by the Corporations Code,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that such person is or was an officer or director of the Co-Registrants,
and further provides for the advance to such officer or director of expenses
incurred by such officer or director in any such proceeding to the maximum
extent permitted by law. The Bylaws also provide that a Co-Registrant's Board of
Directors may provide for the indemnification of, or advancement of expenses to,
other Agents. The Co-Registrants' Articles of Incorporation provide that the
liability of directors of the Co-Registrants shall be eliminated to the fullest
extent permissible under California law, but contain no specific provisions with
respect to the indemnification of, or advancement of expenses to, Agents.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of WFS Financial Auto Loans, Inc.*
3.2 Bylaws of WFS Financial Auto Loans, Inc.*
3.3 Articles of Incorporation of WFS Receivables Corporation*
3.4 Bylaws of WFS Receivables Corporation*
</TABLE>
II-2
<PAGE> 131
<TABLE>
<C> <S>
4.1.1 Form of Trust Agreement -- one Seller transaction
4.1.2 Form of Trust Agreement -- two Sellers transaction
4.2.1 Form of Indenture -- one Seller transaction
4.2.2 Form of Indenture -- two Sellers transaction
5.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
legality**
8.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
tax matters**
10.1.1 Form of Reinvestment Contract -- one Seller transaction
10.1.2 Form of Reinvestment Contract -- two Sellers transaction
10.2.1 Form of Sale and Servicing Agreement -- one Seller
transaction
10.2.2 Form of Sale and Servicing Agreement -- two Sellers
transaction
10.3.1 Form of Insurance Agreement -- one Seller transaction
10.3.2 Form of Insurance Agreement -- two Sellers transaction
10.4.1 Form of Financial Guaranty Insurance Policy (Notes) -- one
Seller transaction
10.4.2 Form of Financial Guaranty Insurance Policy (Notes) -- two
Sellers transaction
10.5.1 Form of Indemnification Agreement -- one Seller transaction
10.5.2 Form of Indemnification Agreement -- two Sellers transaction
10.6.1 Form of Administration Agreement -- one Seller transaction
10.6.2 Form of Administration Agreement -- two Sellers transaction
20.1 Consolidated financial statements of Financial Security
Assurance Inc. and Subsidiaries as of December 31, 1998 and
1997, and for each of the three years in the period ended
December 31, 1998 (Incorporated by reference from the Annual
Report on Form 10-K of Financial Security Assurance Holdings
Inc. for the year ended December 31, 1998 (file #1-12644) as
filed on or about March 25, 1999)
20.2 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the three month
period ended March 31, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended March 31, 1999
(file #1-12644) as filed on or about May 14, 1999)
20.3 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the six month
period ended June 30, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended June 30, 1999
(file #1-12644) as filed on or about August 14, 1999)
23.1 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 5.1)**
23.2 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 8.1)**
23.3 Consent of Pricewaterhouse Coopers L.L.P.
24.1 Power of Attorney (included at pages II-5 and II-6)*
25.1 Statement of Eligibility and Qualification of Indenture
Trustee
</TABLE>
- -------------------------
* previously filed
** filed herewith and, as to each separate Trust, under Form 8-K
b. FINANCIAL STATEMENT SCHEDULES
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake as follows:
(a) To provide to the Underwriters at the Closing Date specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to provide prompt
delivery to each purchaser.
II-3
<PAGE> 132
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of such Registrants in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrants will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
(e) In accordance with Item 512(a) of Regulation S-K, relating to Rule
415 Offerings,
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental changes in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act of 1933, as amended, if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (e)(1)(i) and (e)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant
II-4
<PAGE> 133
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
II-5
<PAGE> 134
SIGNATURES
SIGNATURES -- CO-REGISTRANT WFS FINANCIAL AUTO LOANS, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended,
co-registrant WFS Financial Auto Loans, Inc. certifies that (i) it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and (ii) it reasonably believes that the securities offered under
this Registration Statement will be "investment grade securities", as such term
is defined under Transaction Requirements B.2 of the Instructions to Form S-3,
at the time of sale of such securities, and has duly caused this Amendment No. 1
to Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on the 2nd day of March 2000.
WFS FINANCIAL AUTO LOANS, INC.,
as co-originator of
WFS FINANCIAL OWNER TRUSTS
By: /s/ J. KEITH PALMER
------------------------------------
J. Keith Palmer
Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement on Form S-3 has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President and Chief March 2, 2000
- ----------------------------------------------------- Executive Officer, Director
Joy Schaefer (Principal Executive Officer)
/s/ LEE A. WHATCOTT Chief Financial Officer, March 2, 2000
- ----------------------------------------------------- Director (Principal Financial
Lee A. Whatcott and Accounting Officer)
* Director March 2, 2000
- -----------------------------------------------------
Thomas A. Wolfe
* Director March 2, 2000
- -----------------------------------------------------
Jeffrey B. Davis
/s/ JAMES R. MAY Director March 2, 2000
- -----------------------------------------------------
James R. May
*By: /s/ LEE A. WHATCOTT
- ----------------------------------------------------
Lee A. Whatcott
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 135
SIGNATURES -- CO-REGISTRANT WFS RECEIVABLES CORPORATION
Pursuant to the requirements of the Securities Act of 1933, as amended,
co-registrant WFS Receivables Corporation certifies that (i) it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and (ii) it reasonably believes that the securities offered under this
Registration Statement will be "investment grade securities", as such term is
defined under Transaction Requirements B.2 of the Instructions to Form S-3, at
the time of sale of such securities, and has duly caused this Amendment No. 1 to
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Las Vegas, State of
Nevada, on the 2nd day of March 2000.
WFS RECEIVABLES CORPORATION,
as co-originator of
WFS FINANCIAL OWNER TRUSTS
By: /s/ DAVID A. GUAY
------------------------------------
David A. Guay
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement on Form S-3 has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DAVID A. GUAY President and Chief Executive March 2, 2000
- ----------------------------------------------------- Officer, Director
David A. Guay (Principal Executive Officer)
/s/ LEE A. WHATCOTT Chief Financial Officer, March 2, 2000
- ----------------------------------------------------- Director (Principal Financial
Lee A. Whatcott and Accounting Officer)
/s/ ILANA TANDOWSKY Director March 2, 2000
- -----------------------------------------------------
Ilana Tandowsky
/s/ STUART BROTMAN Director March 2, 2000
- -----------------------------------------------------
Stuart Brotman
* Director March 2, 2000
- -----------------------------------------------------
Joy Schaefer
*By: /s/ LEE A. WHATCOTT
- ----------------------------------------------------
Lee A. Whatcott
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 136
INDEX TO EXHIBITS
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of WFS Financial Auto Loans, Inc.*
3.2 Bylaws of WFS Financial Auto Loans, Inc.*
3.3 Articles of Incorporation of WFS Receivables Corporation*
3.4 Bylaws of WFS Receivables Corporation*
4.1.1 Form of Trust Agreement -- one Seller transaction
4.1.2 Form of Trust Agreement -- two Sellers transaction
4.2.1 Form of Indenture -- one Seller transaction
4.2.2 Form of Indenture -- two Sellers transaction
5.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
legality**
8.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
tax matters**
10.1.1 Form of Reinvestment Contract -- one Seller transaction
10.1.2 Form of Reinvestment Contract -- two Sellers transaction
10.2.1 Form of Sale and Servicing Agreement -- one Seller
transaction
10.2.2 Form of Sale and Servicing Agreement -- two Sellers
transaction
10.3.1 Form of Insurance Agreement -- one Seller transaction
10.3.2 Form of Insurance Agreement -- two Sellers transaction
10.4.1 Form of Financial Guaranty Insurance Policy (Notes) -- one
Seller transaction
10.4.2 Form of Financial Guaranty Insurance Policy (Notes) -- two
Sellers transaction
10.5.1 Form of Indemnification Agreement -- one Seller transaction
10.5.2 Form of Indemnification Agreement -- two Sellers transaction
10.6.1 Form of Administration Agreement -- one Seller transaction
10.6.2 Form of Administration Agreement -- two Sellers transaction
20.1 Consolidated financial statements of Financial Security
Assurance Inc. and Subsidiaries as of December 31, 1998 and
1997, and for each of the three years in the period ended
December 31, 1998 (Incorporated by reference from the Annual
Report on Form 10-K of Financial Security Assurance Holdings
Inc. for the year ended December 31, 1998 (file #1-12644) as
filed on or about March 25, 1999)
20.2 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the three month
period ended March 31, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended March 31, 1999
(file #1-12644) as filed on or about May 14, 1999)
20.3 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the six month
period ended June 30, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended June 30, 1999
(file #1-12644) as filed on or about August 14, 1999)
23.1 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 5.1)**
23.2 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 8.1)**
23.3 Consent of Pricewaterhouse Coopers L.L.P.
24.1 Power of Attorney (included at pages II-5 and II-6)*
25.1 Statement of Eligibility and Qualification of Indenture
Trustee
</TABLE>
- -------------------------
* previously filed
** filed herewith and, as to each separate Trust, under Form 8-K
<PAGE> 1
EXHIBIT 1.1
WFS FINANCIAL 2000-A OWNER TRUST
$__________
_____ % AUTO RECEIVABLE BACKED NOTES, CLASS A-1
$__________
_____ % AUTO RECEIVABLE BACKED NOTES, CLASS A-2
$__________
_____ % AUTO RECEIVABLE BACKED NOTES, CLASS A-3
WFS FINANCIAL AUTO LOANS, INC.
and
WFS RECEIVABLES CORPORATION,
as Sellers,
and
WFS FINANCIAL INC,
as Master Servicer
UNDERWRITING AGREEMENT
March __, 2000
Bear, Stearns & Co. Inc.
as Representative of the several Underwriters
245 Park Avenue
New York, New York 10167
Dear Sirs:
WFS Financial Auto Loans, Inc., a California corporation ("WFAL"), and WFS
Receivables Corporation, a California corporation ("WFSRC" and together with
WFAL, the "Sellers"), propose to sell to the several underwriters listed on
Schedule I hereto (the "Underwriters") for whom Bear, Stearns & Co. Inc. will be
acting as representative (the "Representative"), as provided in Section 2
hereof, $__________ aggregate principal amount of ____ % Auto Receivable Backed
Notes, Class A-1 (the "Class A-1 Notes"), $__________ aggregate principal amount
of ____ % Auto Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"),
$__________ aggregate principal amount of ____ % Auto Receivable Backed Notes
Class A-4 and $__________ aggregate principal amount of ____ % Auto Receivable
Backed Notes Class A-3 (the "Class A-4 Notes" and, together with the Class A-1
<PAGE> 2
Notes, the Class A-2 Notes and the Class A-3 Notes, the "Notes"). The Notes will
be issued pursuant to an indenture dated as of March 1, 2000 (the "Indenture"),
between the WFS Financial 2000-A Owner Trust (the "Trust") and Bankers Trust
Company, as trustee (the "Indenture Trustee"). Financial Security Assurance Inc.
("Financial Security") will issue a financial guaranty insurance policy for the
exclusive benefit of the holders of the Notes (the "Note Policy"). Each Note
will represent an obligation of the Trust. Simultaneously with the issuance of
the Notes, WFAL and WFSRC will cause the Trust to issue Auto Receivable Backed
Certificates (the "Certificates", and together with the Notes, the "Securities")
to WFAL and WFSRC. The Trust will be created and the Certificates will be issued
pursuant to a trust agreement, dated as of _______, 2000, as amended and
restated as of _______, 2000 (the "Trust Agreement"), among WFAL, WFSRC,
Financial Security and Chase Manhattan Bank Delaware, as Owner Trustee. Each
Certificate will evidence a fractional undivided interest in the Trust.
The assets of the Trust will include, among other things, (i) a pool of
retail installment sales contracts and installment loans (the "Contracts")
secured by new and used automobiles and light-duty trucks financed thereby (the
"Financed Vehicles"), (ii) certain monies due under the Contracts on and after
March 1, 2000, (iii) security interests in the Financed Vehicles, (iv) the Note
Policy, (v) amounts on deposit in certain accounts and (vi) certain rights under
the sale and servicing agreement dated as of March 1, 2000 (the "Sale and
Servicing Agreement"), among the Trust, WFAL, WFSRC and WFS Financial Inc
("WFS"), as Master Servicer. Pursuant to the Indenture, the Trust property will
be held by the Indenture Trustee on behalf of the holders of the Notes. Pursuant
to the administration agreement dated as of March 1, 2000 (the "Administration
Agreement"), among WFAL, WFSRC, WFS, as administrator (in such capacity, the
"Administrator"), the Trust and the Indenture Trustee, the Administrator will
perform certain administrative obligations under the Indenture. Capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed thereto in the Indenture or the Sale and Servicing Agreement, as the
case may be. The Notes are more fully described in a Registration Statement (as
such term is defined in Section 1 hereof) which WFAL and WFSRC have furnished to
the Underwriters.
1. Registration Statement and Prospectuses. WFAL and WFSRC meet the
requirements for use of Form S-3 under Securities Act of 1933 as amended (the
"Act"), and have prepared and filed with the Securities and Exchange Commission
(the "Commission"), a registration statement on Form S-3 (File No. 333-______),
including a preliminary base prospectus and two preliminary prospectus
supplements relating to the offering of auto receivable backed notes, issued in
series from time to time in accordance with Rule 415 under the Act. Such
registration statement has been declared effective by the Commission. If any
post-effective amendment has been filed with respect thereto, prior to the
execution and delivery of this Agreement, the most recent such amendment has
been declared effective by the Commission. The Sellers will file a final base
prospectus and a final prospectus supplement relating to the Notes in accordance
with Rules 415 and 424(b)(2) or (5). The Sellers have included in such
registration statement, as amended at the Effective Date (as hereinafter
defined), all information required by the Act and the rules thereunder to be
included in the prospectus with respect to the Notes and the offering thereof.
As filed, the final prospectus supplement shall include all required
information, with respect to the Notes and the offering thereof and, be in all
substantive respects in the form furnished to the Representative prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes
2
<PAGE> 3
(beyond that contained in the latest preliminary base prospectus and preliminary
prospectus supplement, if any, that have been previously been furnished to the
Representative) as the Sellers have advised the Representative, prior to the
Execution Time, will be included or made therein. The Registration Statement, at
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x). "Rule
415", "Rule 424" and "Regulation S-K refer to such rules or regulations under
the Act.
As used herein, "Execution Time" means the date and time this Agreement
is executed and delivered to the parties hereto. "Effective Date" means the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution and
delivery of this Agreement, was declared effective by the Commission and such
registration statement, as amended at the Effective Date including the exhibits
thereto and any material incorporated by reference therein pursuant to the Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
referred to as the "Registration Statement". "Base Prospectus" means the base
prospectus included in the Registration Statement. "Preliminary Prospectus"
means the preliminary prospectus supplement to the Base Prospectus and the Base
Prospectus which describes the Notes and the offering thereof and is used prior
to the filing of the Prospectus. "Prospectus" shall mean the supplement to the
Base Prospectus that is first filed after the Execution Date pursuant to Rule
424(b), together with the Base Prospectus, as amended at the time of such
filing; provided, however, that a supplement to the Base Prospectus shall be
deemed to have supplemented the Base Prospectus only with respect to the
offering of the series of securities to which it relates. "Prospectus
Supplement" means the supplement to the Base Prospectus included in the
Prospectus.
To the extent that the Underwriters either have provided to WFAL and
WFSRC (i) Collateral Term Sheets (as defined in Section 8) that the Underwriters
have provided to a prospective investor, WFAL and WFSRC have filed such
Collateral Term Sheets as an exhibit to a report on Form 8-K within two business
days of its receipt thereof, or (ii) Structural Term Sheets or Computational
Materials (each as defined in Section 8) that the Underwriters have provided to
a prospective investor, WFAL and WFSRC will file or cause to be filed with the
Commission a report on Form 8-K containing such Structural Term Sheet and
Computational Materials, as soon as reasonably practicable after the date of
this Agreement, but in any event, not later than the date on which the
Prospectus is made available to the Representative in final form.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, Base Prospectus, Preliminary Prospectus or the
Prospectus (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are or are deemed to be incorporated by reference in the Registration Statement,
Preliminary Prospectus or the Prospectus, as the case may be. All references in
this Agreement to the terms "amend", "amendments" or "supplements" with respect
to the Registration Statement, Base Prospectus, Preliminary Prospectus or the
Prospectus shall be deemed to mean and include the filing of any documents under
the Exchange Act of 1934, as amended after the Effective Date of the
Registration Statement or the issue date of Base Prospectus, Preliminary
Prospectus or the Prospectus, as the case may be, which are or are deemed to be
incorporated by reference therein.
3
<PAGE> 4
2. Agreements to Sell and Purchase. WFAL and WFSRC, severally and not
jointly, agree to sell to the Underwriters, and upon the basis of the
representations, warranties and agreements of WFAL, WFSRC and WFS herein
contained and subject to all the terms and conditions of this Agreement, the
Underwriters agree to purchase from WFAL and WFSRC, severally and not jointly,
on the Closing Date referred to in Section 4 hereof, the Notes at a purchase
price of, in the case of (i) the Class A-1 Notes, ___% of the principal amount
thereof, (ii) the Class A-2 Notes, ___% of the principal amount thereof, the
Class A-3 Notes, ___% of the principal amount thereof and (iii) the Class A-4
Notes, ___% of the principal amount thereof, in each case plus accrued interest
at the related Interest Rate from _______ 1, 2000, to but not including the
Closing Date. The Underwriters shall pay __% of the aggregate purchase price to
WFAL and __% of the aggregate purchase price to WFSRC.
3. Terms of Public Offering. Each of WFAL and WFSRC is advised by the
Representative that the Underwriters propose (i) to make a public offering of
the Notes as soon after the execution of this Agreement as in the judgment of
the Representative is advisable and (ii) initially to offer each Class of Notes
upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery of the Notes shall be made at the
office of the Representative at Eleven Madison Avenue, New York, New York 10010
on or about 10:00 A.M., New York City time, on _______, 2000 (such time and date
are referred to herein as the "Closing Date"). Payment for the Notes shall be
made at the offices of WFS Financial Inc, 23 Pasteur, Irvine, California 92618.
The Closing Date and the location of the delivery of and payment for the Notes
may be varied by agreement among the Representative, WFAL and WFSRC.
Each Class of Notes will be initially represented by one or more
certificates in definitive form registered in the name of Cede & Co., the
nominee of The Depository Trust Company ("DTC") (the "DTC Certificates"). The
certificates evidencing the DTC Certificates shall be made available to the
Representative for inspection not later than 10:00 A.M., New York City time, on
the business day immediately preceding the Closing Date. The Notes shall be
delivered to the Underwriters on the Closing Date for their respective accounts
against payment of the purchase price therefor by either (i) certified or
official bank check or checks payable in New York Clearing House (next day)
funds to the order of WFAL and WFSRC or (ii) wire transfer (same day funds), as
the Representative, WFAL and WFSRC shall agree.
Pursuant to Rule 15c6-1(d) under the Exchange Act, the parties hereto
have agreed that the Closing Date will be not later than March __, 2000.
5. Agreements of WFAL and WFSRC. Each of WFAL and WFSRC, jointly and
severally, agrees with each of the Underwriters:
(a) To transmit the Prospectus to the Commission pursuant to
Rule 424(b) by a means reasonably calculated to result in the timely
filing of such Prospectus with the Commission pursuant to Rule 424(b).
(b) To advise the Representative promptly and, if requested by
the Representative, to confirm such advice in writing, (i) when the
Registration Statement
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<PAGE> 5
has become effective and when any post-effective amendment to it becomes
effective, (ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of any of the Notes for
offering or sale in any jurisdiction, or the initiation of any
proceeding for either such purpose, and (iv) of the happening of any
event during the period referred to in paragraph (e) below which, in the
judgment of either WFAL or WFSRC, makes the Registration Statement or
the Prospectus contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, WFAL and WFSRC will make every reasonable effort
to obtain the withdrawal or lifting of such order at the earliest
possible time.
(c) To furnish to the Representative two signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to the
Underwriters such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits, as
the Underwriters may reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective,
or to make any amendment or supplement to the Prospectus of which the
Representative shall not previously have been advised or to which the
Representative shall reasonably object and to prepare and file with the
Commission promptly upon the request of the Representative, any
amendment to the Registration Statement or supplement to the Prospectus
which may be necessary or advisable in connection with the distribution
of any of the Notes by the Underwriters, and to use its best efforts to
cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period as in the opinion of
counsel to the Underwriters a prospectus is required by law to be
delivered in connection with sales by the Underwriters or such dealers
as the Representative shall specify, to furnish to the Underwriters and
each such dealer as many copies of the Prospectus (and of each amendment
or supplement to the Prospectus) as the Underwriters or such dealer may
reasonably request.
(f) If during the period specified in Section 5(e) hereof any
event shall occur as a result of which, in the opinion of either WFAL,
WFSRC or counsel to the Underwriters it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with any law, forthwith to prepare and file
with the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law,
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<PAGE> 6
and to furnish to the Underwriters and to such dealers as the
Representative shall specify, such number of copies thereof as the
Underwriters or such dealers may reasonably request.
(g) Prior to any public offering of the Notes, to cooperate with
the Underwriters and counsel to the Underwriters in connection with the
registration or qualification of the Notes for offer and sale by the
Underwriters and by dealers under the securities or Blue Sky laws of
such jurisdictions as the Underwriters may reasonably request, to
continue such qualification in effect so long as reasonably required for
distribution of the Notes and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; provided that neither WFAL nor WFSRC
shall be required to register or qualify as a foreign corporation or to
take any action which would subject it to service of process in suits,
other than as to matters and transactions relating to the offer and sale
of the Notes, in any jurisdiction where WFAL or WFSRC, as the case may
be, it is not now so subject.
(h) As soon as practicable, but not later than 16 months after
the "effective date" of the Registration Statement, to cause the Trust
to make generally available to holders of the Notes an earnings
statement of the Trust covering a 12 month period beginning not later
than the first day of the Trust's fiscal quarter next following the
"effective date" of the Registration Statement. Such statement shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
Commission.
(i) So long as any of the Notes remain outstanding, promptly to
furnish to the Underwriters (i) the annual statements of compliance,
annual independent certified public accountants' reports and annual
opinions of counsel furnished to the Indenture Trustee or the Owner
Trustee pursuant to the Sale and Servicing Agreement, the Indenture and
the Trust Agreement, as soon as such statements, reports and opinions
are furnished to the Indenture Trustee or the Owner Trustee, (ii) all
documents of WFAL, WFSRC or the Trust required to be distributed to
Noteholders or filed with the Commission pursuant to the Exchange Act or
any order of the Commission thereunder and (iii) such other information
concerning WFAL, WFSRC, the Trust or WFS as the Underwriters may
reasonably request.
(j) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
WFAL or WFSRC prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Notes. To the extent, if any, that the
ratings provided with respect to the Notes by any Rating Agency (as such
term is defined in Section 9(m) hereof) that initially rates the Notes
is conditional upon the furnishing of documents or the taking of any
other actions by either WFAL or WFSRC, WFAL or WFSRC, as the case may
be, shall furnish such documents and take such other actions.
(k) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by the Representative
pursuant to Section 10 hereof) or if for any reason either WFAL or WFSRC
shall be unable to perform its obligations hereunder, to reimburse the
Underwriters for all of their out-of-pocket
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<PAGE> 7
expenses (including the fees and expenses of counsel to the
Underwriters) reasonably incurred by the Underwriters in connection
herewith.
(l) To apply the net proceeds from the offering in the manner
set forth under the caption "Use of Proceeds" in the Prospectus.
(m) WFAL and WFSRC, during the period when the Prospectus is
required to be delivered under the Act or the Exchange Act (including
the rules and regulations under the Act ("Rules and Regulations") and
the rules and regulations of the Commission under the Exchange Act (the
"Exchange Act Regulations")), will file all documents required to be
filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and
the Exchange Act Regulations.
6. Representations and Warranties of WFAL, WFSRC and WFS.
(a)Each of WFAL and WFSRC, jointly and severally, represents and
warrants to, and agrees with, each of the Underwriters that:
(i) The conditions to the use of a registration statement on
Form S-3 under the Act, as set forth in the General Instructions to Form
S-3, have been satisfied with respect to WFAL and WFSRC and the
Registration Statement and the Prospectus fully comply, and any
supplements or amendments thereto will fully comply, in all material
respects with the provisions of the Act.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of either of WFAL or
WFSRC, threatened by the Commission. At the effective date,
respectively, of the Registration Statement and any post-effective
amendments thereto, at the date of this Agreement and the Closing Date,
the Registration Statement and any post-effective amendments or
supplements thereto, each Preliminary Prospectus, the Prospectus and any
amendment or supplement thereto, complied or will comply in all respects
with the requirements of the Act and the Rules and Regulations, and did
not and will not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and on the date of filing the
Prospectus pursuant to Rule 424(b), the date of this Agreement and the
Closing Date, neither the Prospectus nor any amendments or supplements
thereto contained or will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that the
representations and warranties in this subparagraph shall not apply to
statements or omissions in the Registration Statement or the Prospectus
or any Preliminary Prospectus made in reliance upon information
furnished to WFAL and WFSRC in writing by the Underwriters through the
Representative expressly for use therein or to that part of the
Registration Statement which shall constitute the Statement of
Eligibility and Qualification of the Indenture Trustee on Form T-1 (the
"Form T-1") under the Trust Indenture Act of 1939, as amended (the "1939
Act").
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<PAGE> 8
(iii) Each Preliminary Prospectus, the Prospectus and any
amendment or supplement thereto, complied or will comply when so filed
with the requirements of the Act and the Rules and Regulations, and the
Prospectus delivered to the Underwriters for use in connection with the
offering of the Notes was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system, except to the extent permitted
by Regulation S-T.
(iv) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange
Act and Exchange Act Regulations, and, when read together with the other
information in the Prospectus, at the date of this Agreement and at the
Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(v) The Notes conform to the description thereof contained in
the Prospectus and are duly and validly authorized and (i) when the
Certificates have been executed, authenticated and delivered in
accordance with the Trust Agreement, such Certificates will be entitled
to the benefits and security afforded by the Trust Agreement and will
constitute legal, valid and binding obligations of the Trust enforceable
in accordance with their terms and the terms of the Trust Agreement, and
(ii) when the Notes have been executed, authenticated and delivered in
accordance with the Indenture and delivered to and paid for by the
Underwriters as provided herein, such Notes will be entitled to the
benefits and security afforded by the Indenture and will constitute
legal, valid and binding obligations of the Trust enforceable in
accordance with their terms and the terms of the Indenture, subject to
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(vi) The execution and delivery by each of WFAL and WFSRC of the
Administration Agreement, the Indenture, the Sale and Servicing
Agreement, the Trust Agreement, the indemnification agreement dated as
of March 1, 2000 (the "Indemnification Agreement"), among WFAL, WFSRC,
WFS, Financial Security and the Representative, the insurance, indemnity
and pledge agreement dated as of March 1, 2000 (the "Insurance
Agreement" and, together with the Administration Agreement, the
Indemnification Agreement, the Indenture, the Sale and Servicing
Agreement and the Trust Agreement, the "Basic Documents"), among the
Trust, WFAL, WFSRC, WFS, Financial Security and the Indenture Trustee,
and this Agreement are within the corporate power of WFAL or WFSRC, as
the case may be, and have been duly authorized by all necessary
corporate action on the part of WFAL or WFSRC, as the case may be, and
neither the issuance and sale of the Notes to the Underwriters, nor the
execution and delivery by WFAL and WFSRC of this Agreement and the Basic
Documents to which each of them is a party, nor the consummation by WFAL
and WFSRC of the transactions
8
<PAGE> 9
herein and therein contemplated, nor compliance by WFAL and WFSRC with
the provisions hereof or thereof, will conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, the articles of incorporation or bylaws of WFAL or WFSRC, as the
case may be, or any indenture, mortgage, deed of trust or other
agreement or instrument to which either of WFAL or WFSRC is now a party
or by which it is bound, or any order of any court or government agency
or authority entered in any proceeding to which either of WFAL or WFSRC
was or is now a party or by which it is bound.
(vii) Each of WFAL and WFSRC has been duly incorporated and is
validly existing in good standing under the laws of the State of
California and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary, except such jurisdictions, if any, in which the
failure to be so qualified will not have a material adverse effect on
its business or properties; each of WFAL and WFSRC holds all material
licenses, certificates and permits from all governmental authorities
necessary for the conduct of its business as described in the
Prospectus; and each of WFAL and WFSRC has the corporate power and
authority to own its properties and conduct its business as described in
the Prospectus.
(viii) Each of this Agreement and the Basic Documents to which
either of WFAL or WFSRC is a party, when executed and delivered as
contemplated thereby, will have been duly authorized, executed and
delivered by such entity and will constitute, when so executed and
delivered, a legal, valid and binding instrument enforceable against
such entity in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and, in the case of this Agreement and the
Indemnification Agreement, except as rights to indemnity and
contribution hereunder and thereunder may be limited by applicable law;
each of the Basic Documents conforms to the description thereof
contained in the Prospectus; and the Indenture has been duly qualified
under the 1939 Act.
(ix) At the Closing Date, each of WFAL and WFSRC will have good
and marketable title to the Contracts listed in Schedule A to the Sale
and Servicing Agreement, free and clear of any lien, mortgage, pledge,
charge, security interest or other encumbrance (subject to the security
interest afforded to Financial Security under the Insurance Agreement);
and each of WFAL's and WFSRC's assignment and delivery of the Contract
Documents to the Trust will vest in the Trust the good and marketable
title purported to be conveyed thereby (subject to the security interest
afforded to Financial Security under the Insurance Agreement).
(x) The Trust's assignment of the Trust Estate to the Indenture
Trustee pursuant to the Indenture will vest in the Indenture Trustee,
for the benefit of the Noteholders, a first priority perfected security
interest therein, subject to no prior lien, mortgage, pledge, charge,
security interest or other encumbrance, except that such
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<PAGE> 10
security interest will be subject to the security interest afforded to
Financial Security under the Insurance Agreement.
(xi) The representations and warranties made by each of WFAL and
WFSRC in the Sale and Servicing Agreement and in the Officers'
Certificates delivered pursuant to the Basic Documents to which each of
WFAL and WFSRC is a party will be true and correct at the Closing Date.
(xii) Since December 31, 1999, there has been no material
adverse change or development involving a prospective material adverse
change in or affecting particularly the condition, financial or
otherwise, of either of WFAL or WFSRC, or the earnings, affairs or
business prospects of either of WFAL or WFSRC, whether or not arising in
the ordinary course of business, except as set forth in or contemplated
in the Prospectus.
(b)WFS represents and warrants to the Underwriters that the
representations and warranties of WFAL and WFSRC set forth in paragraph (a)
above are true and correct, and to the further effect that:
(i) WFS has been duly incorporated and is validly existing in
good standing under the laws of the State of California and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction where the character of its
properties or the nature of its activities makes such qualification
necessary, except such jurisdictions, if any, in which the failure to be
so qualified will not have a material adverse effect on either the
business or properties of WFS; WFS holds all material licenses,
certificates and permits from all governmental authorities necessary for
the conduct of its business as described in the Prospectus; and WFS has
the corporate power and authority to own its properties and conduct its
business as described in the Prospectus.
(ii) The execution and delivery by WFS of this Agreement and the
Basic Documents to which it is a party are within the corporate power of
WFS and have been duly authorized by all necessary action on the part of
WFS; and neither the execution and delivery by WFS of this Agreement and
the Basic Documents to which it is a party, nor the consummation by WFS
of the transactions herein and therein contemplated, nor compliance by
WFS with the provisions hereof and thereof, will conflict with or result
in a breach of any of the terms or provisions of, or constitute a
default under, the articles of incorporation or bylaws of WFS or any
indenture, mortgage, deed of trust or other agreement or instrument to
which WFS is now a party or by which it is bound, or any order of any
court or government agency or authority entered in any proceeding to
which WFS was or is now a party or by which it is bound.
(iii) Each of this Agreement and each Basic Document to which
WFS is a party has been duly authorized, executed and delivered by WFS
and constitutes a valid and binding agreement of WFS, enforceable
against WFS in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, subject to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and, in
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<PAGE> 11
the case of this Agreement and the Indemnification Agreement, except as
rights to indemnity and contribution hereunder and thereunder may be
limited by applicable law.
(iv) The Contracts transferred to WFAL from WFS and in part
further transferred from WFAL to WFSRC on the Closing Date were free and
clear of all liens (including tax liens), mortgages, pledges, charges,
security interests and other encumbrances at the time of such transfer
(subject to the security interest afforded to Financial Security under
the Insurance Agreement).
(v) WFS has the power and authority to own its properties, to
conduct its business as described in the Prospectus and to enter into
and perform its obligations under each of the Basic Documents to which
it is a party.
(vi) Since December 31, 1999, there has been no material adverse
change or development involving a prospective material adverse change in
or affecting particularly the condition, financial or otherwise, of WFS,
or the earnings, affairs or business prospects of WFS, whether or not
arising in the ordinary course of business, except as set forth in or
contemplated in the Prospectus.
7. Payment of Expenses. WFAL and WFSRC will pay all costs, expenses,
fees and taxes incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing, filing and distribution
under the Act of the Registration Statement as first filed (including all
financial statements, exhibits and documents incorporated by reference), all
Computational Materials, each Structural Term Sheet, each Collateral Term Sheet,
each Preliminary Prospectus and all amendments and supplements to any of them
(including the delivery to the Underwriters of copies thereof), (ii) the
preparation of this Agreement, (iii) the preparation and issuance of the
Securities and delivery of the Notes to the Underwriters, (iv) the fees and
disbursements to WFAL's and WFSRC's counsel and accountants, (v) the
registration or qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the jurisdictions referenced in Section 5(g)
hereof (including in each case the filing fees and the fees and disbursements of
counsel to the Underwriters relating to such registration or qualification and
in connection with the preparation of any Blue Sky or legal investment survey
relating thereto), (vi) the printing or copying and delivery to the Underwriters
of any dealer agreement, Preliminary and Supplemental Blue Sky Memoranda, legal
investment memoranda and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection with the offering of the
Notes (including in each case the disbursements of counsel to the Underwriters
relating to such reproducing and delivery) and (vii) any fees paid to Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc. ("Standard & Poor's") in connection with the rating
of the Notes.
8. Indemnification and Contribution.
(a) WFAL, WFSRC, and WFS jointly and severally agree to indemnify and
hold harmless each Underwriter from and against any and all losses, claims,
damages, liabilities and judgments, joint or several, to which such Underwriter
may become subject under the Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages, liabilities or judgments (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
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<PAGE> 12
untrue statement of a material fact contained in the Registration Statement,
each Preliminary Prospectus (if any), the Prospectus or any amendment or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and WFAL, WFSRC and WFS will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability, judgment or action as such expenses are incurred; provided, however,
that neither WFAL, WFSRC nor WFS will be liable in any such case to the extent
that any such loss, claim, damage, liability or judgment arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any such document in reliance upon and in conformity with
written information furnished to WFAL or WFSRC by the Underwriters through the
Representative specifically for use therein.
(b) Each Underwriter, severally but not jointly, agrees to indemnify and
hold harmless WFAL, WFSRC and WFS from and against any and all losses, claims,
damages, liabilities and judgments, joint or several, to which WFAL, WFSRC and
WFS may become subject under the Act or the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or judgments (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
(ii) any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information relating to such Underwriter
furnished to WFAL, WFSRC or WFS by such Underwriter through the Representative
specifically for use therein, and will reimburse any legal or other expenses
reasonably incurred by WFAL, WFSRC or WFS in connection with investigating or
defending any such loss, claim, damage, liability, judgment or action as such
expenses are incurred, it being understood that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus Supplement furnished on behalf of each Underwriter: the concession
and reallowance figures appearing in the first and second paragraphs under the
caption "Underwriting" and the information regarding price stabilization
contained in the fifth paragraph under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
Section 8(a) or 8(b), notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve such indemnifying party from any liability that it may have to any
indemnified party otherwise than under Section 8(a) or 8(b). In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election to so assume the defense thereof and approval by the indemnified party
of the counsel appointed by the indemnifying party, the indemnifying party
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<PAGE> 13
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. The
indemnifying party shall not be liable for any settlement of any such action
effected without the written consent of the indemnifying party but, if settled
with the written consent of the indemnifying party, the indemnifying party
agrees that each person so consenting agrees to indemnify and hold harmless each
such indemnified party from and against any loss or liability by reason of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement (i) includes an unconditional release of such indemnified
party from all liability on any claims that are the subject matter of such
proceeding or (ii) does not include a statement as to, or an admission of,
fault, culpability, or a failure to act by or on behalf of an indemnified party
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments referred to in subsection (a) or (b) above: (i) in
such proportion as is appropriate to reflect the relative benefits received by
WFAL, WFSRC and WFS on the one hand and such Underwriter(s) on the other from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of WFAL, WFSRC and WFS on the one hand and such
Underwriter(s) on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
WFAL, WFSRC and WFS on the one hand and such Underwriter(s) on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Notes (before deducting expenses) received by WFAL, WFSRC and
WFS and the total underwriting discounts and commissions received by such
Underwriter(s), bear to the total price to the public of the Notes, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of WFAL, WFSRC, WFS and the relevant Underwriter(s) shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by WFAL, WFSRC, WFS or the relevant
Underwriter(s) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
WFAL, WFSRC, WFS and the Underwriters agree that it would not be just
and equitable if contribution pursuant to Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Underwriter (except as may be
provided in the agreement among underwriters
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<PAGE> 14
relating to the offering of the Notes) shall be required to contribute any
amount in excess of the underwriting discount or commission applicable to the
Notes purchased by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of WFAL, WFSRC and WFS under this Section shall be
in addition to any liability any of WFAL, WFSRC or WFS may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any of the Underwriters within the meaning of the Act; and the
obligations of the Underwriters under this Section shall be in addition to any
liability that the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of WFAL, WFSRC or WFS, to
each officer of WFAL, WFSRC or WFS who has signed the Registration Statement and
to each person, if any, who controls WFAL, WFSRC or WFS within the meaning of
the Act.
(f) Each Underwriter agrees to deliver to the WFAL, WFSRC and WFS no
later than the date prior to the date on which the Form 8-K is required to be
filed pursuant to Section 1 with a copy of its Derived Information (defined
below) for filing with the Commission on Form 8-K.
(g) Each Underwriter agrees, assuming all information relating to the
offering and sale of the Notes provided to the Underwriters by WFAL, WFSRC or
WFS ("Provided Information") is accurate and complete in all material respects,
to severally and not jointly indemnify and hold harmless each of WFAL, WFSRC and
WFS from and against any and all losses, claims, damages, liabilities and
judgments, joint or several, to which WFAL, WFSRC or WFS may become subject
under the Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or judgments (or actions in respect thereof) arise out of
or are based upon any untrue statement of a material fact contained in the
Derived Information provided by such Underwriter, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that in no case shall any Underwriter
be responsible for any amount in excess of the underwriting discount applicable
to the Notes purchased by such Underwriter. The obligations of each of the
Underwriters under this Section 8(g) shall be in addition to any liability which
such Underwriter may otherwise have.
WFAL, WFSRC, and WFS jointly and severally agree to indemnify and hold
harmless each Underwriter from and against any and all losses, claims, damages,
liabilities and judgments, joint or several, to which such Underwriter may
become subject under the Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or judgments (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Provided Information, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
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<PAGE> 15
incurred by him, her or it in connection with investigating or defending or
preparing to defend any such loss, claim, damage, liability or action as such
expenses are incurred. WFAL, WFSRC and WFS's obligation under this Section shall
be in addition to any liability which they may otherwise have to the
Underwriters.
The procedures set forth in Section 8(c) shall be equally applicable to
this Section 8(g).
The term "Derived Information" means such portion, if any, of the
information delivered to WFAL, WFSRC and WFS pursuant to Section 8(f) for filing
with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference;
(ii) does not constitute Provided Information; and
(iii) is of the type of information defined as Collateral Term
Sheets, Structural Term Sheets or Computational Materials (as such terms
are interpreted in the No-Action Letters).
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have
the respective meanings assigned to them in the February 13, 1995 letter (the
"PSA Letter") of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. The term "Computational Materials" has the
meaning assigned to it in the May 17, 1994 letter (the "Kidder letter" and
together with the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf
of Kidder, Peabody & Co., Inc. (which letter, and the SEC staff's response
thereto, were publicly available May 20, 1994).
9. Conditions. The several obligations of the Underwriters to purchase
the Notes under this Agreement are subject to the satisfaction of each of the
following conditions:
(a) All the representations and warranties of WFAL, WFSRC and
WFS contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing
Date.
(b) All actions required to be taken and all filings required to
be made by the Sellers under the Act prior to the sale of the Notes
shall have been duly taken or made, the Registration Statement shall
have become effective not later than 5:30 P.M., New York City time, on
the date of this Agreement or at such later date and time as the
Representative may approve in writing, and as of the Closing Date no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending before or contemplated by the
Commission.
(c) Since December 31, 1999, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the
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<PAGE> 16
condition, financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the ordinary course of
business, of WFAL, WFSRC or WFS. On the Closing Date, the Representative
shall have received (i) a certificate dated the Closing Date, signed by
the President or a Vice President of WFAL, confirming the matters set
forth in paragraphs (a) (as to the representations and warranties of
WFAL only), (b) and (c) of this Section (as to WFAL only), (ii) a
certificate dated the Closing Date, signed by the President or a Vice
President of WFSRC, confirming the matters set forth in paragraphs (a)
(as to the representations and warranties of WFSRC only), (b) and (c) of
this Section (as to WFSRC only), and (iii) a certificate dated the
Closing Date, signed by the President or a Vice President of WFS,
confirming the matters set forth in paragraphs (a) and (c) of this
Section. Such officers may in each certificate rely upon the best of
their information and belief as to proceedings contemplated.
(d) The Representative shall have received the opinion of
Mitchell, Silberberg & Knupp LLP, counsel for WFAL and WFSRC, dated the
Closing Date and satisfactory to counsel to the Underwriters, to the
effect that:
(i) Each of WFAL and WFSRC has been duly incorporated
and is validly existing and in good standing under the laws of
the State of California, with corporate power and authority to
own its properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
this Agreement and each of the Basic Documents to which it is a
party, and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the location of its
properties or the character of its operations makes such
qualification necessary, except such jurisdictions, if any, in
which the failure to be so qualified will not have a material
adverse effect on either business or properties of WFAL or
WFSRC, as the case may be.
(ii) The statements in each of the Base Prospectus and
the Prospectus Supplement set forth under the captions "Summary
of Terms", "The Notes", "The Contracts Pool" and "Certain
Information Regarding the Securities", insofar as such
statements purport to summarize certain provisions of the Notes
or the Basic Documents, provide a fair summary of such
provisions, and the statements in the Base Prospectus under the
captions "Summary of Prospectus--Tax Status and "--ERISA
Considerations", "Certain Legal Aspects of the Contracts",
"Federal and California Income Tax Consequences" and "ERISA
Considerations" and in the Prospectus Supplement under the
captions "Summary of Terms --Tax Status", "--ERISA
Considerations" and "ERISA Considerations", to the extent such
statements constitute matters of law or legal conclusions with
respect thereto, have been prepared or reviewed by such counsel
and are correct in all material respects.
(iii) For federal income tax purposes, the Notes will be
considered debt, the Trust will not be an association taxable as
a corporation and the Trust will not be a publicly traded
partnership taxable as a corporation. The trust fund created by
the Trust Agreement will not, for California income tax
purposes, be classified as an association taxable as a
corporation, and Noteholders who are not residents
16
<PAGE> 17
of or otherwise subject to tax in California will not, solely by
reason of their acquisition of an interest in any Class of
Notes, be subject to California income, franchise, excise or
similar taxes with respect to interest on any Class of Notes or
with respect to any of the other Trust property.
(iv) Each of this Agreement and the Indemnification
Agreement has been duly authorized, executed and delivered by
WFAL and WFSRC.
(v) Each Basic Document (other than the Indemnification
Agreement) to which each of WFAL or WFSRC is a party has been
duly authorized, executed and delivered by WFAL or WFSRC, as the
case may be, and, assuming due authorization, execution and
delivery by the parties thereto, constitutes a legal, valid and
binding agreement of WFAL or WFSRC, as the case may be,
enforceable against WFAL or WFSRC, as the case may be, in
accordance with its terms, except as enforceability thereof may
be subject to or limited by bankruptcy, insolvency,
reorganization or other laws, provisions or principles now or
hereafter in effect affecting the enforcement of creditors'
rights generally, except that no opinion is expressed as to the
availability of remedies of specific performance, injunction or
other forms of equitable relief, all of which may be subject to
certain tests of equity jurisdiction, equitable defenses and the
discretion of the court before which any proceeding therefor may
be brought.
(vi) Assuming the due authorization, execution and
delivery of each Basic Document to which the Trust is a party by
the Owner Trustee, on behalf of the Trust, and by each other
party thereto (other than WFAL, WFSRC and WFS) each such Basic
Document constitutes the valid, legal and binding obligation of
the Trust enforceable against the Trust in accordance with its
terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other laws now or
hereafter in effect affecting the enforcement of creditors'
rights generally, and except that no opinion is expressed as to
the availability of remedies of specific performance, injunction
or other forms of equitable relief, all of which may be subject
to certain tests of equity jurisdiction, equitable defenses and
the discretion of the court before which any proceeding therefor
may be brought.
(vii) The Certificates, when executed, authenticated and
delivered in accordance with the Trust Agreement, will be
validly issued and outstanding and entitled to the benefits of
the Trust Agreement.
(viii) The Notes, when executed and authenticated in
accordance with the Indenture and delivered and paid for
pursuant to this Agreement, will be entitled to the benefits of
the Indenture and will constitute legal, valid and binding
obligations of the Trust, entitled to the benefits of the
Indenture, and enforceable in accordance with their terms and
the terms of the Indenture (subject to the security interest
afforded to Financial Security under the Insurance Agreement),
subject, with respect to each of the Indenture and the Notes, to
applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws
17
<PAGE> 18
affecting creditors' rights generally, and except that no
opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
(ix) As to each security interest in a Financed Vehicle
created by a Contract, no filing or other action is necessary to
perfect or continue the perfected status of such security
interest as against creditors of or transferees from the obligor
under such Contract, so long as such Financed Vehicle is not
removed from the State of California for a period longer than
four months, or before the end of such four-month period, WFS
perfects such security interest under applicable law; provided
that (A) no opinion is rendered as to a security interest in a
Financed Vehicle as to which neither a properly endorsed
certificate of title naming WFS or an affiliate or predecessor
of WFS as legal owner nor an application for an original
registration together with an application for registration of
WFS or an affiliate or predecessor of WFS as legal owner, has
been deposited with the California Department of Motor Vehicles,
and (B) no opinion is given as to the enforceability of the
security interest in a Financed Vehicle as against a subsequent
owner of a Financed Vehicle or a holder or assignee of a
certificate of title relating to such Financed Vehicle through
fraudulent or negligent transfer of such certificate of title.
(x) The Sale and Servicing Agreement, together with the
filing referred to in this subsection, creates and perfects the
ownership interest of the Trust in the Contracts which is a
valid first priority ownership interest (subject to the security
interest afforded to Financial Security under the Insurance
Agreement); a financing statement with respect to the Contracts
has been filed with the Secretary of State of the State of
California pursuant to the California Uniform Commercial Code,
as amended, and with the Secretary of State of the State of
Delaware, pursuant to the Delaware Uniform Commercial Code, as
amended; and no other filings in any jurisdiction or any other
actions are necessary to perfect the ownership interest of the
Trustee in the Contracts against any third parties.
(xi) The Indenture constitutes a grant by the Trust to
the Indenture Trustee of a valid security interest in the
Contracts, the security interests in the Financed Vehicles
securing the Contracts and the proceeds of each of the foregoing
(subject to the security interest afforded to Financial Security
under the Insurance Agreement), which security interest has been
perfected by the filing of financing statements with the
Secretary of State of the State of California and the Secretary
of State of the State of Delaware, each as pursuant to the
Uniform Commercial Code as in effect in such state. No filing or
other action, other than the filing of the financing statements
referred to above, is necessary to perfect and maintain the
interest or the security interest of the Indenture Trustee in
the Contracts, the security interests in the Financed Vehicles
securing the Contracts
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<PAGE> 19
and the proceeds of each of the foregoing against third parties
(subject to the security interest afforded to Financial Security
under the Insurance Agreement).
(xii) WFAL's assignment and delivery of the Contracts to
the Trust will vest in the Trust all of WFAL's right, title and
interest therein, subject to no prior lien, mortgage, security
interest, pledge, adverse claim, charge or other encumbrance,
except that such security interest will be subject to the
security interest afforded to Financial Security under the
Insurance Agreement.
(xiii) WFSRC's assignment and delivery of the Contracts
to the Trust will vest to the Trust a first priority perfected
security interest therein, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other
encumbrance, except that such security interest will be subject
to the security interest afforded to Financial Security under
the Insurance Agreement.
(xiv) The Trust's assignment of the Contracts to the
Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the Noteholders, a first
priority perfected security interest therein, subject to no
prior lien, mortgage, security interest, pledge, adverse claim,
charge or other encumbrance.
(xv) The Registration Statement has become effective
under the Act and the Prospectus has been filed with the
Commission, pursuant to Rule 424(b) and, to the best of the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are
pending or contemplated.
(xvi) No order, consent or other authorization or
approval of any court, public board or governmental body is
legally required for the performance by either of WFAL or WFSRC
of its respective obligations under this Agreement or any of the
Basic Documents to which it is a party, except such as have been
obtained under the Act, such as may be required under the Blue
Sky laws of any jurisdiction in connection with the purchase and
distribution of the Notes by the Underwriters, such as have been
obtained from the Office of Thrift Supervision and such other
approvals (specified in such opinion) as have been obtained.
(xvii) Neither the consummation of any of the
transactions contemplated by this Agreement and each of the
Basic Documents to which WFAL or WFSRC is a party nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the
respective articles of incorporation or bylaws of WFAL or WFSRC,
as the case may be, or the terms of (A) any indenture or other
agreement or instrument known to such counsel and to which WFAL
or WFSRC, as the case may be, or any of its subsidiaries is a
party or is bound or (B) any judgment, order or decree known to
such counsel to be applicable to WFAL, WFSRC or any of their
respective subsidiaries, as the case may be, of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over WFAL, WFSRC or any of their
respective
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<PAGE> 20
subsidiaries, as the case may be, except, in the case of clauses
(A) and (B), for defaults, breaches or violations that do not,
in the aggregate, have an adverse material effect on WFAL or
WFSRC, as the case may be.
(xviii) To the best knowledge of such counsel, there is
no legal or governmental proceeding pending or threatened to
which either of the Trust, WFAL or WFSRC is, or is threatened to
be, a party or of which the business or property of the Trust,
WFAL or WFSRC is, or is threatened to be, the subject that is
material to the business or financial condition of the Trust,
WFAL or WFSRC and is not disclosed in the Prospectus.
(xix) There is no contract or other document known to
such counsel of a character required to be described in the
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required.
(xx) Neither of the Trust, WFAL nor WFSRC is an
"investment company" and neither is "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
(xxi) Each of WFAL and WFSRC has obtained all material
licenses, permits and other governmental authorizations which
are necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full force
and effect, and each of WFAL and WFSRC is in all material
respects complying therewith; and each of WFAL and WFSRC is
otherwise in compliance with all laws, rules, regulations and
statutes of any jurisdiction to which it is subject, except
where non-compliance would not have a material adverse effect on
WFAL or WFSRC, as the case may be.
(xxii) Except as to the financial statements and other
financial and statistical data included therein, as to which
such counsel need not express any opinion, such counsel (A) is
of the opinion the Registration Statement and the Prospectus and
any supplements or amendments thereto (except for the financial
statements and other financial or statistical data included
therein and the Form T-1) comply as to form in all material
respects with the Act and the 1939 Act and (B) believes that the
Registration Statement (except for the financial statements and
other financial or statistical data included therein, the
information regarding Financial Security included therein and
the Form T-1), at the time the Registration Statement became
effective, did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading and the Prospectus (except for the financial
statements and other financial or statistical data included
therein and the information regarding Financial Security
included therein) at the date hereof and at the Closing Date did
not and does not contain any untrue statement of a material fact
and did not and does not omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
20
<PAGE> 21
(xxiii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements, supporting schedules and other financial
data therein, as to which no opinion need be rendered), when
they were filed with the Commission, complied as to form in all
material respects with the applicable requirements of the
Exchange Act and the Exchange Act Regulations.
(xxiv) The Indenture has been duly qualified under the
1939 Act and the Trust Agreement is not required to be qualified
under the 1939 Act.
(e) The Representative shall have received the opinion of Guy Du
Bose, Esq., General Counsel of WFS, General Counsel of Western Financial
Bank (the "Bank") and General Counsel of WFS Financial Auto Loans 2,
Inc. ("WFAL 2"), dated the Closing Date and satisfactory to counsel to
the Underwriters, to the effect that:
(i) WFS has been duly incorporated and is validly
existing and in good standing under the laws of the State of
California, with corporate power and authority to own its
properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
this Agreement and each of the Basic Documents to which it is a
party, and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the location of its
properties or the character of its operations makes such
qualification necessary, except such jurisdictions, if any, in
which the failure to be so qualified will not have a material
adverse effect on either the business or properties of WFS or
WII, as the case may be.
(ii) This Agreement has been duly authorized, executed
and delivered by WFS.
(iii) Each Basic Document to which WFS is a party has
been duly authorized, executed and delivered by WFS, and each
Basic Document other than the Indemnification Agreement
constitutes a legal, valid and binding agreement of WFS,
enforceable against WFS in accordance with its terms, except as
enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization or other laws, provisions
or principles now or hereafter in effect affecting the
enforcement of creditors' rights generally except that no
opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the court
before which any proceeding therefor may be brought.
(iv) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
performance by WFS of its obligations under this Agreement and
any of the Basic Documents to which it is a party, except such
as have been obtained.
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<PAGE> 22
(v) Neither the consummation of any of the transactions
contemplated by this Agreement and each of the Basic Documents
to which WFS is a party nor the fulfillment of the terms hereof
or thereof will conflict with, result in a breach of, or
constitute a default under, the articles of incorporation or
bylaws of WFS, or the terms of (A) any indenture or other
agreement or instrument known to such counsel and to which WFS
or any of its subsidiaries is a party or is bound or (B) any
judgment, order or decree known to such counsel to be applicable
to WFS or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over WFS or any of its subsidiaries, except, in the
case of clauses (A) and (B), for defaults, breaches or
violations that do not, in the aggregate, have an adverse
material effect on WFS.
(vi) To the best knowledge of such counsel, there is no
legal or governmental proceeding pending or threatened to which
WFS is, or is threatened to be, a party or of which its business
or property is, or is threatened to be, the subject that would
have a material adverse effect on the ability of WFS to perform
its obligations under any of the Basic Documents to which it is
a party.
(vii) WFS has obtained all material licenses, permits
and other governmental authorizations which are necessary to the
conduct of its business; such licenses, permits and other
governmental authorizations are in full force and effect, and
WFS is in all material respects complying therewith; and WFS is
otherwise in compliance with all laws, rules, regulations and
statutes of any jurisdiction to which it is subject, except
where non-compliance would not have a material adverse effect on
WFS, or, in the case of the Contracts, would not cause the
Contracts to be unenforceable.
(viii) The Bank has been duly organized and is validly
existing and in good standing as a Federal association pursuant
to the laws of the United States of America, with the authority
within its charter to own its properties, to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Reinvestment Contract dated as
of _______ 1, 2000, among the Bank, WFAL 2 and the Indenture
Trustee (the "Reinvestment Contract"), and the Sale and
Assignment dated as of _______ 1, 2000, from the Bank to WFS of
the Contracts (collectively with the Reinvestment Contract, the
"Bank Agreements").
(ix) Each of the Bank Agreements has been duly
authorized, executed and delivered by the Bank and constitutes a
legal, valid and binding instrument enforceable against the Bank
in accordance with its terms, except as enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or
other laws, provisions or principles now or hereafter in effect
affecting the enforcement of creditors' rights generally or the
rights of creditors of savings banks the accounts of which are
insured by the Federal Deposit Insurance Corporation and except
that no opinion is expressed as to the availability of remedies
of specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain tests of equity
jurisdiction, equitable defenses
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<PAGE> 23
and the discretion of the court before which any proceeding
therefor may be brought.
(x) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated by the Bank
Agreements except such as have been obtained under the Act and
such as have been obtained from the Office of Thrift
Supervision.
(xi) Neither the consummation of any of the transactions
contemplated by the Bank Agreements, nor the fulfillment of the
terms thereof, will conflict with, result in a breach of, or
constitute a default under the Charter or bylaws of the Bank or
(i) the terms of any indenture or other agreement or instrument
known to such counsel to be applicable to the Bank or any of its
subsidiaries or (ii) any judgment, order or decree known to such
counsel to be applicable to the Bank or any of its subsidiaries
of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the
Bank or any of its subsidiaries, except in the case of clauses
(i) and (ii), for defaults, breaches or violations that do not
in the aggregate, have a material adverse effect on the Bank.
(xii) The Bank is in compliance with all applicable
state and federal laws regarding its continued operation,
including those pertaining to the origination of the Contracts,
other than those laws the Bank's non-compliance with which would
not materially affect its ability to perform its obligations
under the Bank Agreements or, in the case of the origination of
the Contracts, would not cause the Contracts to be
unenforceable.
(xiii) WFAL 2 has been duly incorporated and is validly
existing and in good standing under the laws of the State of
California, with corporate power and authority to own its
properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
the Reinvestment Contract and the Sale and Assignment, dated as
of ________ 1, 2000, from WFAL 2 to WFS of the Contracts
(collectively with the Reinvestment Contract, the "WFAL 2
Agreements"), and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the location
of its properties or the character of its operations makes such
qualification necessary, except such jurisdictions, if any, in
which the failure to be so qualified will not have a material
adverse effect on either the business or properties of WFAL 2,
as the case may be.
(xiv) Each of the WFAL 2 Agreements has been duly
authorized, executed and delivered by WFAL 2, and constitutes a
legal, valid and binding agreement of WFAL 2, enforceable
against WFAL 2, in accordance with its terms, except as
enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization or other laws, provisions
or principles now or hereafter in effect affecting the
enforcement of creditors' rights generally except that no
opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain
23
<PAGE> 24
tests of equity jurisdiction, equitable defenses and the
discretion of the court before which any proceeding therefor may
be brought.
(xv) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
performance by WFAL 2 of its obligations under the WFAL 2
Agreements, except such as have been obtained.
(xvi) Neither the consummation of any of the
transactions contemplated by the WFAL 2 Agreements nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the
articles of incorporation or bylaws of WFAL 2, or the terms of
(A) any indenture or other agreement or instrument known to such
counsel and to which WFAL 2 is a party or is bound or (B) any
judgment, order or decree known to such counsel to be applicable
to WFAL 2, of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over WFAL 2,
except, in the case of clauses (A) and (B), for defaults,
breaches or violations that do not, in the aggregate, have an
adverse material effect on WFAL 2.
(xvii) To the best knowledge of such counsel, there is
no legal or governmental proceeding pending or threatened to
which WFAL 2, as the case may be, is, or is threatened to be, a
party or of which its business or property is, or is threatened
to be, the subject that would have a material adverse effect on
the ability of WFAL 2, to perform its obligations under any of
the WFAL 2 Agreements.
(xviii) WFAL 2 has obtained all material licenses,
permits and other governmental authorizations which are
necessary to the conduct of its business; such licenses, permits
and other governmental authorizations are in full force and
effect, and is in all material respects complying therewith; and
WFAL 2 is otherwise in compliance with all laws, rules,
regulations and statutes of any jurisdiction to which it is
subject, except where non-compliance would not have a material
adverse effect on WFAL 2.
(f) The Representative shall have received from Mitchell,
Silberberg & Knupp LLP, counsel for WFAL and WFSRC, a letter dated the
Closing Date to the effect that the Underwriters may rely upon each
opinion rendered by such counsel to either Standard & Poor's or Moody's
in connection with the rating of any of the Notes, as if each such
opinion were addressed to the Underwriters.
(g) The Representative shall have received the opinion of Brian
H. Mellstrom, Esq., Assistant General Counsel for Financial Security,
dated the Closing Date and satisfactory to counsel to the Underwriters.
(h) The Representative shall have received the opinion addressed
to the Underwriters and to WFS from Richards, Layton & Finger P.A.,
counsel to the Owner Trustee, dated the Closing Date and satisfactory to
counsel to the Underwriters and to counsel to WFAL and WFSRC, to the
effect that:
24
<PAGE> 25
(i) The Owner Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing under
the laws of the State of Delaware.
(ii) The Owner Trustee has full corporate trustee power
and authority to enter into and perform its obligations under
the Trust Agreement and, on behalf of the Trust, under the
Indenture, the Sale and Servicing Agreement and the
Administration Agreement.
(iii) The execution and delivery of the Trust Agreement
and, on behalf of the Trust, of the Indenture, the Sale and
Servicing Agreement, the Administration Agreement, the
Certificates and the Notes and the performance by the Owner
Trustee of its obligations under the Trust Agreement, the
Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized by all
necessary corporate action of the Owner Trustee and each has
been duly executed and delivered by the Owner Trustee.
(iv) The Trust Agreement, the Sale and Servicing
Agreement, the Indenture and the Administration Agreement
constitute valid and binding agreements of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their
terms, subject, as to enforcement of remedies, (A) to applicable
bankruptcy, insolvency and reorganization, generally, and (B) to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(v) The execution and delivery by the Owner Trustee of
the Trust Agreement and, on behalf of the Trustee, of the
Indenture, the Sale and Servicing Agreement and the
Administration Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any
Delaware or United States Federal governmental authority having
jurisdiction over the trust power of the Owner Trustee, other
than those consents, approvals or authorizations as have been
obtained and the filing of the Certificate of Trust with the
Secretary of State of the State of Delaware.
(vi) The Notes have been duly authorized, executed and
issued by the Trust.
(vii) The Certificates have been duly authorized,
executed and issued by the Trust.
(viii) The execution and delivery by the Owner Trustee
of the Trust Agreement and, on behalf of the Trust, the Sale and
Servicing Agreement, the Indenture and the Administration
Agreement, and the performance by the Owner Trustee of its
obligations thereunder do not conflict with, result in a breach
or violation of or constitute a default under, the Articles of
Association or By-laws of the Owner Trustee.
25
<PAGE> 26
(i) The Representative shall have received an opinion addressed
to the Underwriters and to WFS, dated as of the Closing Date, of
Richards, Layton & Finger P.A, special Delaware counsel to the Trust,
satisfactory to counsel to the Underwriters and counsel to WFS, to the
effect that:
(i) The Trust has been duly formed and is validly
existing as a business trust pursuant to the laws of the State
of Delaware, 12 Del. C. Section 3801, et seq.
(ii) The Trust Agreement authorizes the Trust to execute
and deliver the Indenture, the Sale and Servicing Agreement and
the Administration Agreement, to issue the Certificates and the
Notes and to grant the trust estate to the Indenture Trustee as
security for the Notes.
(iii) Assuming that the Certificates have been duly
authorized, executed and issued by the Trust, the Certificates
have been validly issued and are entitled to the benefits of the
Trust Agreement.
(iv) Except for the timely filing in the future of
continuation statements with respect to the financing
statements, no other filing is required in the State of Delaware
in order to make effective the lien of the Indenture. Insofar as
the Delaware Uniform Commercial Code, 6 Del. C. Section 9-101 et
seq. (the "UCC"), applies (without regard to conflict of laws
principles) and, assuming that the security interests in that
portion of the trust estate that consists of general
intangibles, accounts or chattel paper, as defined under the
UCC, have been duly created and have attached, the Indenture
Trustee has a perfected security interest in such general
intangibles, accounts or chattel paper and, assuming that the
UCC search accurately lists all the financing statements filed
naming the Trust as debtor and describing any portion of the
trust estate consisting of such general intangibles, accounts or
chattel paper, the security interest of the Indenture Trustee
will be prior to the security interest of all other creditors,
except that such security interest will be subject to the
security interest afforded to Financial Security under the
Insurance Agreement, and excluding purchase money security
interests under Section 9-312(4) of the UCC, and temporarily
perfected security interests pursuant to Section 9-306(3) of the
UCC (as to the priority of temporarily unrecorded security
interests in proceeds), subject to customary and usual
exceptions.
(v) No creditor of the Seller or any Certificateholder
shall have any right to obtain possession or, or otherwise legal
or equitable remedies with respect to, the property of the
Trust.
(vi) Assuming that the Sale and Servicing Agreement
conveys good title to the Trust Property referred to therein to
the Trust as a true sale and not as a security arrangement, the
Trust rather than the Seller is the owner of the Trust Property.
26
<PAGE> 27
(j) The Representative shall have received an opinion addressed
to the Underwriters and to WFS from White & Case, counsel to the
Indenture Trustee, dated the Closing Date and satisfactory to counsel to
the Underwriters and to special counsel to WFS to the effect that:
(i) The Indenture Trustee has been duly incorporated and
is validly existing as a banking corporation under the laws of
the State of New York.
(ii) The Indenture Trustee, at the time of its execution
and delivery of the Indenture, had full power and authority to
execute and deliver the Indenture and has full power and
authority to perform its obligations thereunder.
(iii) The Indenture has been duly and validly
authorized, executed and delivered by the Indenture Trustee and,
assuming due authorization, execution and delivery thereof by
the Trustee, constitutes the valid and binding obligation of the
Indenture Trustee enforceable against the Indenture Trustee in
accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws relating to or
affecting creditors' rights or by general principles of equity.
(iv) To the best of such counsel's knowledge, there are
no actions, proceedings or investigations pending or threatened
against or affecting the Indenture Trustee before or by any
court, arbitrator, administrative agency or other governmental
authority which, if adversely decided, would materially and
adversely affect the ability of the Indenture Trustee to carry
out the transactions contemplated in the Indenture.
(v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or
governmental agency or body of the United States of America or
any state thereof was or is required for the execution, delivery
or performance by the Indenture Trustee of the Indenture.
(k) The Representative shall have received the opinion of Brown
& Wood LLP, counsel to the Underwriters, dated the Closing Date, with
respect to the issuance and sale of the Notes, the Registration
Statement, the Prospectus and other related matters as the
Representative may reasonably require, and WFAL, WFSRC and WFS shall
have furnished to counsel to the Underwriters such documents as they may
reasonably request for the purpose of enabling them to pass upon such
matters.
(l) The Representative shall have received letters in form and
substance satisfactory to the Representative, addressed to the
Underwriters and dated the date hereof, from Ernst & Young LLP,
independent public accountants for WFAL and WFSRC, substantially in the
form heretofore approved by the Representative.
(m) At the Closing Date each Class of Notes shall have been
rated in the highest category applicable to such Class by each of
Moody's and Standard & Poor's, as nationally recognized rating agencies,
with regard to the benefit afforded the Notes under the Note Policy, and
such ratings shall be in full force and effect and subsequent to the
27
<PAGE> 28
execution and delivery of this Agreement and prior to the Closing Date,
there shall not have been any downgrading, nor any notice given by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Act (a "Rating
Agency"), to the public, WFAL or WFSRC of any intended or potential
downgrading or of a possible change that does not indicate the direction
of the possible change, in the rating accorded any of WFAL's or WFSRC's
securities by any Rating Agency.
(n) The Representative shall have received the Indemnification
Agreement executed by all parties thereto.
10. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the later of (i) execution of this Agreement and (ii)
receipt of notification of the effectiveness of the Registration Statement by
WFAL, WFSRC or the Representative.
This Agreement may be terminated at any time prior to the Closing Date
by the Representative by written notice to WFAL and WFSRC if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in or affecting particularly
the condition, financial or otherwise, of WFAL, WFSRC or WFS or the earnings,
affairs or business prospects of WFAL, WFSRC or WFS, whether or not arising in
the ordinary course of business, which would, in the reasonable judgment of the
Representative, make the offering or delivery of any Class of Notes
impracticable, (ii) any outbreak of hostilities or other national or
international calamity or crisis or material change in economic conditions, if
the effect of such outbreak, calamity, crisis or change on the financial markets
of the United States or elsewhere would, in the reasonable judgment of the
Representative, make the offering or delivery of any Class of Notes
impracticable, (iii) suspension of trading in securities on the New York Stock
Exchange or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange, (iv) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority which in the reasonable opinion of the Representative
materially and adversely affects, or will materially and adversely affect, the
business or operations of WFAL or WFSRC, (v) declaration of a banking moratorium
by either federal or New York State authorities or (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in the reasonable opinion the Representative has a
material adverse effect on the financial markets in the United States.
11. Miscellaneous. All communications hereunder will be in writing and
notices given pursuant to any provision of this Agreement shall be addressed as
follows: (i) if to either or WFAL, WFSRC or WFS, to Guy Du Bose, Esq. at his
office at 23 Pasteur, Irvine, California 92618 or (iii) if to any Underwriter,
through the Representative at Bear, Stearns & Co. Inc., Attention: Asset Backed
Securities Group, 245 Park Avenue, New York, New York 10167 or in any case to
such other address as the person to be notified may have requested in writing;
provided, however, that any notice to an Underwriter pursuant to Section 8 will
be mailed, delivered or telegraphed and confirmed to such Underwriter. Any such
notice will take effect at the time of receipt.
28
<PAGE> 29
The respective indemnities, contribution agreements, representations,
warranties and other statements of WFS, WFAL, WFSRC, their respective officers
and directors and of the Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Underwriters or
by or on behalf of either of WFAL or WFSRC, its officers or directors or any
controlling person of WFAL, WFSRC or WFS, (ii) acceptance of the Notes and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Representative because of
any failure or refusal on the part of WFAL, WFSRC or WFS to comply with the
terms or to fulfill any of the conditions of this Agreement, or pursuant to any
other provision hereof (other than by notice given to WFAL and WFSRC with
respect to clauses (ii) through (vi) of the second paragraph of Section 10
hereof), WFAL, WFSRC and WFS agree to reimburse the Underwriters for all of
their out-of-pocket expenses (including the fees and disbursements of counsel to
the Underwriters) reasonably incurred by the Underwriters.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon WFAL, WFSRC, WFS and the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Notes from the Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
The Representative will act for the several Underwriters in connection
with the transactions described in this Agreement and any action taken by the
Representative under this Agreement will be binding upon all of the
Underwriters.
29
<PAGE> 30
If the foregoing is in accordance with your understanding of the
agreement among WFAL, WFSRC, WFS and the Underwriters, kindly sign and return to
us the enclosed duplicate hereof, whereupon it will become a binding agreement
among WFAL, WFSRC, WFS and the several Underwriters in accordance with its
terms.
Very truly yours,
WFS FINANCIAL AUTO LOANS, INC.
By:_________________________________
Name:
Title:
WFS RECEIVABLES CORPORATION
By:_________________________________
Name:
Title:
WFS FINANCIAL INC
By:_________________________________
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first written above:
BEAR, STEARNS & CO. INC.
as Representative of the several
Underwriters named on Schedule I hereto
By:____________________________________
Name:
Title:
30
<PAGE> 31
SCHEDULE I
<TABLE>
<CAPTION>
Amount of Class Amount of Class Amount of Class Amount of
Underwriter A-1 Notes A-2 Notes A-3 Notes Class A-4 Notes
- ----------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. --
----------- ----------- ---------- ---------
- -------------------------- ----------- ----------- --
Total
=========== =========== ========== =========
</TABLE>
S-1
<PAGE> 1
================================================================================
EXHIBIT 4.1.1
AMENDED AND RESTATED
TRUST AGREEMENT
among
WFS FINANCIAL AUTO LOANS, INC.,
WFS INVESTMENTS, INC.,
FINANCIAL SECURITY ASSURANCE INC.
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated__________ __, 20__
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE
DEFINITIONS
<S> <C> <C>
Section 1.01. Capitalized Terms.......................................................... 1
Section 1.02. Other Definitional Provisions.............................................. 4
Section 1.03. Usage of Terms............................................................. 4
Section 1.04. Section References......................................................... 5
Section 1.05. Accounting Terms........................................................... 5
ARTICLE TWO
ORGANIZATION
Section 2.01. Name....................................................................... 6
Section 2.02. Office..................................................................... 6
Section 2.03. Purposes and Powers........................................................ 6
Section 2.04. Appointment of Owner Trustee............................................... 7
Section 2.05. Initial Capital Contribution of Owner Trust Estate......................... 7
Section 2.06. Declaration of Trust....................................................... 7
Section 2.07. Title to Trust Property.................................................... 7
Section 2.08. Situs of Trust............................................................. 7
Section 2.09. Representations and Warranties of the Depositors........................... 8
Section 2.10. Federal Income Tax Allocations............................................. 10
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership.......................................................... 11
Section 3.02. The Trust Certificates..................................................... 11
Section 3.03. Authentication and Delivery of Trust Certificates.......................... 11
Section 3.04. Registration of Transfer and Exchange of Trust Certificates................ 11
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.................... 13
Section 3.06. Persons Deemed Owners...................................................... 13
Section 3.07. Access to List of Certificateholders' Names and Addresses.................. 13
Section 3.08. Maintenance of Office or Agency............................................ 13
Section 3.09. Temporary Trust Certificates............................................... 14
Section 3.10. Appointment of Paying Agent................................................ 14
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.11. Ownership by the Company of Trust Certificates............................. 15
ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters..................... 17
Section 4.02. Action by Owners with Respect to Certain Matters........................... 17
Section 4.03. Action by Owners with Respect to Bankruptcy................................ 18
Section 4.04. Restrictions on Owners' Power.............................................. 18
Section 4.05. Majority Control........................................................... 18
ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account............................................. 19
Section 5.02. Application of Trust Funds................................................. 19
Section 5.03. Method of Payment.......................................................... 20
Section 5.04. No Segregation of Monies; No Interest...................................... 20
Section 5.05. Accounting and Reports to the Noteholders, Owners, the Internal Revenue
Service and Others......................................................... 20
Section 5.06. Signature on Returns; Tax Matters Partner.................................. 20
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority.......................................................... 21
Section 6.02. General Duties............................................................. 21
Section 6.03. Action Upon Instruction.................................................... 21
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions......... 22
Section 6.05. No Action Except Under Specified Documents or Instructions................. 22
Section 6.06. Restrictions............................................................... 23
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties............................................ 24
Section 7.02. Furnishing of Documents.................................................... 25
Section 7.03. Representations and Warranties............................................. 25
Section 7.04. Reliance; Advice of Counsel................................................ 25
Section 7.05. Not Acting in Individual Capacity.......................................... 26
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or Contracts........ 26
Section 7.07. Owner Trustee May Own Trust Certificates and Notes......................... 27
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses...................... 27
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses.......................................... 28
Section 8.02. Indemnification............................................................ 28
Section 8.03. Payments to the Owner Trustee.............................................. 28
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement............................................. 29
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee................................ 31
Section 10.02. Resignation or Removal of Owner Trustee................................... 31
Section 10.03. Successor Owner Trustee................................................... 32
Section 10.04. Merger or Consolidation of Owner Trustee.................................. 32
Section 10.05. Appointment of Co-Trustee or Separate Trustee............................. 32
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments................................................ 34
Section 11.02. No Legal Title to Trust Estate in Owners.................................. 35
Section 11.03. Limitations on Rights of Others........................................... 35
Section 11.04. Notices................................................................... 35
Section 11.05. Severability of Provisions................................................ 36
Section 11.06. Counterparts.............................................................. 36
Section 11.07. Successors and Assigns.................................................... 36
Section 11.08. No Petition............................................................... 36
Section 11.09. No Recourse............................................................... 36
Section 11.10. Certificates Nonassessable and Fully Paid................................. 37
Section 11.11. Headings.................................................................. 37
Section 11.12. Governing Law............................................................. 37
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Section 11.13. Depositor Payment Obligation.............................................. 37
Section 11.14. Insurer Default or Insolvency............................................. 37
EXHIBITS
Exhibit A - Form of Certificate of Trust................................................. A-1
Exhibit B - Form of Trust Certificate.................................................... B-1
</TABLE>
(iv)
<PAGE> 6
This AMENDED AND RESTATED TRUST AGREEMENT, dated __________ __, 20__, is
among WFS FINANCIAL AUTO LOANS, INC., a California corporation (the
"Depositor"), WFS INVESTMENTS, INC., a California corporation (the "Company"),
FINANCIAL SECURITY ASSURANCE INC., a New York corporation ("Financial
Security"), and CHASE MANHATTAN BANK DELAWARE, a Delaware corporation, as owner
trustee (the "Owner Trustee").
WHEREAS, in connection herewith, the Depositor is willing to assume
certain obligations pursuant hereto;
WHEREAS, in connection herewith, the Company is willing to purchase the
Company Trust Certificate (as defined herein) to be issued pursuant hereto and
to assume certain obligations pursuant hereto; and
WHEREAS, Financial Security is willing to issue a financial guaranty
insurance policy in respect of certain payments made on the Trust Certificates
to be issued pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Administration Agreement" means the administration agreement, dated as
of __________ __, 20__, among the Trust, the Company, the Depositor, the
Indenture Trustee and WFS, as administrator.
"Agreement" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Applicants" shall have the meaning assigned to such term in Section
3.07.
"Benefit Plan" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
"Certificate Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
<PAGE> 7
"Certificate Percentage Interest" has the meaning set forth in the Sale
and Servicing Agreement.
"Certificate of Trust" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of Exhibit B hereto.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"Certificateholder" or "Holder" means the Person in whose name a Trust
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement or the other Basic Documents, the interest evidenced by any Trust
Certificate registered in the name of the Depositor, the Company, WFS or any of
their respective Affiliates shall not be taken into account in determining
whether the requisite percentage necessary to effect such consent, waiver,
request or demand in respect of the Trust Certificates shall have been obtained.
"Closing Date" means __________ __, 20__.
"Code" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Company" means WFS Investments, Inc., a California corporation, in its
capacity as Owner of the Company Trust Certificate hereunder, and its
successors.
"Company Trust Certificate" means the Trust Certificate purchased by the
Company on the Closing Date pursuant to Section 3.11, having an initial
principal balance equal to $------.
"Depositor" means WFS Financial Auto Loans, Inc. in its capacity as
depositor hereunder, and its successors.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" means the indenture dated as of __________ __, 20__, among
the Trust and Bankers Trust Company, as Indenture Trustee.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.03(a).
"Insurer" means Financial Security Assurance, Inc., and its successors.
2
<PAGE> 8
"Notes" means the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes, in each case issued pursuant to the Indenture.
"Owner" means each Holder of a Trust Certificate.
"Owner Trustee" means Chase Manhattan Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be Chase Manhattan Bank Delaware, 1201 Market Street,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department, with a copy to The Chase Manhattan Bank, 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Structured Finance Services (ABS),
or such other office at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Master Servicer, the
Depositor, the Company and the Insurer. The foregoing address of The Chase
Manhattan Bank shall be its address for purposes of its acting as Certificate
Registrar and as agent of the Owner Trustee pursuant to Sections 3.04 and 3.08,
or such other office at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Master Servicer, the
Depositor, the Company and the Insurer.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.10.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Record Date" means, with respect to any Distribution Date, the day
immediately preceding such Distribution Date or, if Definitive Trust
Certificates are issued, the 15th day of the month preceding the month in which
such Distribution Date occurs.
"Sale and Servicing Agreement" means the sale and servicing agreement,
dated as of __________ __, 20__, among the Trust, as Issuer, the Depositor, as
Seller and WFS, as Master Servicer, as the same may be amended or supplemented
from time to time.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Seller" means WFS Financial Auto Loans, Inc., in its capacity as seller
under the Sale and Servicing Agreement, and its successors.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" means the trust established by this Agreement.
3
<PAGE> 9
"Trust Certificates" means the trust certificates evidencing the
beneficial interest of an Owner in the Trust, substantially in the form of
Exhibit C hereto.
"Trust Estate" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article Two of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"Underwriters" means Banc of America Securities LLC, Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse First Boston Corporation.
"WFS" means WFS Financial Inc, and its successors.
Section 1.02. Other Definitional Provisions. Capitalized terms used that
are not otherwise defined herein shall have the meanings ascribed thereto in the
Sale and Servicing Agreement or, if not defined therein, in the Indenture.
Section 1.03. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
Section 1.04. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
4
<PAGE> 10
ARTICLE TWO
ORGANIZATION
Section 2.01. Name. The Trust created hereby shall be known as "WFS
Financial 20__-_ Owner Trust", in which name the Owner Trustee may conduct the
activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners, the Depositor and the Insurer.
Section 2.03. Purposes and Powers.
(a) The sole purpose of the Trust is to conserve the Trust Estate and
collect and disburse the periodic income therefrom for the use and benefit of
the Owners, and in furtherance of such purpose to engage in the following
ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to purchase the
Contracts, to fund the Spread Account, to pay the organizational,
start-up and transactional expenses of the Trust and to pay the balance
to the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to Grant the Trust Estate pursuant to the Indenture and to
hold, manage and distribute to the Owners pursuant to the Sale and
Servicing Agreement any portion of the Trust Estate released from the
Lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate and the making of distributions to the Owners and
the Noteholders.
The Trust shall not engage in any activities other than in connection
with the foregoing. Nothing contained herein shall be deemed to authorize the
Owner Trustee, on behalf of the Trust, to engage in any business operations or
any activities other than those set forth in the introductory sentence of this
Section. Specifically, the Owner Trustee, on behalf of the Trust, shall have no
authority to engage in any business operations, acquire any assets other than
those specifically included in the Trust Estate under Section 1.01 or otherwise
vary the assets held by
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the Trust. Similarly, the Owner Trustee shall have no discretionary duties other
than performing those ministerial acts set forth above necessary to accomplish
the purpose of the Trust as set forth in the introductory sentence of this
Section.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
Section 2.05. Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Estate and
shall be deposited in the Certificate Distribution Account. The Depositor shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, the
Trust shall be treated as a partnership, with the assets of the partnership
being the Contracts and other assets held by the Trust and with the partners of
the partnership being the Certificateholders (including the Company and the
Seller as the recipient of certain excess cash flows as provided in Section 5.05
of the Sale and Servicing Agreement) and the Notes being debt of the
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and in the Business Trust Statute for the sole purpose and to the extent
necessary to accomplish the purpose of the Trust as set forth in the
introductory sentence of Section 2.03.
Section 2.07. Title to Trust Property. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
Section 2.08. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of California, the State of
Delaware or the State of New York. The Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in Delaware or New York
and
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payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Owner Trustee Corporate Trust Office.
Section 2.09. Representations and Warranties of the Depositor and the
Company.
(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of California, with power and authority to own its
properties and to conduct its business and had at all relevant times,
and has, power, authority and legal right to acquire and own the
Contracts.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(iii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Owner Trustee on behalf of the Trust
as part of the Trust Estate and has duly authorized such sale and
assignment and deposit with the Owner Trustee on behalf of the Trust by
all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the Depositor
by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in the breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of the properties of the Depositor pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or any order, rule
or regulation applicable to the Depositor of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties.
(v) There are no proceedings or investigations pending, or to the
Depositor's best knowledge threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Trust Certificates, (B) seeking to prevent the issuance of the Trust
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 Depositor of its obligations under, or the validity
or enforceability of, this Agreement, any of the other
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Basic Documents or the Trust Certificates or (D) involving the Depositor
and which might adversely affect the federal income tax or other
federal, state or local tax attributes of the Trust Certificates.
(b) The Company hereby represents and warrants to the Owner Trustee and
the Insurer that:
(i) The Company is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of California, with power and authority to own its
properties and to conduct its business and had at all relevant times,
and has, power, authority and legal right to acquire and own the
Contracts.
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(iii) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement have been duly authorized by
the Company by all necessary corporate action.
(iv) 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, nor
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of the Company, or any
indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any
Lien upon any of the properties of the Company pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant
to the Basic Documents); nor violate any law or any order, rule or
regulation applicable to the Company of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its properties.
(v) There are no proceedings or investigations pending, or to the
Company's best knowledge threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Trust Certificates, (B) seeking to prevent the issuance of the Trust
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 Company of its obligations under, or the validity or
enforceability of, this Agreement, any of the other Basic Documents or
the Trust Certificates or (D) involving the Company and which might
adversely affect the federal income tax or other federal, state or local
tax attributes of the Trust Certificates.
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Section 2.10. Federal Income Tax Allocations.
(a) Net income of the Trust for any calendar quarter as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the first day following the end of such quarter, in
proportion to their Certificate Percentage Interest in the Trust Certificates on
such date,
(b) Net losses of the Trust, if any, for any calendar quarter as
determined for federal income tax purposes (and each item of income, gain, loss
and deduction entering into the computation thereof) shall be allocated to the
Certificateholders in proportion to their Certificate Percentage Interest as of
the first day following the end of such quarter in proportion to their ownership
of the principal amount of Trust Certificates on such day. The
Certificateholders are authorized to modify the allocations in this paragraph if
necessary or appropriate, in their sole discretion, for the allocations to
fairly reflect the income, gain, loss and deduction to the Depositor and the
Company or to the Certificateholders, or as otherwise required by the Code.
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ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.
Section 3.02. The Trust Certificates. The Trust Certificates shall be
substantially in the form of Exhibit B hereto. The Trust Certificates shall be
executed by the Owner Trustee on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee and attested on behalf
of the Owner Trustee by the manual or facsimile signature of an authorized
officer of the Owner Trustee and shall be deemed to have been validly issued
when so executed. Trust Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Owner Trustee shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Trust Certificates or did not hold such offices at the date of such Trust
Certificates. All Trust Certificates shall be dated the date of their
authentication.
Section 3.03. Authentication and Delivery of Trust Certificates. The
Owner Trustee shall cause to be authenticated and delivered upon the order of
the Depositor, in exchange for the Contracts and the other assets of the Trust,
simultaneously with the sale, assignment and transfer to the Trust of the
Contracts, and the constructive delivery to the Owner Trustee of the Contract
Files and the other assets of the Trust, Trust Certificates duly authenticated
by the Owner Trustee evidencing the entire ownership of the Trust and Notes
issued by the Owner Trustee and authenticated by the Indenture Trustee in
aggregate principal amount of, in the case of the (i) Class A-1 Notes, $______,
(ii) Class A-2 Notes, $______ and (iii) Class A-3 Notes, $______. No Trust
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Trust Certificate a certificate of
authentication substantially in the form set forth in the form of Trust
Certificate attached hereto as Exhibit C, executed by the Owner Trustee or its
authenticating agent, by manual signature, and such certificate upon any Trust
Certificate shall be conclusive evidence, and the only evidence, that such Trust
Certificate has been duly authenticated and delivered hereunder. The provisions
of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to any authenticating agent
hereunder. Upon issuance, authentication and delivery pursuant to the terms
hereof, the Trust Certificates will be entitled to the benefits of this
Agreement.
Section 3.04. Registration of Transfer and Exchange of Trust
Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of Trust
Certificates and transfers and exchanges of Trust Certificates as provided
herein. The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York,
New York 10001, Attention: Structured Finance Services (ABS) as agent for the
Owner Trustee, is hereby initially appointed Certificate Registrar for the
purpose of registering Trust Certificates and transfers and exchanges of Trust
Certificates as herein provided. In the event that,
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subsequent to the Closing Date, the Owner Trustee notifies the Master Servicer
that The Chase Manhattan Bank is unable to act as Certificate Registrar, the
Master Servicer shall appoint another bank or trust company, having an office or
agency located in The City of New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise acceptable to the
Owner Trustee, to act as successor Certificate Registrar hereunder. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to any Certificate
Registrar hereunder.
(b) Upon surrender for registration of transfer of any Trust Certificate
at the office of the Certificate Registrar, the Owner Trustee shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of
like Certificate Percentage Interest.
(c) At the option of a Certificateholder, Trust Certificates may be
exchanged for other Trust Certificates in authorized denominations of a like
aggregate principal amount, upon surrender of the Trust Certificates to be
exchanged at the office of the Certificate Registrar. Whenever any Trust
Certificates are so surrendered for exchange, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver) the Trust Certificates that the
Certificateholder making the exchange is entitled to receive. Every Trust
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Owner Trustee and the Certificate Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
(e) The Trust Certificates may not be acquired by or for the account of
a Benefit Plan. By accepting and holding a Trust Certificate or a beneficial
interest therein, the Holder or any Certificateholder thereof shall be deemed to
have represented and warranted that it is not a Benefit Plan nor will it hold
such Trust Certificate or a beneficial interest therein for the account of a
Benefit Plan.
(f) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered to the Company or any agent of the Owner Trustee or the
Company under this Agreement, shall be delivered to the Owner Trustee and
promptly cancelled by it, or, if surrendered to the Owner Trustee, shall be
promptly cancelled by it, and no Trust Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Owner Trustee shall dispose of cancelled Trust Certificates in
accordance with the normal industry practice.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If (i) any mutilated Trust Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Trust Certificate, and (ii) there
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is delivered to the Certificate Registrar and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice that such Trust Certificate has been acquired by a protected
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee or its authenticating agent shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Certificate, a new Trust Certificate of like tenor and fractional undivided
interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar, any Paying Agent and any of their respective agents may
treat the Person in whose name any Trust Certificate is registered as the owner
of such Trust Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar, any Paying Agent or any of their respective
agents shall be affected by any notice to the contrary.
Section 3.07. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Insurer and the Depositor, within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Master Servicer, the
Certificateholders, the Insurer or the Depositor, a list, in such form as the
Master Servicer or the Depositor may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders, or one or more Holders of Trust Certificates
evidencing not less than 25% of the percentage interests of the Trust
Certificates (hereinafter referred to as "Applicants"), apply in writing to the
Owner Trustee, and such application states that the Applicants desire to
communicate with other Certificateholders with respect to their rights hereunder
or under the Trust Certificates and such application is accompanied by a copy of
the communication that such Applicants propose to transmit, then the Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access, during normal business hours, to the current list
of Certificateholders. Every Certificateholder, by receiving and holding a Trust
Certificate, agrees with the Master Servicer, the Depositor and the Owner
Trustee that none of the Master Servicer, the Depositor or the Owner Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders hereunder, regardless of
the source from which such information was derived.
Section 3.08. Maintenance of Office or Agency. The Chase Manhattan Bank,
as agent for the Owner Trustee, shall maintain in the Borough of Manhattan, The
City of New York, an office or offices or agency or agencies where Trust
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the Trust
Certificates and the Basic Documents may be served. The Owner Trustee hereby
designates the office of The Chase Manhattan Bank at the address provided under
the definition of the term "Owner Trustee Corporate Trust Office" as its office
for such purposes. The Owner Trustee shall give prompt written notice to the
Depositor, the Master Servicer and to
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Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 3.09. Temporary Trust Certificates. Pending the preparation of
definitive Trust Certificates, the Owner Trustee, on behalf of the Trust, may
execute, authenticate and deliver, temporary Trust Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Trust
Certificates in lieu of which they are issued. If temporary Trust Certificates
are issued, the Depositor will cause definitive Trust Certificates to be
prepared without unreasonable delay. After the preparation of definitive Trust
Certificates, the temporary Trust Certificates shall be exchangeable for
definitive Trust Certificates upon surrender of the temporary Trust Certificates
at the office or agency to be maintained as provided in Section 3.08, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Trust Certificates, the Owner Trustee shall execute and authenticate
and deliver in exchange therefor a like principal amount of definitive Trust
Certificates in authorized denominations. Until so exchanged, the temporary
Trust Certificates shall in all respects be entitled to the same benefits
hereunder as definitive Trust Certificates.
Section 3.10. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be The Chase Manhattan Bank and any co-paying agent chosen by the Paying Agent
that is acceptable to the Owner Trustee. Each Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Owner Trustee. In the
event that The Chase Manhattan Bank shall no longer be the Paying Agent, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee to execute
and deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise. If the long
term debt rating of the Paying Agent shall not be at least Baa3 from Moody's and
BBB- from Standard & Poor's, the Rating Agencies shall be given notice of such
lower long term debt rating.
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Section 3.11. Ownership by the Company of Trust Certificates. The
Company shall on the Closing Date retain Trust Certificates representing at
least __% of the Certificate Percentage Interest and shall thereafter retain
beneficial and record ownership of Trust Certificates representing at least __%
of the Certificate Percentage Interest (the "Retained Trust Certificate
Percentage"). Any attempted transfer of any Trust Certificate that would reduce
the interest of the Company in the Trust below the Retained Trust Certificate
Percentage shall be void. The Owner Trustee shall cause any Trust Certificate
issued to the Company on the Closing Date (and any Trust Certificate issued in
exchange therefor) to contain a legend stating "THIS TRUST CERTIFICATE IS
NON-TRANSFERABLE EXCEPT AS PROVIDED IN SECTION 3.11 OF THE TRUST AGREEMENT".
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and the Holders of Trust
Certificates evidencing at least a majority of the aggregate Certificate
Percentage Interest shall not have notified the Owner Trustee in writing prior
to the 30th day after such notice is given that such Holders have withheld
consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by
or against the Trust (except with respect to the aforementioned claims
or lawsuits for collection of the Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and
such amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant
to this Agreement of a successor Certificate Registrar, or the consent
to the assignment by the Note Registrar, Paying Agent, Indenture Trustee
or Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
Section 4.02. Action by Owners with Respect to Certain Matters. Subject
to the provisions and limitations of Section 4.04, the Owner Trustee shall not
have the power, except upon the direction of the Owners and with the prior
written consent of the Insurer (so long as no Insurer Default shall have
occurred and be continuing), to (a) remove the Administrator pursuant to Section
8 of the Administration Agreement, (b) appoint a successor Administrator
pursuant to Section 8 of the Administration Agreement, (c) remove the Master
Servicer pursuant to Section 8.01 of the Sale and Servicing Agreement, (d)
except as expressly provided in the Basic Documents, sell the Contracts after
the termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
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Trust, (f) authorize the merger, consolidation or conversion of the Trust with
or into any other business trust or entity (other than in accordance with
Section 3.10 of the Indenture) or (g) amend the Certificate of Trust. The Owner
Trustee shall take the actions referred to in the preceding sentence only upon
written instructions signed by the Owners.
Section 4.03. Action by Owners with Respect to Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior written consent of the
Insurer and the unanimous prior approval of all Owners and the delivery to the
Owner Trustee by each such Owner of a certificate certifying that such Owner
reasonably believes that the Trust is insolvent.
Section 4.04. Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the other Basic Documents or would be contrary to
the purpose of the Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
aggregate Certificate Percentage Interest. Except as expressly provided herein,
any written notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by Holders of Trust Certificates evidencing not less than a
majority of the aggregate Certificate Percentage Interest at the time of the
delivery of such notice.
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
Section 5.01. Establishment of Trust Account. The Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Certificate Distribution Account
initially shall be established with The Chase Manhattan Bank in the state of New
York.
The Owner Trustee shall possess all right, title and interest in funds
on deposit from time to time in the Certificate Distribution Account and in the
proceeds thereof. Except as otherwise expressly provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Depositor on behalf of the Owner Trustee, if the Certificate
Distribution Account is not then held by the Owner Trustee or an Affiliate
thereof) shall within ten Business Days (or such longer period, not to exceed 30
calendar days, as to which the Insurer must consent) establish a new Certificate
Distribution Account as an Eligible Account and shall transfer any cash and/or
any investments to such new Certificate Distribution Account.
Section 5.02. Application of Trust Funds.
(a) On each Calculation Day and Distribution Date, the Owner Trustee
will distribute to Certificateholders, in proportion to each Certificateholder's
Certificate Percentage Interest, amounts deposited into the Certificate
Distribution Account pursuant to Sections 5.06 and 9.01 of the Sale and
Servicing Agreement and Section 5.06(a) of the Indenture with respect to such
Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Master Servicer pursuant to Section 5.07 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain, or cause the Paying Agent
to retain, from amounts otherwise distributable to the Owners sufficient funds
for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to an Owner shall be treated as cash distributed to such
Owner at the time it is withheld by the Trust and remitted to the appropriate
taxing authority. If there is a possibility that withholding tax is payable with
respect to a distribution, the Owner Trustee may in its sole discretion withhold
such amounts in accordance with this paragraph (c).
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Section 5.03. Method of Payment. Subject to Section 9.01(c) respecting
the final payment upon retirement of each Trust Certificate, distributions
required to be made to each Certificateholder of record on the related Record
Date shall be made by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register or by wire transfer of
immediately available funds or pursuant to other arrangements.
Section 5.04. No Segregation of Monies; No Interest. Subject to Sections
5.01 and 5.02, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.05. Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.01(c) with respect to income or distributions to
Owners. The Owner Trustee shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Contracts. The Owner Trustee shall not make the election provided under Section
754 of the Code.
Section 5.06. Signature on Returns; Tax Matters Partner.
(a) The Company shall sign on behalf of the Trust the tax returns of the
Trust.
(b) The Company shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Administrator recommends with
respect to the Basic Documents.
Section 6.02. General Duties. Subject to the provisions and limitations
of Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to
discharge (or cause to be discharged through the Administrator or such agents as
shall be appointed with the consent of the Insurer) all of its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Without limiting the foregoing, the Owner Trustee shall on behalf of
the Trust file and prove any claim or claims that may exist against the Company
in connection with any claims paying procedure as part of an insolvency or
receivership proceeding involving the Company. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the other Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform any act or
to discharge any duty of the Owner Trustee hereunder or under any Basic
Document, regardless of whether the Administration Agreement is subsequently
terminated or rejected by the Administrator, and the Owner Trustee shall not be
held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
Section 6.03. Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or the Owners (if an Insurer Default shall have occurred and
be continuing) (the "Instructing Party") may by written instruction direct the
Owner Trustee in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Instructing Party pursuant to Article
Four.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any other Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any other Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Basic Document,
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the Owner Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Instructing Party requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Instructing Party received, the Owner Trustee shall not be liable on account
of such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement and the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any other Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03 and no implied duties or obligations
shall be read into this Agreement or any other Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens (other than the lien of the
Indenture) on any part of the Trust Estate that result from actions by, or
claims against, the Owner Trustee that are not related to the ownership or the
administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except in accordance with
(i) the powers granted to and the authority conferred upon
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the Owner Trustee pursuant to this Agreement, (ii) the other Basic Documents and
(iii) any document or instruction delivered to the Owner Trustee pursuant to
Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of a Responsible Officer in the Owner
Trustee Corporate Trust Office, would result in the Trust's becoming taxable as
a corporation for federal or state income tax purposes. The Owners shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
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ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Trust Estate upon the terms of this Agreement and the other Basic
Documents. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Basic Document under any circumstances, except (i) for its own
willful misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or any Owner;
(c) no provision of this Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights or
powers hereunder or under any other Basic Document if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Trust
Certificates;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or the Insurer or for the form,
character, genuineness, sufficiency, value or validity of any of the
Trust Estate, or for or in respect of the validity or sufficiency of the
Basic Documents, other than the certificate of authentication on the
Trust Certificates, and the Owner Trustee shall in no event assume or
incur any liability, duty or obligation to any Noteholder or to any
Owner, other than as expressly provided for herein or expressly agreed
to in the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, WFS Financial Auto Loans, Inc., as
Seller or Depositor, the Insurer, the Indenture Trustee or the Master
Servicer under any of the Basic Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations
of the Trust under this Agreement or the other Basic Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture
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Trustee under the Indenture or the Master Servicer or WFS Financial Auto
Loans, Inc. as Seller or Depositor under the Sale and Servicing
Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the request, order or direction of the Instructing Party, unless such
Instructing Party has offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may
be incurred by the Owner Trustee therein or thereby; the right of the
Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any other Basic Document shall not be construed as a
duty, and the Owner Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish
to the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor, the Owners and the Insurer that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any
lien, charge or encumbrance on the Trust Estate resulting from actions
by or claims against the Owner Trustee individually which are unrelated
to this Agreement or the other Basic Documents.
Section 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
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directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any other Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as otherwise
provided in this Article Seven, in accepting the trusts hereby created, Chase
Manhattan Bank Delaware acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any other Basic
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or
Contracts. The recitals contained herein and in the Trust Certificates (other
than the signature of the Owner Trustee and the certificate of authentication on
the Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, any other Basic Document or the Trust Certificates (other than the
signature of the Owner Trustee and the certificate of authentication on the
Trust Certificates and the representations and warranties in Section 7.03) or
the Notes, or of any Contract or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Contract, or the perfection and
priority of any security interest created by any Contract in any Financed
Vehicle or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation, the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Contract on any computer or other record thereof; the validity of the assignment
of any Contract to the Trust or of any intervening assignment; the completeness
of any Contract; the performance or enforcement of any Contract; the compliance
by the Depositor, the Insurer or the Master Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or
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representation; or any action of the Administrator, the Indenture Trustee or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Insurer, the Administrator, the Indenture Trustee and the Master Servicer in
banking transactions with the same rights as it would have if it were not Owner
Trustee.
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Trust to use
its best efforts to maintain, the effectiveness of all licenses required under
the Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the other Basic Documents and the transactions contemplated hereby
and thereby until such time as the Trust shall terminate in accordance with the
terms hereof.
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ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.02. Indemnification. The Company shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the other Basic Documents, the Trust
Estate, the administration of the Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that the Company shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.01. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
Section 8.03. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article shall be deemed not to be a part of the
Trust Estate immediately after such payment.
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ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.
(a) The Trust shall dissolve upon the final distribution by the Owner
Trustee of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five. The bankruptcy, liquidation, dissolution, death or incapacity of
any Owner shall not (i) operate to terminate this Agreement or the Trust, (ii)
entitle such Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Estate or (iii) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor, the
Company, the Insurer nor any Owner shall be entitled to dissolve, revoke or
terminate the Trust.
(c) Notice of any dissolution of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Trust Certificates to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of a termination notice from the Master Servicer given
pursuant to Section 9.01(c) of the Sale and Servicing Agreement and no later
than 20 days prior to such dissolution, stating (i) the Distribution Date upon
or with respect to which final payment of the Trust Certificates shall be made
upon presentation and surrender of the Trust Certificates at the office of the
Paying Agent in The City of New York therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein specified. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Paying Agent at the time
such notice is given to Certificateholders. Upon presentation and surrender of
the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.02. In addition, the Owner Trustee shall notify the Rating Agencies
upon the final payment of the Trust Certificates.
(d) In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies at least 18 months after the date of
dissolution shall be distributed by the Owner Trustee to a charity designated by
the Master Servicer.
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(e) Upon the winding up of the Trust and payment of its liabilities or
reasonable provision therefore in accordance with Section 3808 of the Business
Trust Statute, the Owner Trustee shall cause the Certificate of Trust to be
cancelled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Business Trust Statute and
this Agreement (other than Article Eight) and the Trust shall terminate.
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ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's. If such corporation shall publish reports of condition
at least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee; provided that the Depositor shall have received written
confirmation from each Rating Agency that the proposed appointment will not
result in an increased capital charge to the Insurer by either Rating Agency. If
no successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee or the Insurer may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator, with the consent of the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) may remove the Owner Trustee. If the Administrator shall remove the
Owner Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
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Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective,
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall, upon payment of its fees and
expenses, deliver to the successor Owner Trustee all documents and statements
and monies held by it under this Agreement; and the Administrator and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Insurer, the Indenture Trustee, the Noteholders and each
Rating Agency. If the Administrator shall fail to mail such notice within ten
days after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner
30
<PAGE> 36
Trustee pursuant to Section 10.01, except that such co-trustee or successor
trustee shall have (or have a parent that has) a rating of at least Baa3 by
Moody's and A-1 by Standard & Poor's, and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the Owner
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the Owner
Trustee. Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
31
<PAGE> 37
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments.
(a) This Agreement may be amended by the Depositor, the Company and the
Owner Trustee, with the prior written consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing), without the consent
of any of the Noteholders or the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement 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; 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 Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time with the prior
written consent of the Insurer (so long as an Insurer Default shall not have
occurred and be continuing) by the Depositor, the Company and the Owner Trustee,
with the consent of the Holders of Trust Certificates evidencing not less than
51% of the aggregate Certificate Percentage (which consent of any Holder of a
Note or Trust Certificate given pursuant to this Section or pursuant to any
other provision of this Agreement shall be conclusive and binding on such Holder
and on all future Holders of such Note or Trust Certificate, as the case may be,
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made thereon) and, if such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of Holders (as such term is defined in the Indenture) of Notes
evidencing not less than 51% of the Outstanding Amount of the Notes, 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) collections of payments on Contracts or distributions
that shall be required to be made for the benefit of the Noteholders or the
Certificateholders or any Interest Rate or the Pass-Through Rate or (ii) reduce
the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Percentage required to consent to any such amendment, without the
consent of the Insurer and the Holders of all outstanding Notes and Trust
Certificates.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to the Indenture Trustee, the Insurer,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of Certificateholders, Noteholders or the Indenture Trustee pursuant
to this Section 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 any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the
32
<PAGE> 38
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) In connection with the execution of any amendment to this Agreement
or any other Basic Document to which the Issuer is a party and for which
amendment the Owner Trustee's consent is sought, the Owner Trustee shall be
entitled to receive and conclusively rely upon an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the Basic Documents and
that all conditions precedent in the Basic Documents for the execution and
delivery thereof by the Issuer or the Owner Trustee, as the case may be, have
been satisfied. The Owner Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02. No Legal Title to Trust Estate in Owners. The Owners
shall not have legal title to any part of the Trust Estate. The Owners shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles Five and Nine. No transfer, by
operation of law or otherwise, of any right, title or interest of the Owners to
and in their ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
Section 11.03. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Company, the Owners, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 11.04. 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) the Owner Trustee, at the Owner Trustee Corporate
Trust Office; (b) the Depositor, at 23 Pasteur, Irvine, California 92618,
Attention: Legal Department; (c) the Company, at 23 Pasteur, Irvine, California
92618, Attention: Legal Department; (d) the Insurer, at 350 Park Avenue, New
York, New York 10022, Attention: Surveillance Department, Telex No.: (212)
688-3101, Confirmation: (212) 826-0100, Telecopy Nos.: (212) 339-3518, (212)
339-3529 (in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on the Note Policy or with
respect to which failure on the part of Financial Security to respond shall be
deemed to constitute consent or acceptance, then a copy of such other notice or
other communication should also be sent to the attention of the General Counsel
and the Head - Financial Guaranty Group "URGENT MATERIAL ENCLOSED"); (e) the
Certificate Registrar or the agent for the Owner Trustee, at the address
indicated under the definition of "Owner Trustee Corporate Trust Office"; or (f)
as to each party, at such other address as shall be designated by such party in
a written notice to each other party. Any notice required or permitted to be
mailed to a Certificateholder
33
<PAGE> 39
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
Section 11.05. Severability of Provisions. If any 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 Trust
Certificates or the rights of the Holders thereof.
Section 11.06. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Company, the Insurer, the Owner Trustee and their respective
successors and permitted assigns and each Owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by an Owner shall bind the successors and assigns
of such Owner.
Section 11.08. No Petition.
(a) The Depositor will not at any time institute against the Trust or
the Company any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the other Basic
Documents.
(b) The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Seller,
the Depositor, the Company or the Trust, or join in any institution against the
Seller, the Depositor, the Company or the Trust of, any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Trust Certificates, the Notes, this
Agreement or any of the other Basic Documents.
(c) The Company will not at any time institute against the Trust, the
Seller or the Depositor any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, the Agreement or any of the other
Basic Documents.
Section 11.09. No Recourse. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Company, the Master Servicer, the
Seller, the Administrator, the Owner Trustee, the Indenture Trustee or any of
their respective Affiliates and no recourse may be had against such parties or
their assets,
34
<PAGE> 40
except as may be expressly set forth or contemplated in this Agreement, the
Trust Certificates or the other Basic Documents.
Section 11.10. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof pursuant to Section 3.03, the Certificates shall be
deemed fully paid.
Section 11.11. 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 11.12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's compensation pursuant to Section
3 of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder.
Section 11.14. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or a Insurer Insolvency has occurred,
any provision of this Agreement or any other Basic Document giving the Insurer
the right to direct, appoint or consent to, approve of, or take any action under
this Agreement, shall be inoperative during the period of such default or the
period from and after such Insurer Insolvency and such consent or approval shall
be deemed to have been given for the purpose of such provisions.
35
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WFS FINANCIAL AUTO LOANS, INC.,
as Depositor
By:
--------------------------------
Name:
Title:
WFS INVESTMENTS, INC.
By:
--------------------------------
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:
--------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
By:
--------------------------------
Name:
Title:
<PAGE> 42
EXHIBIT A
CERTIFICATE OF TRUST OF
WFS FINANCIAL 20__-_ OWNER TRUST
This Certificate of Trust of WFS Financial 20__-_ Owner Trust (the
"Trust"), dated as of __________ __, 20__, is being duly executed and filed by
Chase Manhattan Bank Delaware, a Delaware corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is WFS Financial
20__-_ Owner Trust.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee
By:
--------------------------------
Name:
Title:
A-1
<PAGE> 43
EXHIBIT B
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES
TO THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
[TO BE INSERTED ON COMPANY CERTIFICATE--
THIS TRUST CERTIFICATE IS NON-TRANSFERABLE]
WFS FINANCIAL 20__-_ OWNER TRUST
AUTO RECEIVABLE BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes, among other things, a pool of retail
installment sale contracts secured by new and used automobiles and light duty
trucks sold to the Trust by WFS Financial Auto Loans, Inc.
(This Trust Certificate does not represent an interest in or obligation
of WFS Financial Auto Loans, Inc., WFS Financial Inc, WFS Investments, Inc. or
any of their respective affiliates, and is not a deposit and is not insured by
the Federal Deposit Insurance Corporation.)
Full and complete payment of the Certificate Distributable Amount on
each Distribution Date is unconditionally and irrevocably guaranteed pursuant to
the Certificate Policy.
NUMBER C-1 $______
CUSIP NO. ______
THIS CERTIFIES THAT Cede & Co. is the registered owner of a __%
Certificate Percentage Interest nonassessable, fully-paid, fractional undivided
interest in the WFS Financial 20__-_ Owner Trust (the "Trust") formed by WFS
Financial Auto Loans, Inc., a California corporation (the "Depositor").
The Trust was created pursuant to a Trust Agreement, dated __________
__, 20__, as amended and restated __________ __, 20__ (as amended and
supplemented from time to time, the "Trust Agreement"), among WFS Financial Auto
Loans, Inc. (the "Depositor"), WFS Investments, Inc. (the "Company"), Financial
Security Assurance Inc. (the "Insurer") and Chase Manhattan Bank Delaware, as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Trust
Agreement.
This Trust Certificate is one of the duly authorized Trust Certificates
designated as "______% Auto Receivable Backed Certificates" (the "Trust
Certificates"). Issued under the Indenture, dated as of __________ __, 20__ (the
"Indenture"), between the Trust and Bankers Trust Company as Indenture Trustee,
are three classes of Notes designated as "______% Auto Receivable Backed Notes,
Class A-1", "______% Auto Receivable Backed Notes, Class A-2" and "______% Auto
Receivable Backed Notes, Class A-3" (collectively, the "Notes"). This Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the
B-1
<PAGE> 44
Trust Agreement, to which Trust Agreement the Holder of this Trust Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
The property of the Trust includes, among other things, (i) a pool of retail
installment sale contracts (the "Contracts") for new and used automobiles and
light duty trucks (the "Financed Vehicles") and (ii) the Certificate Policy.
Under the Trust Agreement, there will be distributed on each January 20,
April 20, July 20 and October 20, of each year or, if any such day is not a
Business Day, the next succeeding Business Day (each, a "Distribution Date"),
commencing on __________ 20, 20__ and ending no later than __________ 20, 20__
to the person in whose name this Trust Certificate is registered at the close of
business on the last calendar day immediately preceding the related Distribution
Date (the "Record Date"), such Certificateholder's Certificate Percentage
Interest in the amount to be distributed to Certificateholders on such
Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Seller, the Master Servicer, the Company and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be treated
as partners in that partnership. The Company and the other Certificateholders,
by acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate
covenants and agrees that such Certificateholder or Certificate Owner, as the
case may be, will not at any time institute against the Trust, the Seller, the
Depositor or the Company, or join in any institution against the Trust, the
Seller, the Depositor or the Company of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, the Trust
Agreement or any of the other Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon.
Except as otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Trust Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office of the Paying
Agent or the office or agency maintained for that purpose by the Owner Trustee
in The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
B-2
<PAGE> 45
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or any other Basic Document or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-3
<PAGE> 46
[REVERSE OF CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an interest
in, the Seller, the Depositor, the Company, the Master Servicer, the Owner
Trustee or any of their respective Affiliates and no recourse may be had against
such parties or their assets, except as expressly set forth or contemplated
herein or in the Trust Agreement or the other Basic Documents. In addition, this
Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections and
recoveries with respect to the Contracts (and certain other amounts), in each
case as more specifically set forth herein and in the Sale and Servicing
Agreement. Copies of the Sale and Servicing Agreement and the Trust Agreement
may be examined by any Certificateholder upon written request during normal
business hours at the principal office of the Depositor and at such other
places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the parties thereto with the consent of Holders of
Trust Certificates evidencing not less than 51% of the aggregate Certificate
Percentage Interest and, if such amendment materially and adversely affects the
interests of the Noteholders, with the consent of Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes. Any such consent by
the Holder of this Trust Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Trust Certificate and of any Trust
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Trust
Certificate. The Trust Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Trust
Certificates or the Notes.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
in The City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is The Chase Manhattan
Bank.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, Trust Certificates are exchangeable for new Trust
Certificates of authorized denominations evidencing the same Certificate
Percentage Interest, as requested by the Holder surrendering the same. No
service charge will be made for any such registration of transfer or exchange,
but the Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Certificate Registrar, the Paying Agent and any
of their respective agents may treat the Person in whose name this Trust
Certificate is registered as the
B-4
<PAGE> 47
owner hereof for all purposes, and none of the Owner Trustee, the Certificate
Registrar, the Paying Agent or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust Estate. The Seller may at its option purchase the Trust Estate
at a price specified in the Sale and Servicing Agreement, and such purchase of
the Contracts and other property of the Trust will effect early retirement of
the Trust Certificates; however, such right of purchase is exercisable only as
of any Distribution Date as of which the Aggregate Scheduled Balance is less
than or equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
The Trust Certificates may not be acquired by a Benefit Plan. By
accepting and holding this Trust Certificate, the Holder hereof shall be deemed
to have represented and warranted that it is not a Benefit Plan and is not
acquiring this Trust Certificate or an interest therein for the account of a
Benefit Plan.
B-5
<PAGE> 48
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly executed.
Dated: __________ __, 20__ WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By:
------------------------------------
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
THE CHASE MANHATTAN BANK, CHASE MANHATTAN BANK DELAWARE, not
as Authenticating Agent in its individual capacity but
solely as Owner Trustee
OR
By: By:
---------------------------------- ---------------------------------
Authorized Signatory Authorized Signatory
B-6
<PAGE> 49
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
---------------
Signature Guaranteed:
- ------------------------------------ --------------------------------
NOTICE: Signature(s) must be NOTICE: The signature to this
guaranteed by an eligible guarantor assignment must correspond with
institution. the name of the registered owner
as it appears on the face of the
within Trust Certificate in
every particular, without
alteration or enlargement or any
change whatever.
<PAGE> 1
EXHIBIT 4.1.2
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
WFS FINANCIAL AUTO LOANS, INC.
WFS RECEIVABLES CORPORATION,
FINANCIAL SECURITY ASSURANCE INC.
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated ______, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms.......................................................... 1
Section 1.02. Other Definitional Provisions.............................................. 4
Section 1.03. Usage of Terms............................................................. 4
Section 1.04. Section References......................................................... 4
Section 1.05. Accounting Terms........................................................... 4
ARTICLE TWO
ORGANIZATION
Section 2.01. Name....................................................................... 5
Section 2.02. Office..................................................................... 5
Section 2.03. Purposes and Powers........................................................ 5
Section 2.04. Appointment of Owner Trustee............................................... 6
Section 2.05. Initial Capital Contribution of Owner Trust Estate......................... 6
Section 2.06. Declaration of Trust....................................................... 6
Section 2.07. Title to Trust Property.................................................... 6
Section 2.08. Situs of Trust............................................................. 6
Section 2.09. Representations and Warranties of the Depositors........................... 7
Section 2.10. Federal Income Tax Allocations............................................. 8
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership.......................................................... 9
Section 3.02. The Trust Certificates..................................................... 9
Section 3.03. Authentication and Delivery of Trust Certificates.......................... 9
Section 3.04. Registration of Transfer and Exchange of Trust Certificates................ 9
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.................... 10
Section 3.06. Persons Deemed Owners...................................................... 11
Section 3.07. Access to List of Certificateholders' Names and Addresses.................. 11
Section 3.08. Maintenance of Office or Agency............................................ 11
Section 3.09. Appointment of Paying Agent................................................ 12
Section 3.10. Ownership by WFAL of Trust Certificates.................................... 12
Section 3.11. Ownership of the WFSRC Certificate......................................... 12
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters..................... 13
Section 4.02. Action by Owners with Respect to Certain Matters........................... 13
Section 4.03. Action by Owners with Respect to Bankruptcy................................ 14
Section 4.04. Restrictions on Owners' Power.............................................. 14
Section 4.05. Majority Control........................................................... 14
ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account............................................. 15
Section 5.02. Application of Trust Funds................................................. 15
Section 5.03. Method of Payment.......................................................... 16
Section 5.04. No Segregation of Monies; No Interest...................................... 16
Section 5.05. Accounting and Reports to the Noteholders, Owners, the Internal Revenue
Service and Others......................................................... 16
Section 5.06. Signature on Returns; Tax Matters Partner.................................. 16
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority.......................................................... 17
Section 6.02. General Duties............................................................. 17
Section 6.03. Action Upon Instruction.................................................... 17
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions......... 18
Section 6.05. No Action Except Under Specified Documents or Instructions................. 18
Section 6.06. Restrictions............................................................... 19
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties............................................ 20
Section 7.02. Furnishing of Documents.................................................... 21
Section 7.03. Representations and Warranties............................................. 21
Section 7.04. Reliance; Advice of Counsel................................................ 21
Section 7.05. Not Acting in Individual Capacity.......................................... 22
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or Contracts........ 22
Section 7.07. Owner Trustee May Own Trust Certificates and Notes......................... 23
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Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses...................... 23
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses.......................................... 24
Section 8.02. Indemnification............................................................ 24
Section 8.03. Payments to the Owner Trustee.............................................. 24
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement............................................. 25
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee................................ 27
Section 10.02. Resignation or Removal of Owner Trustee................................... 27
Section 10.03. Successor Owner Trustee................................................... 28
Section 10.04. Merger or Consolidation of Owner Trustee.................................. 28
Section 10.05. Appointment of Co-Trustee or Separate Trustee............................. 28
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments................................................ 30
Section 11.02. No Legal Title to Trust Estate in Owners.................................. 31
Section 11.03. Limitations on Rights of Others........................................... 31
Section 11.04. Notices................................................................... 31
Section 11.05. Severability of Provisions................................................ 32
Section 11.06. Counterparts.............................................................. 32
Section 11.07. Successors and Assigns.................................................... 32
Section 11.08. No Petition............................................................... 32
Section 11.09. No Recourse............................................................... 32
Section 11.10. Certificates Nonassessable and Fully Paid................................. 32
Section 11.11. Headings.................................................................. 33
Section 11.12. Governing Law............................................................. 33
Section 11.13. Depositor Payment Obligation.............................................. 33
Section 11.14. Insurer Default or Insolvency............................................. 33
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EXHIBITS
Exhibit A - Form of Certificate of Trust...................................................A-1
Exhibit B - Form of Trust Certificate......................................................B-1
</TABLE>
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This AMENDED AND RESTATED TRUST AGREEMENT, dated ______, 2000, is among
WFS FINANCIAL AUTO LOANS, INC., a California corporation, and WFS RECEIVABLES
CORPORATION, a California corporation (the "Depositors"), FINANCIAL SECURITY
ASSURANCE INC., a New York corporation ("Financial Security"), and CHASE
MANHATTAN BANK DELAWARE, a Delaware corporation, as owner trustee (the "Owner
Trustee").
WHEREAS, in connection herewith, the Depositors are willing to create a
trust and assume certain obligations pursuant hereto; and
WHEREAS, Financial Security is willing to issue a financial guaranty
insurance policy in respect of certain payments made on the Trust Certificates
(as defined herein) to be issued pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Adjusted Spread Account Balance" means, after taking into account all
deposits and withdrawals from the Spread Account on the Repurchase Distribution
Date, the Spread Account Balance on such Distribution Date to the extent it
exceeds the sum of (i) any Unreimbursed Insurer Amounts owed to the Insurer and
(ii) the amount of the Spread Account Initial Deposit not yet distributed to
WFAL pursuant to Section 5.05(b) of the Sale and Servicing Agreement.
"Administration Agreement" means the administration agreement, dated as
of ______, 2000, among the Trust, the Depositors, the Indenture Trustee and WFS,
as administrator.
"Agreement" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Applicants" shall have the meaning assigned to such term in Section
3.07.
"Benefit Plan" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
<PAGE> 7
"Certificate Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
"Certificate of Trust" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of Exhibit A hereto.
"Certificate Percentage Interest" has the meaning set forth in the Sale
and Servicing Agreement.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"Certificateholder" or "Holder" means the Person in whose name a Trust
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement or the other Basic Documents, the interest evidenced by any Trust
Certificate registered in the name of either Depositor, WFS, or any of their
respective Affiliates shall not be taken into account in determining whether the
requisite percentage necessary to effect such consent, waiver, request or demand
in respect of the Trust Certificates shall have been obtained.
"Closing Date" means ______, 2000.
"Code" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Depositors" means each of WFAL and WFSRC in its capacity as a depositor
hereunder, and its successors.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" means the indenture dated as of ______ 1, 2000, among the
Trust and Bankers Trust Company, as Indenture Trustee.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.03(a).
"Insurer" means Financial Security Assurance, Inc., and its successors.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, in each case issued pursuant to the Indenture.
"Owner" means each Holder of a Trust Certificate.
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<PAGE> 8
"Owner Trustee" means Chase Manhattan Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be Chase Manhattan Bank Delaware, 1201 Market Street,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department, with a copy to The Chase Manhattan Bank, 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Structured Finance Services (ABS),
or such other office at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Master Servicer, the
Depositors and the Insurer. The foregoing address of The Chase Manhattan Bank
shall be its address for purposes of its acting as Certificate Registrar and as
agent of the Owner Trustee pursuant to Sections 3.04 and 3.08, or such other
office at such other address as the Owner Trustee may designate from time to
time by notice to the Certificateholders, the Master Servicer, the Depositors
and the Insurer.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.09.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Record Date" means, with respect to any Distribution Date, the day
immediately preceding such Distribution Date.
"Repurchase Spread Account Amount" means the product of the Adjusted
Spread Account Balance and Certificate Percentage Interest of the WFSRC
Certificate.
"Repurchase Distribution Date" means the Distribution Date on which
Holder of the WFSRC Certificate repurchases the WFSRC Contracts pursuant to
Section 3.10(a) of the Sale and Servicing Agreement.
"Retained Trust Certificate Percentage" has the meaning set forth in
Section 3.10.
"Sale and Servicing Agreement" means the sale and servicing agreement,
dated as of ______, 2000, among the Trust, as Issuer, the Depositors, as
Sellers, and WFS, as Master Servicer, as the same may be amended or supplemented
from time to time.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Seller" means each of WFAL and WFSRC, in its capacity as seller under
the Sale and Servicing Agreement, and their successors.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
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<PAGE> 9
"Trust" means the trust established by this Agreement.
"Trust Certificates" means the trust certificates evidencing the
beneficial interest of an Owner in the Trust, substantially in the form of
Exhibit B hereto.
"Trust Estate" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article Two of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"Underwriters" means Credit Suisse First Boston Corporation.
"WFAL" means WFS Financial Auto Loans, Inc., and its successors.
"WFSRC" means WFS Receivables Corporation, and its successors.
"WFSRC Certificate" has the meaning set forth in the Sale and Servicing
Agreement.
"WFS" means WFS Financial Inc., and its successors.
Section 1.02. Other Definitional Provisions. Capitalized terms used that
are not otherwise defined herein shall have the meanings ascribed thereto in the
Sale and Servicing Agreement or, if not defined therein, in the Indenture.
Section 1.03. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
Section 1.04. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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<PAGE> 10
ARTICLE TWO
ORGANIZATION
Section 2.01. Name. The Trust created hereby shall be known as "WFS
Financial 2000-A Owner Trust", in which name the Owner Trustee may conduct the
activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners, the Depositor and the Insurer.
Section 2.03. Purposes and Powers.
(a) The sole purpose of the Trust is to conserve the Trust Estate and
collect and disburse the periodic income therefrom for the use and benefit of
the Owners, and in furtherance of such purpose to engage in the following
ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes;
(ii) with the proceeds of the sale of the Notes, to purchase
the Contracts, to fund the Spread Account, to pay the organizational,
start-up and transactional expenses of the Trust and to pay the balance
to the Depositors pursuant to the Sale and Servicing Agreement;
(iii) to Grant the Trust Estate pursuant to the Indenture and
to hold, manage and distribute to the Owners pursuant to the Sale and
Servicing Agreement any portion of the Trust Estate released from the
Lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions to the
Owners and the Noteholders.
(b) The Trust shall not engage in any activities other than in
connection with the foregoing. Nothing contained herein shall be deemed to
authorize the Owner Trustee, on behalf of the Trust, to engage in any business
operations or any activities other than those set forth in the introductory
sentence of this Section. Specifically, the Owner Trustee, on behalf of the
Trust, shall have no authority to engage in any business operations, acquire any
assets other than those specifically included in the Trust Estate under Section
1.01 or otherwise vary the assets
5
<PAGE> 11
held by the Trust. Similarly, the Owner Trustee shall have no discretionary
duties other than performing those ministerial acts set forth above necessary to
accomplish the purpose of the Trust as set forth in the introductory sentence of
this Section.
Section 2.04. Appointment of Owner Trustee. The Depositors hereby
appoint the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
Section 2.05. Initial Capital Contribution of Owner Trust Estate. Each
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositors, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Estate and
shall be deposited in the Certificate Distribution Account. The Depositors shall
be jointly and severally liable for, and shall pay the organizational expenses
of the Trust as they may arise or shall, upon the request of the Owner Trustee,
promptly reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, the
Trust shall be treated as a partnership, with the assets of the partnership
being the Contracts and other assets held by the Trust and with the partners of
the partnership being the Certificateholders and the Notes being debt of the
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as a partnership for such tax purposes. Effective as of the date
hereof, the Owner Trustee shall have all rights, powers and duties set forth
herein and in the Business Trust Statute for the sole purpose and to the extent
necessary to accomplish the purpose of the Trust as set forth in the
introductory sentence of Section 2.03.
Section 2.07. Title to Trust Property. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
Section 2.08. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of California, the State of
Delaware or the State of New York. The Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in Delaware or New York
and
6
<PAGE> 12
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Owner Trustee Corporate Trust Office.
Section 2.09. Representations and Warranties of the Depositors. Each
Depositor hereby jointly and severally represents and warrants to the Owner
Trustee and the Insurer that:
(a) Each Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of California, with power and authority to own its
properties and to conduct its business and had at all relevant times,
and has, power, authority and legal right to acquire and own the
Contracts.
(b) Each Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(c) Each Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; each Depositor has
full power and authority to sell and assign the property to be sold and
assigned by such Depositor to and deposited with the Owner Trustee on
behalf of the Trust as part of the Trust Estate and has duly authorized
such sale and assignment and deposit with the Owner Trustee on behalf of
the Trust by all necessary corporate action; and the execution, delivery
and performance of this Agreement have been duly authorized by each
Depositor by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in the breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or bylaws of either Depositor, or any
indenture, agreement or other instrument to which either Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of the properties of either Depositor pursuant to
the terms of any such indenture, agreement or other instrument (other
than pursuant to the Basic Documents); nor violate any law or any order,
rule or regulation applicable to either Depositor of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over such Depositor or
its properties.
(e) There are no proceedings or investigations pending, or to the
Depositor's best knowledge threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over either Depositor or its properties (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Trust Certificates, (B) seeking to prevent the issuance of the Trust
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 either Depositor of its obligations under, or the
validity or enforceability of, this Agreement, any of the other Basic
Documents or the Trust Certificates or (D) involving either Depositor
and which
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<PAGE> 13
might adversely affect the federal income tax or other federal, state or
local tax attributes of the Trust Certificates.
Section 2.10. Federal Income Tax Allocations.
(a) Net income of the Trust for any calendar quarter as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated among the
Certificateholders as of the first day following the end of such quarter, in
proportion to their Certificate Percentage Interest on such date, net income in
an amount up to the sum any other amounts of income payable to the
Certificateholders for such quarter
(b) Net losses of the Trust, if any, for any calendar quarter as
determined for federal income tax purposes (and each item of income, gain, loss
and deduction entering into the computation thereof) shall be allocated to the
Certificateholders in proportion to their Certificate Percentage Interest as of
the first day following the end of such quarter in proportion to their ownership
of the principal amount of Trust Certificates on such day. The
Certificateholders are authorized to modify the allocations in this paragraph if
necessary or appropriate, in their sole discretion, for the allocations to
fairly reflect the income, gain, loss and deduction to the Certificateholders,
or as otherwise required by the Code.
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<PAGE> 14
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositors pursuant to Section 2.05 and until the issuance
of the Trust Certificates, the Depositors shall be the sole beneficiaries of the
Trust.
Section 3.02. The Trust Certificates. The Trust Certificates shall be
substantially in the form of Exhibit B hereto. The Trust Certificates shall be
executed by the Owner Trustee on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee and attested on behalf
of the Owner Trustee by the manual or facsimile signature of an authorized
officer of the Owner Trustee and shall be deemed to have been validly issued
when so executed. Trust Certificates bearing the manual or facsimile signatures
of individuals who were, at the time when such signatures were affixed,
authorized to sign on behalf of the Owner Trustee shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the authentication and delivery of such
Trust Certificates or did not hold such offices at the date of such Trust
Certificates. All Trust Certificates shall be dated the date of their
authentication.
Section 3.03. Authentication and Delivery of Trust Certificates. The
Owner Trustee shall cause to be authenticated and delivered upon the order of
the Depositors, in exchange for the Contracts and the other assets of the Trust,
simultaneously with the sale, assignment and transfer to the Trust of the
Contracts, and the constructive delivery to the Owner Trustee of the Contract
Files and the other assets of the Trust, Trust Certificates duly authenticated
by the Owner Trustee, evidencing the entire ownership of the Trust and Notes
issued by the Owner Trustee and authenticated by the Indenture Trustee in
aggregate principal amount of, in the case of the (i) Class A-1 Notes,
$________, (ii) Class A-2 Notes, $________, (iii) Class A-3 Notes, $________ and
(iv) Class A-4 Notes, $________. No Trust Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Trust Certificate a certificate of authentication substantially in the
form set forth in the form of Trust Certificate attached hereto as Exhibit B,
executed by the Owner Trustee or its authenticating agent, by manual signature,
and such certificate upon any Trust Certificate shall be conclusive evidence,
and the only evidence, that such Trust Certificate has been duly authenticated
and delivered hereunder. The provisions of Sections 7.01, 7.03, 7.04 and 8.01
shall apply to any authenticating agent hereunder. Upon issuance, authentication
and delivery pursuant to the terms hereof, the Trust Certificates will be
entitled to the benefits of this Agreement.
Section 3.04. Registration of Transfer and Exchange of Trust
Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of Trust
Certificates and transfers and exchanges of Trust Certificates as provided
herein. The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York,
New York 10001, Attention: Structured Finance Services (ABS) as agent for the
Owner Trustee, is hereby initially appointed Certificate Registrar for the
purpose of registering Trust Certificates and transfers and exchanges of Trust
Certificates as herein provided. In the event that,
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<PAGE> 15
subsequent to the Closing Date, the Owner Trustee notifies the Master Servicer
that The Chase Manhattan Bank is unable to act as Certificate Registrar, the
Master Servicer shall appoint another bank or trust company, having an office or
agency located in The City of New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise acceptable to the
Owner Trustee, to act as successor Certificate Registrar hereunder. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to any Certificate
Registrar hereunder.
(b) Upon surrender for registration of transfer of any Trust Certificate
at the office of the Certificate Registrar, the Owner Trustee shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates of a like Certificate Percentage
Interest.
(c) At the option of a Certificateholder, Trust Certificates may be
exchanged for other Trust Certificates of a like Certificate Percentage
Interest, upon surrender of the Trust Certificates to be exchanged at the office
of the Certificate Registrar. Whenever any Trust Certificates are so surrendered
for exchange, the Owner Trustee on behalf of the Trust shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver) the Trust Certificates that the Certificateholder
making the exchange is entitled to receive. Every Trust Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the Holder thereof or his attorney duly
authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
(e) The Trust Certificates may not be acquired by or for the account of
a Benefit Plan. By accepting and holding a Trust Certificate or a beneficial
interest therein, the Certificateholder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan nor will it hold such
Trust Certificate or a beneficial interest therein for the account of a Benefit
Plan.
(f) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered any agent of the Owner Trustee under this Agreement,
shall be delivered to the Owner Trustee and promptly cancelled by it, or, if
surrendered to the Owner Trustee, shall be promptly cancelled by it, and no
Trust Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Owner Trustee shall dispose of
cancelled Trust Certificates in accordance with the normal industry practice.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If (i) any mutilated Trust Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Trust Certificate, and (ii) there is
delivered to the Certificate Registrar and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice that such Trust
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Certificate has been acquired by a protected purchaser, the Owner Trustee on
behalf of the Trust shall execute and the Owner Trustee or its authenticating
agent shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Certificate, a new Trust Certificate
of like tenor and Certificate Percentage Interest. In connection with the
issuance of any new Trust Certificate under this Section, the Owner Trustee may
require the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate Trust
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found at
any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar, any Paying Agent and any of their respective agents may
treat the Person in whose name any Trust Certificate is registered as the owner
of such Trust Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar, any Paying Agent or any of their respective
agents shall be affected by any notice to the contrary.
Section 3.07. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Insurer and the Depositors, within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Master Servicer, the
Certificateholders, the Insurer or a Depositor, a list, in such form as the
Master Servicer or the Depositors may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders, or one or more Holders of Trust Certificates
evidencing not less than 25% of the percentage interests of the Trust
Certificates (hereinafter referred to as "Applicants"), apply in writing to the
Owner Trustee, and such application states that the Applicants desire to
communicate with other Certificateholders with respect to their rights hereunder
or under the Trust Certificates and such application is accompanied by a copy of
the communication that such Applicants propose to transmit, then the Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access, during normal business hours, to the current list
of Certificateholders. Every Certificateholder, by receiving and holding a Trust
Certificate, agrees with the Master Servicer, the Depositors and the Owner
Trustee that none of the Master Servicer, the Depositors or the Owner Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders hereunder, regardless of
the source from which such information was derived.
Section 3.08. Maintenance of Office or Agency. The Chase Manhattan Bank,
as agent for the Owner Trustee, shall maintain in the Borough of Manhattan, The
City of New York, an office or offices or agency or agencies where Trust
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the Trust
Certificates and the Basic Documents may be served. The Owner Trustee hereby
designates the office of The Chase Manhattan Bank at the address provided under
the definition of the term "Owner Trustee Corporate Trust Office" as its office
for such purposes. The Owner Trustee shall give prompt written notice to the
Depositor, the Master Servicer and to
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Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
Section 3.09. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be The Chase Manhattan Bank and any co-paying agent chosen by the Paying Agent
that is acceptable to the Owner Trustee. Each Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Owner Trustee. In the
event that The Chase Manhattan Bank shall no longer be the Paying Agent, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee to execute
and deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise. If the long
term debt rating of the Paying Agent shall not be at least Baa3 from Moody's and
BBB- from Standard & Poor's, the Rating Agencies shall be given notice of such
lower long term debt rating.
Section 3.10. Ownership by WFAL of Trust Certificates. WFAL shall on the
Closing Date retain Trust Certificates representing at least __% of the
Certificate Percentage Interest and shall thereafter retain beneficial and
record ownership of Trust Certificates representing at least __% of the
Certificate Percentage Interest (the "Retained Trust Certificate Percentage").
Any attempted transfer of any Trust Certificate that would reduce the interest
of WFAL in the Trust below the Retained Trust Certificate Percentage shall be
void. The Owner Trustee shall cause any Trust Certificate issued to WFAL on the
Closing Date (and any Trust Certificate issued in exchange therefor) to contain
a legend stating "THIS TRUST CERTIFICATE IS NON-TRANSFERABLE EXCEPT AS PROVIDED
IN SECTION 3.10 OF THE TRUST AGREEMENT".
Section 3.11. Ownership of the WFSRC Certificate. The Certificate
Percentage Interest of the WFSRC Certificate may not be subdivided and the WFSRC
Certificate may be held by no more than one Owner.
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and the Holders of Trust
Certificates evidencing at least a majority of the aggregate Certificate
Percentage Interest shall not have notified the Owner Trustee in writing prior
to the 30th day after such notice is given that such Holders have withheld
consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by
or against the Trust (except with respect to the aforementioned claims
or lawsuits for collection of the Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and
such amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant
to this Agreement of a successor Certificate Registrar, or the consent
to the assignment by the Note Registrar, Paying Agent, Indenture Trustee
or Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
Section 4.02. Action by Owners with Respect to Certain Matters. Subject
to the provisions and limitations of Section 4.04, the Owner Trustee shall not
have the power, except upon the direction of the Owners and with the prior
written consent of the Insurer (so long as no Insurer Default shall have
occurred and be continuing), to (a) remove the Administrator pursuant to Section
8 of the Administration Agreement, (b) appoint a successor Administrator
pursuant to Section 8 of the Administration Agreement, (c) remove the Master
Servicer pursuant to Section 8.01 of the Sale and Servicing Agreement, (d)
except as expressly provided in the Basic Documents, sell the Contracts after
the termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
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Trust, (f) authorize the merger, consolidation or conversion of the Trust with
or into any other business trust or entity (other than in accordance with
Section 3.10 of the Indenture) or (g) amend the Certificate of Trust. The Owner
Trustee shall take the actions referred to in the preceding sentence only upon
written instructions signed by the Owners.
Section 4.03. Action by Owners with Respect to Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior written consent of the
Insurer and the unanimous prior approval of all Owners and the delivery to the
Owner Trustee by each such Owner of a certificate certifying that such Owner
reasonably believes that the Trust is insolvent.
Section 4.04. Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the other Basic Documents or would be contrary to
the purpose of the Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
aggregate Certificate Percentage Interest. Except as expressly provided herein,
any written notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by Holders of Trust Certificates evidencing not less than a
majority of the aggregate Certificate Percentage Interest at the time of the
delivery of such notice.
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
Section 5.01. Establishment of Trust Account. The Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Certificate Distribution Account
initially shall be established with The Chase Manhattan Bank in the state of New
York.
The Owner Trustee shall possess all right, title and interest in funds
on deposit from time to time in the Certificate Distribution Account and in the
proceeds thereof. Except as otherwise expressly provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Depositor on behalf of the Owner Trustee, if the Certificate
Distribution Account is not then held by the Owner Trustee or an Affiliate
thereof) shall within ten Business Days (or such longer period, not to exceed 30
calendar days, as to which the Insurer must consent) establish a new Certificate
Distribution Account as an Eligible Account and shall transfer any cash and/or
any investments to such new Certificate Distribution Account.
Section 5.02. Application of Trust Funds.
(a) On each Calculation Day and Distribution Date, the Owner Trustee
will distribute to Certificateholders, in proportion to each Certificateholder's
Certificate Percentage Interest, amounts deposited into the Certificate
Distribution Account pursuant to Sections 5.06 and 9.01 of the Sale and
Servicing Agreement and Section 5.06(a) of the Indenture with respect to such
Distribution Date.
(b) Notwithstanding Section 5.02(a), if the Holder of the WFSRC
Certificate exercises its right to repurchase the WFSRC Contracts pursuant to
Section 3.10 of the Sale and Servicing Agreement, such Holder shall have the
right to receive amounts on deposit in the Certificate Distribution Account
pursuant to such Section only until the aggregate amount received by it after
the Repurchase Distribution Date equals the Repurchase Spread Account Amount.
If, pursuant to this Section, the Holder of the WFSRC Certificate has received
the Repurchase Spread Account Amount, it shall have no further right as Holder
of the WFSRC Certificate to amounts on deposit in the Certificate Distribution
Account.
(c) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Master Servicer pursuant to Section 5.07 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain, or cause the Paying Agent
to retain, from amounts otherwise distributable to the
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Owners sufficient funds for the payment of any tax that is legally owed by the
Trust (but such authorization shall not prevent the Owner Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to an Owner shall be treated
as cash distributed to such Owner at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility that
withholding tax is payable with respect to a distribution, the Owner Trustee may
in its sole discretion withhold such amounts in accordance with this paragraph
(c).
Section 5.03. Method of Payment. Subject to Section 9.01(c) respecting
the final payment upon retirement of each Trust Certificate, distributions
required to be made to each Certificateholder of record on the related Record
Date shall be made by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register or by wire transfer of
immediately available funds.
Section 5.04. No Segregation of Monies; No Interest. Subject to Sections
5.01 and 5.02, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.05. Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.01(c) with respect to income or distributions to
Owners. The Owner Trustee shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Contracts. The Owner Trustee shall not make the election provided under Section
754 of the Code.
Section 5.06. Signature on Returns; Tax Matters Partner.
(a) WFAL shall sign on behalf of the Trust the tax returns of the Trust.
(b) WFAL shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and any
amendment or other agreement, as evidenced conclusively by the Owner Trustee's
execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Administrator recommends with
respect to the Basic Documents.
Section 6.02. General Duties. Subject to the provisions and limitations
of Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to
discharge (or cause to be discharged through the Administrator or such agents as
shall be appointed with the consent of the Insurer) all of its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the other
Basic Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, regardless of whether the Administration
Agreement is subsequently terminated or rejected by the Administrator, and the
Owner Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
Section 6.03. Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or the Owners (if an Insurer Default shall have occurred and
be continuing) (the "Instructing Party") may by written instruction direct the
Owner Trustee in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Instructing Party pursuant to Article
Four.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any other Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any other Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Basic Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
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instruction of the Instructing Party received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement and
the other Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any other Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03 and no implied duties or obligations
shall be read into this Agreement or any other Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens (other than the lien of the
Indenture) on any part of the Trust Estate that result from actions by, or
claims against, the Owner Trustee that are not related to the ownership or the
administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except in accordance with
(i) the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) the other Basic Documents and (iii) any
document or instruction delivered to the Owner Trustee pursuant to Section 6.03.
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Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of a Responsible Officer in the Owner
Trustee Corporate Trust Office, would result in the Trust's becoming taxable as
a corporation for federal or state income tax purposes. The Owners shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
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ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Trust Estate upon the terms of this Agreement and the other Basic
Documents. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Basic Document under any circumstances, except (i) for its own
willful misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Administrator or any Owner;
(c) no provision of this Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights or
powers hereunder or under any other Basic Document if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Trust
Certificates;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or the Insurer or for the form,
character, genuineness, sufficiency, value or validity of any of the
Trust Estate, or for or in respect of the validity or sufficiency of the
Basic Documents, other than the certificate of authentication on the
Trust Certificates, and the Owner Trustee shall in no event assume or
incur any liability, duty or obligation to any Noteholder or to any
Owner, other than as expressly provided for herein or expressly agreed
to in the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, WFAL or WFSRC, each as Seller or
Depositor, the Insurer, the Indenture Trustee or the Master Servicer
under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the
Trust under this Agreement or the other Basic Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the
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Indenture or the Master Servicer or WFAL or WFSRC, each as Seller or
Depositor under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the request, order or direction of the Instructing Party, unless such
Instructing Party has offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may
be incurred by the Owner Trustee therein or thereby; the right of the
Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any other Basic Document shall not be construed as a
duty, and the Owner Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish
to the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositors, the Owners and the Insurer that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any
lien, charge or encumbrance on the Trust Estate resulting from actions
by or claims against the Owner Trustee individually which are unrelated
to this Agreement or the other Basic Documents.
Section 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
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directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any other Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as otherwise
provided in this Article Seven, in accepting the trusts hereby created, Chase
Manhattan Bank Delaware acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any other Basic
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or
Contracts. The recitals contained herein and in the Trust Certificates (other
than the signature of the Owner Trustee and the certificate of authentication on
the Trust Certificates) shall be taken as the statements of the Depositors, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, any other Basic Document or the Trust Certificates (other than the
signature of the Owner Trustee and the certificate of authentication on the
Trust Certificates and the representations and warranties in Section 7.03) or
the Notes, or of any Contract or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Contract, or the perfection and
priority of any security interest created by any Contract in any Financed
Vehicle or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation, the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Contract on any computer or other record thereof; the validity of the assignment
of any Contract to the Trust or of any intervening assignment; the completeness
of any Contract; the performance or enforcement of any Contract; the compliance
by the Depositors, the Insurer or the Master Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or
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<PAGE> 28
representation; or any action of the Administrator, the Indenture Trustee or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositors, the
Insurer, the Administrator, the Indenture Trustee and the Master Servicer in
banking transactions with the same rights as it would have if it were not Owner
Trustee.
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Trust to use
its best efforts to maintain, the effectiveness of all licenses required under
the Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the other Basic Documents and the transactions contemplated hereby
and thereby until such time as the Trust shall terminate in accordance with the
terms hereof.
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<PAGE> 29
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between WFAL and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by WFAL for
its other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder.
Section 8.02. Indemnification. WFAL shall be liable as primary obligor
for, and shall indemnify the Owner Trustee and its successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the other Basic Documents, the Trust
Estate, the administration of the Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that WFAL shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.01. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
Section 8.03. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article shall be deemed not to be a part of the
Trust Estate immediately after such payment.
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ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.
(a) The Trust shall dissolve upon the final distribution by the Owner
Trustee of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five. The bankruptcy, liquidation, dissolution, death or incapacity of
any Owner shall not (i) operate to terminate this Agreement or the Trust, (ii)
entitle such Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Estate or (iii) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither of the Depositors,
the Insurer nor any Owner shall be entitled to dissolve, revoke or terminate the
Trust.
(c) Notice of any dissolution of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Trust Certificates to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of a termination notice from the Master Servicer given
pursuant to Section 9.01(c) of the Sale and Servicing Agreement and no later
than 20 days prior to such dissolution, stating (i) the Distribution Date upon
or with respect to which final payment of the Trust Certificates shall be made
upon presentation and surrender of the Trust Certificates at the office of the
Paying Agent in The City of New York therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein specified. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Paying Agent at the time
such notice is given to Certificateholders. Upon presentation and surrender of
the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.02. In addition, the Owner Trustee shall notify the Rating Agencies
upon the final payment of the Trust Certificates.
(d) In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies at least 18 months after the date of
dissolution shall be distributed by the Owner Trustee to a charity designated by
the Master Servicer.
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<PAGE> 31
(e) Upon the winding up of the Trust and payment of its liabilities or
reasonable provision therefore in accordance with Section 3808 of the Business
Trust Statute, the Owner Trustee shall cause the Certificate of Trust to be
cancelled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Business Trust Statute and
this Agreement (other than Article Eight) and the Trust shall terminate.
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<PAGE> 32
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's. If such corporation shall publish reports of condition
at least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee or the Insurer may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator, with the consent of the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) may remove the Owner Trustee. If the Administrator shall remove the
Owner Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
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Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective,
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall, upon payment of its fees and
expenses, deliver to the successor Owner Trustee all documents and statements
and monies held by it under this Agreement; and the Administrator and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Insurer, the Indenture Trustee, the Noteholders and each
Rating Agency. If the Administrator shall fail to mail such notice within ten
days after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner
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<PAGE> 34
Trustee pursuant to Section 10.01, except that such co-trustee or successor
trustee shall have (or have a parent that has) a rating of at least Baa3 by
Moody's and A-1 by Standard & Poor's, and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed, the Owner
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the Owner
Trustee. Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee, with the prior written consent of the Insurer (so long as an Insurer
Default shall not have occurred and be continuing), without the consent of any
of the Noteholders or the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement 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; 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 Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time with the prior
written consent of the Insurer (so long as an Insurer Default shall not have
occurred and be continuing) by the Depositor and the Owner Trustee, with the
consent of the Holders of Trust Certificates evidencing not less than 51% of the
aggregate Certificate Percentage Interest (which consent of any Holder of a Note
or Trust Certificate given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Note or Trust Certificate, as the case may be,
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made thereon) and, if such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of Holders (as such term is defined in the Indenture) of Notes
evidencing not less than 51% of the Outstanding Amount of the Notes, 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) collections of payments on Contracts or distributions
that shall be required to be made for the benefit of the Noteholders or the
Certificateholders or any Interest Rate or (ii) reduce the aforesaid percentage
of the Outstanding Amount of the Notes and the Certificate Percentage Interest
required to consent to any such amendment, without the consent of the Insurer
and the Holders of all outstanding Notes and Trust Certificates.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to the Indenture Trustee, the Insurer,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of Certificateholders, Noteholders or the Indenture Trustee pursuant
to this Section 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 any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the
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<PAGE> 36
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) In connection with the execution of any amendment to this Agreement
or any other Basic Document to which the Issuer is a party and for which
amendment the Owner Trustee's consent is sought, the Owner Trustee shall be
entitled to receive and conclusively rely upon an Opinion of Counsel to the
effect that such amendment is authorized or permitted by the Basic Documents and
that all conditions precedent in the Basic Documents for the execution and
delivery thereof by the Issuer or the Owner Trustee, as the case may be, have
been satisfied. The Owner Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02. No Legal Title to Trust Estate in Owners. The Owners
shall not have legal title to any part of the Trust Estate. The Owners shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles Five and Nine. No transfer, by
operation of law or otherwise, of any right, title or interest of the Owners to
and in their ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
Section 11.03. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositors, the Owners, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 11.04. 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) the Owner Trustee, at the Owner Trustee Corporate
Trust Office; (b) WFAL, at 23 Pasteur, Irvine, California 92618, Attention:
Legal Department; (b) WFSRC, at 23 Pasteur, Irvine, California 92618, Attention:
Legal Department; (d) the Insurer, at 350 Park Avenue, New York, New York 10022,
Attention: Surveillance Department, Telex No.: (212) 688-3101, Confirmation:
(212) 826-0100, Telecopy Nos.: (212) 339-3518, (212) 339-3529 (in each case in
which notice or other communication to Financial Security refers to an Event of
Default, a claim on the Note Policy or with respect to which failure on the part
of Financial Security to respond shall be deemed to constitute consent or
acceptance, then a copy of such other notice or other communication should also
be sent to the attention of the General Counsel and the Head - Financial
Guaranty Group "URGENT MATERIAL ENCLOSED"); (e) the Certificate Registrar or the
agent for the Owner Trustee, at the address indicated under the definition of
"Owner Trustee Corporate Trust Office"; or (f) as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given
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by first-class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
Section 11.05. Severability of Provisions. If any 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 Trust
Certificates or the rights of the Holders thereof.
Section 11.06. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each
Depositor, the Insurer, the Owner Trustee and their respective successors and
permitted assigns and each Owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
Section 11.08. No Petition.
(a) Neither Depositor will at any time institute against the Trust any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Trust
Certificates, the Notes, this Agreement or any of the other Basic Documents.
(b) The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against either
Seller, either Depositor or the Trust, or join in any institution against either
Seller, either Depositor or the Trust of, any bankruptcy proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, this Agreement or any
of the other Basic Documents.
Section 11.09. No Recourse. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositors, the Master Servicer, the Seller, the
Administrator, the Owner Trustee, the Indenture Trustee or any of their
respective Affiliates and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Trust Certificates or the other Basic Documents.
Section 11.10. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall
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be nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and, upon authentication thereof pursuant to Section 3.03, the
Certificates shall be deemed fully paid.
Section 11.11. 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 11.12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Depositor Payment Obligation. WFAL shall be responsible
for payment of the Administrator's compensation pursuant to Section 3 of the
Administration Agreement and shall reimburse the Administrator for all expenses
and liabilities of the Administrator incurred thereunder.
Section 11.14. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or a Insurer Insolvency has occurred,
any provision of this Agreement or any other Basic Document giving the Insurer
the right to direct, appoint or consent to, approve of, or take any action under
this Agreement, shall be inoperative during the period of such default or the
period from and after such Insurer Insolvency and such consent or approval shall
be deemed to have been given for the purpose of such provisions.
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<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WFS FINANCIAL AUTO LOANS, INC.
By:
--------------------------------
Name:
Title:
WFS RECEIVABLES CORPORATION
By:
--------------------------------
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:
--------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
By:
--------------------------------
Name:
Title:
<PAGE> 40
EXHIBIT A
CERTIFICATE OF TRUST OF
WFS FINANCIAL 2000-A OWNER TRUST
This Certificate of Trust of WFS Financial 2000-A Owner Trust (the
"Trust"), dated as of ___________, 2000, is being duly executed and filed by
Chase Manhattan Bank Delaware, a Delaware corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is WFS Financial
2000-A Owner Trust.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee
By:
------------------------------------
Name:
Title:
A-1
<PAGE> 41
EXHIBIT B
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES
TO THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
[TO BE INSERTED ON WFAL'S CERTIFICATE--
THIS TRUST CERTIFICATE IS NON-TRANSFERABLE EXCEPT AS PROVIDED IN
SECTION 3.10 OF THE TRUST AGREEMENT]
WFS FINANCIAL 2000-A OWNER TRUST
AUTO RECEIVABLE BACKED CERTIFICATE
Evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes, among other things, a pool of retail
installment sale contracts secured by new and used automobiles and light duty
trucks transferred to the Trust by WFS Financial Auto Loans, Inc. and WFS
Receivables Corporation.
(This Trust Certificate does not represent an interest in or obligation
of WFS Financial Auto Loans, Inc., WFS Financial Inc. WFS Investments, Inc., WFS
Receivables Corporation or any of their respective affiliates, and is not a
deposit and is not insured by the Federal Deposit Insurance Corporation.)
Full and complete payment of the Certificate Distributable Amount on
each Distribution Date is unconditionally and irrevocably guaranteed pursuant to
the Certificate Policy.
NUMBER C-1
THIS CERTIFIES THAT _________ is the registered owner of __% Certificate
Percentage Interest nonassessable, fully-paid, fractional undivided interest in
the WFS Financial 2000-A Owner Trust (the "Trust") formed by WFS Financial Auto
Loans, Inc. and WFS Receivables Corporation, each of which is a California
corporation (the "Depositors").
The Trust was created pursuant to a Trust Agreement, dated ______, 2000,
as amended and restated ______, 2000 (as amended and supplemented from time to
time, the "Trust Agreement"), among WFS Financial Auto Loans, Inc. (the
"Depositor"), WFS Receivables Corporation, Financial Security Assurance Inc.
(the "Insurer") and Chase Manhattan Bank Delaware, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Trust Agreement.
This Trust Certificate is one of the duly authorized Trust Certificates
designated as "Auto Receivable Backed Certificates" (the "Trust Certificates").
Issued under the Indenture, dated as of ______ 1, 2000 (the "Indenture"),
between the Trust and Bankers Trust Company as Indenture Trustee, are three
classes of Notes designated as "______% Auto Receivable Backed Notes,
B-1
<PAGE> 42
Class A-1", "______% Auto Receivable Backed Notes, Class A-2", "______% Auto
Receivable Backed Notes, Class A-3" and "______% Auto Receivable Backed Notes,
Class A-4" (collectively, the "Notes"). This Trust Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement,
to which Trust Agreement the Holder of this Trust Certificate by virtue of its
acceptance hereof assents and by which such Holder is bound. The property of the
Trust includes, among other things, a pool of retail installment sale contracts
(the "Contracts") for new and used automobiles and light duty trucks (the
"Financed Vehicles").
Under the Trust Agreement, there will be distributed on each ______ 20,
_______ 20, _______ 20 and ________ 20, of each year or, if any such day is not
a Business Day, the next succeeding Business Day (each, a "Distribution Date"),
commencing on ______ 20, 2000 and ending no later than ______ 20, ____ to the
person in whose name this Trust Certificate is registered at the close of
business on the last calendar day immediately preceding the related Distribution
Date (the "Record Date"), such Certificateholder's Certificate Percentage
Interest in the amount to be distributed to Certificateholders on such
Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Sellers, the Master Servicer and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Depositors) will be
treated as partners in that partnership. The Depositors and the other
Certificateholders, by acceptance of a Trust Certificate, agree to treat, and to
take no action inconsistent with the treatment of, the Trust Certificates for
such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate
covenants and agrees that such Certificateholder will not at any time institute
against the Trust, either Seller or Depositor, or join in any institution
against the Trust, either Seller or Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the other Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon.
Except as otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Trust Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office of the Paying
Agent or the office or agency maintained for that purpose by the Owner Trustee
in The City of New York.
B-2
<PAGE> 43
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or any other Basic Document or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
B-3
<PAGE> 44
[REVERSE OF CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an interest
in, the Sellers, the Depositors, the Master Servicer, the Owner Trustee or any
of their respective Affiliates and no recourse may be had against such parties
or their assets, except as expressly set forth or contemplated herein or in the
Trust Agreement or the other Basic Documents. In addition, this Trust
Certificate is not guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections and recoveries with
respect to the Contracts (and certain other amounts), in each case as more
specifically set forth herein and in the Sale and Servicing Agreement. Copies of
the Sale and Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of each Depositor and at such other places, if any, designated
by the Depositors.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the parties thereto with the consent of Holders of
Trust Certificates evidencing not less than 51% of the aggregate Certificate
Percentage Interest and, if such amendment materially and adversely affects the
interests of the Noteholders, with the consent of Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes. Any such consent by
the Holder of this Trust Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Trust Certificate and of any Trust
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Trust
Certificate. The Trust Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Trust
Certificates or the Notes.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
in The City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates evidencing the same aggregate
interest in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is The Chase Manhattan
Bank.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, Trust Certificates are exchangeable for new Trust
Certificates evidencing the same Certificate Percentage Interest, as requested
by the Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Paying Agent and any
of their respective agents may treat the Person in whose name this Trust
Certificate is registered as the
B-4
<PAGE> 45
owner hereof for all purposes, and none of the Owner Trustee, the Certificate
Registrar, the Paying Agent or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust Estate. WFSRC may at WFSRC's option purchase the WFSRC
Contracts at a price specified in the Sale and Servicing Agreement; however,
such right of purchase is exercisable only as of any Distribution Date as of
which the Aggregate Scheduled Balance is less than or equal to 20% of the
Cut-Off Date Aggregate Scheduled Balance. The Sellers may at any Seller's option
purchase the Trust Estate at a price specified in the Sale and Servicing
Agreement, and such purchase of the Contracts and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable only as of any Distribution Date as of which the
Aggregate Scheduled Balance is less than or equal to 10% of the Cut-Off Date
Aggregate Scheduled Balance.
The Trust Certificates may not be acquired by a Benefit Plan. By
accepting and holding this Trust Certificate, the Holder hereof shall be deemed
to have represented and warranted that it is not a Benefit Plan and is not
acquiring this Trust Certificate or an interest therein for the account of a
Benefit Plan.
B-5
<PAGE> 46
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly executed.
Dated: ______ __, 2000 WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By:
-------------------------------------
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
THE CHASE MANHATTAN BANK, CHASE MANHATTAN BANK DELAWARE, not
as Authenticating Agent in its individual capacity but
solely as Owner Trustee
OR
By: By:
--------------------------------- ---------------------------------
Authorized Signatory Authorized Signatory
B-6
<PAGE> 47
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- --------------------------------------------------------------------------------
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
--------------------
Signature Guaranteed:
- ----------------------------------- -----------------------------------
NOTICE: Signature(s) must be NOTICE: The signature to this
guaranteed by an eligible guarantor assignment must correspond with the
institution. name of the registered owner as it
appears on the face of the within
Trust Certificate in every
particular, without alteration or
enlargement or any change whatever.
<PAGE> 1
EXHIBIT 4.2.1
================================================================================
WFS FINANCIAL 20__-_ OWNER TRUST,
as Issuer,
and
BANKERS TRUST COMPANY,
as Trustee
------------------------------------
INDENTURE
Dated as of __________ 1, 20__
------------------------------------
$__________
Auto Receivable Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................................ 2
Section 1.02. Incorporation by Reference of Trust Indenture Act.......................... 10
Section 1.03. Rules of Construction...................................................... 11
ARTICLE TWO
THE NOTES
Section 2.01. Form....................................................................... 12
Section 2.02. Execution, Authentication and Delivery..................................... 12
Section 2.03. Temporary Notes............................................................ 12
Section 2.04. Registration; Registration of Transfer and Exchange........................ 13
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes................................. 14
Section 2.06. Persons Deemed Owner....................................................... 15
Section 2.07. Payment of Principal and Interest; Defaulted Interest...................... 15
Section 2.08. Cancellation............................................................... 16
Section 2.09. Book-Entry Notes........................................................... 17
Section 2.10. Notices to Clearing Agency................................................. 17
Section 2.11. Definitive Notes........................................................... 17
Section 2.12. Release of Collateral...................................................... 18
Section 2.13. Tax Treatment.............................................................. 18
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest.......................................... 19
Section 3.02. Maintenance of Office or Agency............................................ 19
Section 3.03. Money for Payments to be Held in Trust..................................... 19
Section 3.04. Existence.................................................................. 21
Section 3.05. Protection of Trust Estate................................................. 21
Section 3.06. Opinions as to Trust Estate................................................ 22
Section 3.07. Performance of Obligations; Servicing of Contracts......................... 22
Section 3.08. Negative Covenants......................................................... 24
Section 3.09. Annual Statement as to Compliance.......................................... 24
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Section 3.10. Issuer May Consolidate, etc................................................ 25
Section 3.11. Successor or Transferee.................................................... 27
Section 3.12. No Other Business.......................................................... 27
Section 3.13. No Borrowing............................................................... 27
Section 3.14. Master Servicer's Obligations.............................................. 27
Section 3.15. Guarantees, Loans, Advances and Other Liabilities.......................... 27
Section 3.16. Capital Expenditures....................................................... 28
Section 3.17. Restricted Payments........................................................ 28
Section 3.18. Notice of Events of Default................................................ 28
Section 3.19. Further Instruments and Acts............................................... 28
Section 3.20. Compliance with Laws....................................................... 28
Section 3.21. Amendments of Sale and Servicing Agreement and Trust Agreement............. 28
Section 3.22. Removal of Administrator................................................... 28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.................................... 29
Section 4.02. Application of Trust Money................................................. 30
Section 4.03. Repayment of Monies Held by Paying Agent................................... 30
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.......................................................... 31
Section 5.02. Rights upon Event of Default............................................... 32
Section 1.03. Collection of Indebtedness and Suits for Enforcement by Trustee;
Authority of Controlling Party........................................... 33
Section 1.04. Remedies................................................................... 35
Section 1.05. Optional Preservation of the Contracts..................................... 36
Section 1.06. Priorities................................................................. 36
Section 1.07. Limitation of Suits........................................................ 37
Section 1.08. Unconditional Rights of Noteholders to Receive Principal and Interest...... 38
Section 1.09. Restoration of Rights and Remedies......................................... 38
Section 1.10. Rights and Remedies Cumulative............................................. 38
Section 1.11. Delay or Omission Not a Waiver............................................. 39
Section 1.12. Control by Noteholders..................................................... 39
Section 1.13. Waiver of Past Defaults.................................................... 39
Section 1.14. Undertaking for Costs...................................................... 40
Section 1.15. Waiver of Stay or Extension Laws........................................... 40
Section 1.16. Action on Notes............................................................ 40
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Section 1.17. Performance and Enforcement of Certain Obligations......................... 40
Section 1.18. Claims Under Note Policy................................................... 41
Section 1.19. Preference Claims.......................................................... 42
ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee.......................................................... 44
Section 6.02. Rights of Trustee.......................................................... 45
Section 6.03. Individual Rights of Trustee............................................... 46
Section 6.04. Trustee's Disclaimer....................................................... 47
Section 6.05. Notice of Defaults......................................................... 47
Section 6.06. Reports by Trustee to Holders.............................................. 47
Section 6.07. Compensation and Indemnity................................................. 47
Section 6.08. Replacement of Trustee..................................................... 47
Section 6.09. Successor Trustee by Merger................................................ 49
Section 6.10. Appointment of Co-Trustee or Separate Trustee.............................. 49
Section 6.11. Eligibility; Disqualification.............................................. 50
Section 6.12. Preferential Collection of Claims Against Issuer........................... 50
Section 6.13. Representations and Warranties of Trustee.................................. 50
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses...................... 51
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of Noteholders............... 52
Section 7.02. Preservation of Information; Communications to Noteholders................. 52
Section 7.03. Reports by Issuer.......................................................... 52
Section 7.04. Reports by Trustee......................................................... 53
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money........................................................ 54
Section 8.02. Trust Accounts............................................................. 54
Section 8.03. General Provisions Regarding Accounts...................................... 55
Section 8.04. Release of Trust Estate.................................................... 56
Section 8.05. Opinion of Counsel......................................................... 56
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders..................... 57
Section 9.02. Supplemental Indentures With Consent of Noteholders........................ 58
Section 9.03. Execution of Supplemental Indentures....................................... 59
Section 9.04. Effect of Supplemental Indenture........................................... 59
Section 9.05. Conformity With Trust Indenture Act........................................ 60
Section 9.06. Reference in Notes to Supplemental Indentures.............................. 60
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption................................................................ 61
Section 10.02. Form of Redemption Notice................................................. 61
Section 10.03. Notes Payable on Redemption Date.......................................... 62
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc................................. 63
Section 11.02. Form of Documents Delivered to Trustee.................................... 64
Section 11.03. Acts of Noteholders....................................................... 65
Section 11.04. Notices, etc.............................................................. 66
Section 11.05. Notices to Noteholders; Waiver............................................ 67
Section 11.06. Alternate Payment and Notice Provisions................................... 67
Section 11.07. Conflict With Trust Indenture Act......................................... 67
Section 11.08. Effect of Headings and Table of Contents.................................. 68
Section 11.09. Successors and Assigns.................................................... 68
Section 11.10. Separability.............................................................. 68
Section 11.11. Benefits of Indenture..................................................... 68
Section 11.12. Legal Holidays............................................................ 68
Section 11.13. Governing Law............................................................. 68
Section 11.14. Counterparts.............................................................. 68
Section 11.15. Recording of Indenture.................................................... 68
Section 11.16. Trust Obligation.......................................................... 69
Section 11.17. No Petition............................................................... 69
Section 11.18. Inspection................................................................ 69
Section 11.19. Limitation of Liability of Owner Trustee.................................. 69
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EXHIBITS
Schedule A - Schedule of Contracts.................................................. SA-1
Exhibit A - Form of Sale and Servicing Agreement................................... A-1
Exhibit B - Form of Depository Agreement........................................... B-1
Exhibit C - Form of Class A-1 Note................................................. C-1
Exhibit D - Form of Class A-2 Note................................................. D-1
Exhibit E - Form of Class A-3 Note................................................. E-1
Exhibit F - Form of Note Assignment................................................ G-1
Exhibit G - Form of Note Policy.................................................... H-1
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(v)
<PAGE> 7
This Indenture, dated as of __________ 1, 20__, is among WFS Financial
20__-_ Owner Trust, a Delaware business trust (the "Issuer"), and Bankers Trust
Company, a New York banking corporation, in its capacity as trustee (the
"Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the holders of the Issuer's ______% Auto
Receivable Backed Notes, Class A-1 (the "Class A-1 Notes"), ______% Auto
Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"), ______% Auto
Receivable Backed Notes, Class A-3 (the "Class A-3 Notes" and together with the
Class A-1 Notes and the Class A-2 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee on the Closing Date, on behalf
of and for the benefit of the Holders of the Notes, without recourse, all of the
Issuer's right, title and interest (exclusive of the amount, if any, allocable
to any rebatable insurance premium financed by any Contract) in, to and under
(i) the Contracts secured by the Financed Vehicles (which Contracts shall be
listed in the Schedule of Contracts); (ii) certain monies due under the
Contracts on and after __________ __, 20__, including, without limitation, all
payments of Monthly P&I with respect to any Financed Vehicle to which a Contract
relates received on or after __________ __, 20__ and all other proceeds received
on or in respect of such Contracts (other than payments of Monthly P&I due prior
to __________ __, 20__; (iii) security interests in the Financed Vehicles; (iv)
a financial guaranty insurance policy to be issued by Financial Security for the
exclusive benefit of Noteholders, which will unconditionally and irrevocably
guarantee payment of the Scheduled Payments on each Distribution Date; (v)
amounts on deposit in the Collection Account, the Note Distribution Account, the
Spread Account and the Holding Account, including all Eligible Investments
therein and all income from the investment of funds therein and all proceeds
therefrom; (vi) proceeds from claims under certain insurance policies in respect
of individual Financed Vehicles or obligors under the Contracts; (vii) certain
rights under the Sale and Servicing Agreement; (viii) the protective security
interest in certain of the above-described property granted by the Seller in
favor of the Issuer; (ix) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing; and (x) all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion, voluntary
or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (as each such defined term is defined in
Section 1.01) (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and
<PAGE> 8
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
(a) 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 Indenture. Capitalized terms used herein that are not
otherwise defined herein shall have the meaning ascribed thereto in the Sale and
Servicing Agreement.
"Act" shall have the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Company, the Issuer, the Seller
and the Trustee.
"Administrator" means the Master Servicer, or any successor
Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, 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 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" and "controlled" have
meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the foregoing
list of Authorized Officers.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Administration Agreement, the Note
Depository Agreement, the Insurance Agreement, the Note Policy and this
Indenture.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
2
<PAGE> 9
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
governmental decree to remain closed.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the __________, 20__
Distribution Date.
"Class A-1 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year and actual number of days elapsed since the immediately
preceding Distribution Date).
"Class A-1 Notes" means the Class A-1 Notes, substantially in the form
of Exhibit C.
"Class A-2 Final Distribution Date" means the __________, 20__
Distribution Date.
"Class A-2 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 Notes, substantially in the form
of Exhibit D.
"Class A-3 Final Distribution Date" means the __________, 20__
Distribution Date.
"Class A-3 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 Notes, substantially in the form
of Exhibit E.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __________ __, 20__.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning specified in the Granting Clause of
this Indenture.
"Company" means WFS Investments, Inc., and its successors.
3
<PAGE> 10
"Controlling Party" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing, and the Trustee, for so long as an
Insurer Default shall have occurred and be continuing.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Indenture is located at Four
Albany Street, 10th Floor, New York, New York 10006, Attention: Corporate Trust
Department - Asset Backed Group; or at such other address as the Trustee may
designate from time to time by notice to the Noteholders, the Insurer and the
Issuer, or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Noteholders, the Insurer
and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Distribution Date" means each January 20, April 20, July 20, and
October 20 or, if any such date shall not be a Business Day, the next succeeding
Business Day, commencing __________ 20, 20__.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation or depository
institution, the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, President, Executive Vice President, any Vice President, the
Secretary or the Treasurer of such corporation or depository institution; and
with respect to any partnership, any general partner thereof.
"Financial Security" means Financial Security Assurance Inc.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
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"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such Person;
or (viii) obligations of such Person under any interest rate or currency
exchange agreement.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any of their respective Affiliates, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Seller or any of their respective
Affiliates, and (iii) is not connected with the Issuer, any such other obligor,
the Seller or any of their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.01, made by an Independent
appraiser or other expert appointed by an Issuer Order and approved by the
Trustee in the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer, the Company and the Trustee.
"Insurance Agreement Obligations" means, as of any date, the aggregate
amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurer" means Financial Security.
"Insurer Default" means the occurrence and continuance of any of the
following:
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(i) the Insurer shall have failed to make a payment required to
be made under the Note Policy;
(ii) the Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (b) made a general
assignment for the benefit of its creditors or (c) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property
of the Insurer).
"Interest Period" means, with respect to any Distribution Date and any
Class of Notes, the period from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including __________ __, 20__) to but excluding such Distribution
Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate or the Class A-3 Interest Rate, as applicable.
"Issuer" means WFS Financial 20__-_ Owner Trust until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by an Authorized Officer and delivered to the
Trustee.
"Master Servicer" means WFS, in its capacity as master servicer under
the Sale and Servicing Agreement, and any successor Master Servicer thereunder.
"Note" means a Class A-1 Note, a Class A-2 Note or a Class A-3 Note.
"Note Depository Agreement" means the agreement dated __________ __,
20__, among the Issuer, the Trustee and DTC, as the initial Clearing Agency,
relating to the Notes, substantially in the form of Exhibit B hereto.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
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"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Insurer with respect to the Notes, including any endorsements thereto,
substantially in the form of Exhibit G hereto.
"Note Policy Claim Amount" shall have the meaning specified in Section
5.18(a).
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.04.
"Notice of Claim" shall have the meaning specified in Section 5.18(b).
"Officer's Certificate" means a certificate signed by an Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer and who shall be satisfactory to the Trustee and, if
addressed to the Insurer, satisfactory to the Insurer, and which shall comply
with any applicable requirements of Section 11.01, and shall be in form and
substance satisfactory to the Trustee, and if addressed to the Insurer,
satisfactory to the Insurer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice has been made, satisfactory to the Trustee, has been
made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by
a protected purchaser (as such term is defined in Article 8 of the UCC);
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Trustee, and the Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of the requisite Outstanding Amount have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder or under any other Basic Document, Notes owned by the Issuer, any
other obligor upon the Notes, the Seller, the Company, WFS or any of their
respective Affiliates shall be disregarded and deemed not to be
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Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Seller, the Company, WFS or
any of their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Owner Trustee" means Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and, so long as
no Insurer Default shall have occurred and be continuing, is consented to by the
Insurer and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" shall have the meaning specified in Section 5.19(b).
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means each of Moody's and Standard & Poor's.
"Rating Agency Condition" means, with respect to any action, that (i)
Standard & Poor's shall have been given ten Business Days (or such shorter
period as is acceptable to Standard & Poor's) prior notice thereof and that
Standard & Poor's shall have notified the Seller, the Master Servicer, the
Insurer and the Issuer in writing that such action will not result in a
qualification, reduction or withdrawal of its then-current rating of any Class
of Notes and will not result in an increased capital charge to the Insurer and
(ii) Moody's shall have been given ten Business Days (or such shorter period as
is acceptable to Moody's) prior notice thereof and copies of all documentation
relating to the event requiring such Rating Agency Condition.
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"Rating Event" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date, or, in the event that Definitive Notes are
issued, the close of business on the 15th day of the month immediately preceding
the month in which such Distribution Date or Redemption Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Master Servicer or the Issuer
pursuant to Section 10.01(a) or 10.01(b), as the case may be.
"Redemption Price" means (i) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon at the weighted
average of the Interest Rate for each Class of Notes being so redeemed to but
excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust and Agency Group (or any successor group of the
Trustee), including any Vice President, assistant secretary or other officer or
assistant officer of the Trustee customarily performing function similar to
those performed by the people who at such time shall be officers, respectively,
or to whom any corporate trust matter is referred at the Corporate Trust Office
of the Trustee because of his knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Issuer, the Seller and the Master
Servicer, substantially in the form of Exhibit A hereto.
"Schedule of Contracts" means the listing of the Contracts set forth in
Schedule A hereto.
"Scheduled Payments" shall have the meaning specified therefor in the
Note Policy.
"Seller" shall mean WFS Financial Auto Loans, Inc., in its capacity as
seller under the Sale and Servicing Agreement, and its successors.
"State" means any one of the 50 states of the United States or the
District of Columbia.
"Successor Master Servicer" shall have the meaning specified in Section
3.07(e).
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have
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received payment and performance of all amounts and obligations which the Issuer
may owe to or on behalf of the Insurer under this Indenture and (iii) the date
on which the Trustee shall have received payment and performance of all amounts
and obligations which the Issuer may owe to or on behalf of the Trustee for the
benefit of the Noteholders under this Indenture or the Notes.
"Trust Agreement" means the Trust Agreement, dated as __________ __,
20__, as amended and restated as of __________ __, 20__, among the Seller, the
Insurer, the Company and the Owner Trustee.
"Trust Estate" means the Collateral Granted to the Trustee under this
Indenture, including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"Trustee" means Bankers Trust Company, as Trustee under this Indenture,
or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Note Policy for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"United States" means the United States of America.
"WFAL" means WFS Financial Auto Loans, Inc., a California corporation.
"WFS" means WFS Financial Inc, and its successors.
(b) Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Trustee.
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"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. 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; (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 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 permitted successors and assigns; (viii) the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Indenture shall refer to this Indenture as a whole and not to any particular
provision of this Indenture; and (ix) Section, subsection and Schedule
references contained in this Indenture are references to Sections, subsections
and Schedules in or to this Indenture unless otherwise specified.
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ARTICLE TWO
THE NOTES
Section 2.01. Form. The Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, in each case together with the Trustee's certificate of
authentication, shall be in substantially the forms set forth as Exhibits to
this Indenture with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of the Note Policy and an Issuer Order,
authenticate and deliver for original issue the following aggregate principal
amount of Notes: (i) $______ of Class A-1 Notes, (ii) $______ of Class A-2 Notes
and (iii) $______ of Class A-3 Notes. The aggregate principal amount of Class
A-1 Notes, Class A-2 Notes and Class A-3 Notes outstanding at any time may not
exceed such respective amounts, except as otherwise provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
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If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the related Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, a like tenor and principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be the "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, provided that
the requirements of Section 8-401 of the UCC are met, the Issuer shall execute,
and the Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or more
new Notes of the same Class in any authorized denominations, of a like aggregate
principal amount.
At the option of a Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, provided that the
requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and
the Trustee shall authenticate and the Noteholder shall obtain from the Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in
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writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in The City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for the payment in full of such Note.
Copies of this Indenture (without exhibits) may be obtained by
Noteholders upon request in writing to the Trustee at the Corporate Trust
Office.
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, (ii) there is
delivered to the Trustee and the Insurer (unless an Insurer Default shall have
occurred and be continuing) such security or indemnity as may be required by
them to hold the Issuer, the Trustee and the Insurer harmless and (iii) the
requirements of Section 8-405 of the UCC are met, then, in the absence of notice
to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a protected purchaser (as defined in Article 8 of the UCC), the
Issuer shall execute and upon its request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same Class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser (as defined in Article 8 of the UCC)
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer, the Insurer and the Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a protected purchaser (as defined in Article 8 of the UCC), and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
or the Trustee may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
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Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Insurer and
any of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Insurer, the Trustee nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related Interest
Rate, and such interest shall be payable on each Distribution Date as specified
in Article Five of the Sale and Servicing Agreement and in the form of the
related Note set forth as an Exhibit hereto, subject to Section 3.01. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date, a Redemption Date or on the related Final Distribution Date,
as the case may be (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.01(a)), which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Distribution
Date to the extent provided in Article Five of the Sale and Servicing Agreement
and in the form of the related Note set forth as an Exhibit hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the related Final
Distribution Date or on the date on which an Event of Default shall have
occurred and be continuing, so long as an Insurer Default shall not have
occurred and be continuing or, if an Insurer Default shall have occurred and be
continuing, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of Notes representing not less than a
majority of the Outstanding Amount have declared the Notes to be immediately due
and payable in the manner provided in Section 5.02. All principal payments on
each Class of Notes shall be made
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pro rata to the Noteholders of such Class entitled thereto. The Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Distribution Date on which the Issuer expects that
the final installment of principal of and interest on such Note will be paid.
Such notice shall be mailed within five Business Days of such Distribution Date
(or, in the case of Notes registered in the name of Cede & Co., as nominee of
DTC, such notice shall be provided within one Business Day of such Distribution
Date) or receipt of notice of termination of the Trust pursuant to Section
9.01(c) of the Trust Agreement and shall specify that such final installment
will be payable only upon presentation and surrender of such Note and shall
specify the place where such Note may be presented and surrendered for payment
of such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.02. In addition, the
Administrator shall notify the Rating Agencies upon the final payment of
interest and principal of each Class of Notes, and upon the termination of the
Trust, in each case pursuant to Section 1(a)(i) of the Administration Agreement.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the related payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to the Trustee and each Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Insurer has paid any amount in respect of the
Notes under the Note Policy which has not been reimbursed to it, deliver such
surrendered Notes to the Insurer.
Section 2.08. Cancellation. Subject to Section 2.07(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by the Trustee. Subject to Section 2.07(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.07(d), all cancelled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it; provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
Section 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Clearing Agency, by, or on behalf of,
the Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Note
Owner will receive a Definitive Note representing such Note Owner's
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interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of
the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants; pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.11,
the Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of
and interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Trustee.
Section 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
Section 2.11. Definitive Notes. If (i)(A) the Administrator advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as described in the Note Depository
Agreement, and (B) Trustee or the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency,
or (iii) after the occurrence of an Event of Default, the Note Owners
representing not less than 51% of the Outstanding Amount of a Class of Notes
advise the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the related Note Owners,
then the Trustee shall notify all Note Owners of the related Class of Notes,
through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes of the related Class of Notes to Note Owners
requesting the same. Upon surrender to the Trustee of the Note or Notes
representing
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the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Notes of a Class, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders hereunder.
The Trustee shall not be liable if the Trustee or the Administrator is
unable to locate a qualified successor Clearing Agency. The Definitive Notes
shall be typewritten, printed, lithographed or engraved or produced by any
combination of these methods (with or without steel engraved borders), all as
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
Section 2.12. Release of Collateral. Subject to Section 11.01 and the
other Basic Documents, the Trustee shall release property from the lien of this
Indenture only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificates.
Section 2.13. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
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ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account in respect of the
related Due Period on a Distribution Date deposited therein pursuant to the Sale
and Servicing Agreement for the benefit of (i) the Class A-1 Notes, to the Class
A-1 Noteholders, (ii) the Class A-2 Notes, to the Class A-2 Noteholders and
(iii) the Class A-3 Notes, to the Class A-3 Noteholders. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Chase Manhattan Bank,
as agent for the Issuer, will maintain in The City of New York an office or
agency where Notes may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints the Trustee
to serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to be Held in Trust. As provided in
Sections 5.06 and 8.02, all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(b) shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On the Business Day immediately preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Trustee) shall promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Insurer an instrument in which such
Paying Agent shall agree with the Trustee (and if the Trustee acts as Paying
Agent, it hereby so agrees), subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid
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to such Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
receipt of an Issuer Request with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) shall be deposited by the Trustee
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that if such money or any portion
thereof had been previously deposited by the Insurer with the Trustee for the
payment of principal or interest on the Notes, to the extent any amounts are
owing to the Insurer, such amounts shall be paid promptly to the Insurer upon
receipt of a written request by the Insurer to such effect, and provided,
further, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer, any
other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes
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have been called but have not been surrendered for redemption or whose right to
or interest in monies due and payable but not claimed is determinable from the
records of the Trustee or of any Paying Agent, at the last address of record for
each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) 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
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the Trust
Estate, and the Issuer shall take all actions necessary to obtain and maintain,
for the benefit of the Trustee on behalf of the Noteholders, a first lien on and
a first priority, perfected security interest in the Trust Estate, subject to
the rights of the Insurer under the Insurance Agreement. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Master Servicer and
delivered to the Issuer, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the rights
of the Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute all financing statements, continuation statements or other
instruments required to be executed pursuant to this Section.
Section 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Trustee and the Insurer an Opinion of Counsel to the
effect that, in the opinion of such counsel, either (i) all financing statements
and continuation statements have been executed and
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filed that are necessary to create and continue the Trustee's first priority
perfected security interest in the collateral (subject to the rights of the
Insurer under the Insurance Agreement) for the benefit of the Noteholders, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be necessary to
perfect such security interest.
(b) 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, the Issuer shall furnish to the Trustee and the Insurer an Opinion of
Counsel, dated as of a date during such 90-day period, to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Trustee's first priority perfected security interest in
the collateral (subject to the rights of the Insurer under the Insurance
Agreement) for the benefit of the Noteholders, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest.
Section 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others, including the Servicer, that
would release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Trust Estate or
that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in the Basic Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the Insurer
(so long as no Insurer Default shall have occurred and be continuing) to assist
it in performing its duties and obligations under this Indenture, and any
performance of such duties by a Person identified to the Trustee and the Insurer
in an Officer's Certificate shall be deemed to be action taken by the Issuer.
The Trustee shall not be responsible for the action or inaction of the Master
Servicer or the Administrator. Initially, the Issuer has contracted with the
Master Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will, and will cause the Administrator to, punctually
perform and observe all of the obligations and agreements of the Issuer and the
Administrator contained in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the other Basic Documents in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Trustee or the
Holders of at least a majority of the Outstanding Amount or such greater
percentage as may be specified in the particular provision.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly notify the Trustee, the Insurer and each
Rating Agency thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect of such default. If a Servicer
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Default shall arise from the failure of the Master Servicer to perform any of
its duties or obligations under the Sale and Servicing Agreement with respect to
the Contracts, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) If an Insurer Default shall have occurred and be continuing and if
the Issuer has given notice of termination to the Master Servicer of the Master
Servicer's rights and powers pursuant to Section 8.02 of the Sale and Servicing
Agreement, as promptly as possible thereafter, the Issuer shall appoint a
successor servicer (the "Successor Master Servicer"), and such Successor Master
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. In the event that a Successor Master Servicer has not
been appointed and accepted its appointment at the time when the Master Servicer
ceases to act as Master Servicer, the Trustee without further action shall
automatically be appointed the Successor Master Servicer. The Trustee may resign
as the Successor Master Servicer by giving written notice of such resignation to
the Issuer and in such event will be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new servicer as the Successor
Master Servicer under the Sale and Servicing Agreement. Any Successor Master
Servicer other than the Trustee shall (i) be an established financial
institution having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of motor vehicle receivables and (ii) enter into
a servicing agreement with the Issuer having substantially the same provisions
as the provisions of the Sale and Servicing Agreement applicable to the Master
Servicer. If within 30 days after the delivery of the notice referred to above,
the Issuer shall not have obtained such a new Master Servicer, the Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor Master Servicer. In connection with any such appointment, the Trustee
may make such arrangements for the compensation of such successor as it and such
successor shall agree, subject to the limitations set forth below and in the
Sale and Servicing Agreement, and in accordance with Section 8.02 of the Sale
and Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Contracts (such agreement to be in form and
substance satisfactory to the Trustee). If the Trustee shall succeed to the
Master Servicer's duties as servicer of the Contracts as provided herein, it
shall do so in its individual capacity and not in its capacity as Trustee and,
accordingly, the provisions of Article Six shall be inapplicable to the Trustee
in its duties as the successor to the Master Servicer and the servicing of the
Contracts. In case the Trustee shall become successor to the Master Servicer
under the Sale and Servicing Agreement, the Trustee shall be entitled to appoint
as Master Servicer one of its Affiliates, provided that it shall be fully liable
for the actions and omissions of such Affiliate in such capacity as Successor
Master Servicer.
(f) Upon any termination of the Master Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a successor Master Servicer is appointed, the Issuer
shall notify the Trustee of such appointment, specifying in such notice the name
and address of such successor Master Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Master Servicer or the Seller of their respective duties under
the Basic Documents: (i) without the prior consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) or (ii) if the effect
thereof would adversely affect the Holders of the Notes.
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Section 3.08. Negative Covenants. Until the Termination Date, the Issuer
shall not:
(i) except as expressly permitted by the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien created by this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture or
the lien in favor of the Insurer created by the Insurance Agreement) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on a Financed Vehicle and
arising solely as a result of an action or omission of the related
Obligor), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate, or
(D) amend, modify or fail to comply with the provisions of the Basic
Documents without the prior written consent of the Controlling Party,
except where the Basic Documents allow for amendment or modification
without the consent or approval of the Controlling Party; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09. Annual Statement as to Compliance. The Issuer will deliver
to the Trustee and the Insurer, on or before 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
20__) an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
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Section 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form and substance satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing), the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture and each other Basic Document
on the part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such consolidation or
merger, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) to the effect that such consolidation or merger will not
have any material adverse tax consequence to the Trust, the Insurer, any
Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken as required by clause (v) above or that no such actions will be
taken) each stating that such consolidation or merger and such
supplemental indenture comply with this Article Three and that all
conditions precedent herein provided for relating to such transaction
have been compiled with (including any filings required by the Exchange
Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such consolidation or merger at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Basic Documents), unless:
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(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States citizen
or a Person organized and existing under the laws of the United States
or any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form and substance
satisfactory to the Trustee and the Insurer (so long as no Insurer
Default shall have occurred and be continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Basic Document on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such conveyance or
transference, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such conveyance or transference;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) to the effect that such conveyance or transference will not
have any material adverse tax consequence to the Trust, the Insurer, any
Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken as required by clause (v) above or that no such actions will be
taken) each stating that such conveyance or transference and such
supplemental indenture comply with this Article Three and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filings required by the Exchange
Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such conveyance or transfer of properties or assets at least 20 Business
Days prior to the consummation of such action and shall have received
the prior written approval of the Insurer of such conveyance or transfer
and the Person acquiring by conveyance or transference the properties or
assets of the Issuer has a net worth, immediately after such conveyance
or transfer, that is
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(A) greater than zero and (B) not less than the net worth of the Issuer
immediately prior to giving effect to such conveyance or transfer.
Section 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the assets
or properties of the Issuer pursuant to Section 3.10(b), the Issuer will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Trustee stating that the Issuer is to be
so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto.
Section 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations or Indebtedness owing
from time to time to the Insurer under the Insurance Agreement and (iii) any
other Indebtedness permitted by or arising under the other Basic Documents. The
proceeds of the Notes shall be used exclusively to fund the Issuer's purchase of
the Contracts and the other assets specified in the Sale and Servicing
Agreement, to fund the Spread Account and to pay the transactional expenses of
the Issuer.
Section 3.14. Master Servicer's Obligations. The Issuer shall cause the
Master Servicer to comply with Sections 4.09, 4.10, 4.11 and 5.07 and Article
Nine of the Sale and Servicing Agreement.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as otherwise contemplated by the Basic Documents, the Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuming another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, any
other interest in, or make any capital contribution to, any other Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Restricted Payments. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
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respect to any ownership or equity interest or security in or of the Issuer or
to the Master Servicer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Master
Servicer, the Owner Trustee and the Certificateholders as contemplated by, and
to the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (B) payments to the Trustee and the Owner
Trustee pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the other Basic
Documents.
Section 3.18. Notice of Events of Default. The Issuer agrees to give the
Trustee, the Insurer and each Rating Agency prompt written notice of each Event
of Default hereunder and each default on the part of the Master Servicer or the
Seller of their respective obligations under the Sale and Servicing Agreement.
Section 3.19. Further Instruments and Acts. Upon request of the Trustee
or the Insurer, the Issuer will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
Section 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.
Section 3.22. Removal of Administrator. If an Insurer Default shall have
occurred and be continuing, so long as any Notes are issued and outstanding, the
Issuer shall not remove the Administrator without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07,
3.08, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee under
Section 6.07 and the obligations of the Trustee under Section 4.02), (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them and (vii) the
obligation of the Trustee to make claims under the Note Policy, which shall
survive the Class A-3 Final Distribution Date and extend through any preference
period applicable with respect to the Notes or any payments made in respect of
the Notes, and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when
(A)either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have
been delivered to the Trustee for cancellation and the Note Policy has
expired and been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at the Class A-3 Final
Distribution Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee cash or direct obligations of or obligations guaranteed by the
United States (which will mature prior to the date such amounts are
payable), in trust in an Eligible Account for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Trustee for cancellation when due to
the related Final Distribution Date or Redemption Date (if Notes shall
have been called for redemption pursuant to Section 10.01(a)), as the
case may be;
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(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on
behalf of (1) the Trustee for the benefit of the Noteholders under this
Indenture or the Notes and (2) the Insurer under this Indenture; and
(C) the Issuer has delivered to the Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the
TIA, the Trustee and the Insurer) an Independent Certificate from a firm
of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied with
(and, in the case of the foregoing Officer's Certificate, stating that
the Rating Agency Condition has been satisfied).
Section 4.02. Application of Trust Money. All monies deposited with the
Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine, to
the Holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest; but such monies need not be segregated from
other funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.
Section 4.03. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default by the Issuer in the payment of any interest on any
Note when the same becomes due and payable, and such default shall
continue for a period of five days, without taking into account the
effect of any payment under the Note Policy;
(ii) default by the Issuer in the payment of the principal of or
any installment of the principal of any Note when the same becomes due
and payable, without taking into account the effect of any payment under
the Note Policy;
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proves to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition
in respect of which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 30
days after there shall have been given, by registered or certified mail,
to the Issuer and the Trustee by the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or, if an Insurer
Default shall have occurred and be continuing, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25%
of the Outstanding Amount of the Notes, taken together as a single
class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under
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any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee and the Insurer, within five
days after obtaining knowledge of the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause (iii) above,
its status and what action the Issuer is taking or proposes to take with respect
thereto.
Section 5.02. Rights upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing, if an
Event of Default shall have occurred and be continuing, then with the consent of
the Insurer, the Notes shall become immediately due and payable at par, together
with accrued interest thereon. The Trustee will have no discretion with respect
to the acceleration of the Notes under the foregoing circumstances. In the event
of any such acceleration of the Notes, the Trustee shall continue to be entitled
to make claims under the Note Policy pursuant to Section 5.18 for Scheduled
Payments on the Notes. Payments under the Note Policy following acceleration of
the Notes shall be applied by the Trustee:
(i) to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest; and
(ii) to each Class of Noteholders for amounts due and unpaid on
such Class of Notes for principal, ratably, without preference or
priority of any kind, according to amounts due and payable on the Notes
for principal.
(b) So long as no Insurer Default has occurred and is continuing, in the
event the Notes are accelerated due to an Event of Default, the Insurer shall
have the right (in addition to its obligation to pay Scheduled Payments on the
Notes in accordance with the Note Policy), but not the obligation, to elect:
(i) to cause the Trustee or the Master Servicer, subject to
Section 5.04, to sell or liquidate the Trust Estate, in whole or in
part, on any date or dates following such acceleration as the Insurer,
in its sole discretion, shall elect; or
(ii) to pay Scheduled Payments on the Notes in accordance with
the Note Policy.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee may, or if
so requested in writing by Holders of Notes representing at least 66K% of the
aggregate Outstanding Amount, upon prior written notice to each Rating Agency,
shall declare by written notice to the Issuer that the Notes become,
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whereupon they shall become, immediately due and payable at par, together with
accrued interest thereon. Notwithstanding anything to the contrary in this
paragraph (c), if an Event of Default specified in Section 5.01(iv) or (v) shall
occur and be continuing when an Insurer Default has occurred and is continuing,
the Notes shall become immediately due and payable at par, together with accrued
interest thereon.
Section 1.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Controlling Party.
(a) The Issuer covenants that if the Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the applicable
Interest Rate and in addition thereto such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) Each of the Trustee and the Insurer hereby irrevocably and
unconditionally appoints the Controlling Party as the true and lawful
attorney-in-fact of such Person for so long as such Person is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Person such acts, things and deeds for or on behalf of and in the name
of such Person under this Indenture (including specifically under Section 5.04)
and under the other Basic Documents which such Person could or might do or which
may be necessary, desirable or convenient in such Controlling Party's sole
discretion to effect the purposes contemplated hereunder and under the other
Basic Documents and, without limitation, following the occurrence of an Event of
Default, exercise full right, power and authority to take, or defer from taking,
any and all acts with respect to the administration, maintenance or disposition
of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may in
its discretion but with the consent of the Controlling Party (except as provided
in Section 5.03(d)), proceed to protect and enforce the rights of the
Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this Indenture
and regardless of whether an Insurer Default shall have occurred and be
continuing, if the Issuer fails to perform its obligations under Section
10.01(b) when and as due, the Trustee may in its discretion (and without the
consent of the Controlling Party) proceed to protect and enforce its rights and
the rights of the Noteholders by such appropriate proceedings as the Trustee
shall deem most effective to protect and enforce any such rights, whether for
specific performance of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other remedy or
legal or equitable right vested in the Trustee by this Indenture or
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by law; provided that the Trustee shall only be entitled to take any such
actions without the consent of the Controlling Party to the extent such actions
(i) are taken only to enforce the Issuer's obligations to redeem the principal
amount of Notes, and (ii) are taken only against the portion of the Collateral,
if any, consisting of the Spread Account, any investments therein and any
proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Notes allowed in any Proceedings relative to
the Issuer, its creditors and its property; and any trustee, receiver,
liquidator, custodian or other similar official in any such Proceeding
is hereby authorized by each of such Noteholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making
of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
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(f) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(g) All rights of action and of asserting claims under this Indenture or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(h) In any Proceedings brought by the Trustee (including any Proceedings
involving the interpretation of any provision of this Indenture), the Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing the Controlling Party may (subject to Sections 5.02 and 5.05):
(i) institute Proceedings in its own name and as or on behalf of
a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Trustee and take any other appropriate
action to protect and enforce the rights and remedies of the Trustee on
behalf of the Noteholders under this Indenture or the Notes; and
(iv) direct the Trustee or the Master Servicer to sell or
otherwise liquidate the Trust Estate or any portion thereof or rights or
interests therein, at one or more public or private sales called and
conducted in any manner permitted by law and deliver the proceeds of
such sale or liquidation to the Trustee for distribution in accordance
with the terms of this Indenture; provided, however, that, except as
otherwise provided in the immediately succeeding sentence, no such sale
or liquidation can be made if the proceeds of such sale or liquidation
distributable to the Noteholders are not sufficient to pay all
outstanding principal of and accrued interest on the Notes.
Notwithstanding the foregoing, the proceeds of such sale or liquidation
need not be sufficient to pay all outstanding principal of and accrued interest
on the Notes if (A) the Insurer is the Controlling Party and the related Event
of Default arose as described in clause (i), (ii), (iv)
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or (v) of Section 5.01 or (B) the Trustee is the Controlling Party and the
related Event of Default arose as described in clause (i), (ii), (iv) or (v) of
Section 5.01 and (1) the Holders of 100% of the Outstanding Amount of the Notes,
voting together as a single class, consent to such sale or liquidation or (2)
the Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
the Trustee provides prior written notice of such sale or liquidation to each
Rating Agency and Holders of 66K% of the Outstanding Amount of the Notes, voting
together as a single class, consent to such sale or liquidation. In determining
such sufficiency or insufficiency of (i) the proceeds of such sale or
liquidation to pay all outstanding principal of and accrued interest on the
Notes or (ii) the Trust Estate to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, the Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.05. Optional Preservation of the Contracts. If the Trustee is
the Controlling Party and if the Notes have been declared to be due and payable
under Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Trustee shall
take such desire into account when determining whether or not to maintain
possession of the Trust Estate. In determining whether to maintain possession of
the Trust Estate, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. Priorities.
(a) If the Trustee collects any money or property pursuant to this
Article (excluding any payments made under the Note Policy), it shall pay out
the money or property in the following order and priority:
(i) amounts due and owing and required to be distributed to the
Master Servicer, the Owner Trustee and the Trustee, respectively,
pursuant to clauses (i) and (ii) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed, in the order of such
priorities and without preference or priority of any kind within such
priorities;
(ii) to each Class of Noteholders, accrued and unpaid interest
on the outstanding principal amount of the related Class of Notes at the
related Interest Rate, together with, to the extent permitted by
applicable law, interest at the related Interest Rate on any interest
accrued but not timely paid;
(iii) to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for principal, ratably, without preference
or priority of any kind,
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according to the amounts due and payable on the Class A-1 Notes for
principal, until the Outstanding Amount of the Class A-1 Notes is
reduced to zero;
(iv) to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for principal, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal, until the Outstanding Amount of the Class
A-2 Notes is reduced to zero;
(v) to Holders of the Class A-3 Notes for amounts due and unpaid
on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-3 Notes for principal, until the Outstanding Amount of the Class
A-3 Notes is reduced to zero;
(vi) amounts due and owing and required to be distributed to the
Insurer pursuant to clause (vii) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed; and
(vii) any excess amounts remaining after making the
distributions described in clauses (i) through (vii) above shall be
distributed in the following order of priority: into the Spread Account
until the amounts deposited therein equal the Specified Spread Account
Balance, with any excess being distributed, first, to the Insurer, to
the extent of any Unreimbursed Insurer Amounts, second, to the Seller
until the Seller has received an aggregate amount equal to the Spread
Account Initial Deposit and third, to each Certificateholder in
proportion to its Certificate Percentage Interest.
(b) The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
Section 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
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(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes, voting together as a
single class; and
(vi) an Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine that action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder; provided, however, that so long as an
Insurer Default shall not have occurred and be continuing, no such suit shall be
instituted.
Section 5.09. Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article
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Five or by law to the Trustee or to the Noteholders may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
Section 5.12. Control by Noteholders. If the Trustee is the Controlling
Party, the Holders of a majority of the Outstanding Amount of the Notes shall
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the terms of Section 5.04, any direction to the
Trustee to sell or liquidate the Trust Estate shall be by the Holders of
Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Trustee need not take any action that it determines, in its
sole discretion, might involve it in liability or might materially adversely
affect the rights of any Noteholders not consenting to such action.
Section 5.13. Waiver of Past Defaults. If an Insurer Default shall have
occurred and be continuing, the Holders of Notes of not less than a majority of
the Outstanding Amount of the Notes may waive any past Default or Event of
Default and its consequences except a Default (i) in payment of principal of or
interest on any of the Notes or (ii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder of
each Note. In the case of any such waiver, the Issuer, the Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as
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Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to (i) any suit instituted by the Trustee, (ii) any suit
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Outstanding Amount of the Notes or (iii) any
suit instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture (or, in the case of redemption, on
or after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in and manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.16. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer. Any money or property collected by the Trustee shall be applied in
accordance with Section 5.06.
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Seller and the Master Servicer as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
the Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Trustee is the Controlling Party and if an Event of Default
has occurred and is continuing, the Trustee may, and at the direction (which
direction shall be in writing and may include a facsimile) of the Holders of
66K% of the Outstanding Amount of the Notes shall exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Seller or the Master
Servicer under or in connection with the Sale and Servicing Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Seller or the Master Servicer of each of their obligations to
the Issuer thereunder and to give any consent,
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request, notice, direction, approval, extension or waiver under the Sale and
Servicing Agreement, and any right of the Issuer to take such action shall be
suspended.
Section 5.18. Claims Under Note Policy.
(a) In the event that the Trustee has received a Deficiency Notice with
respect to any Distribution Date pursuant to Section 5.02(c) of the Sale and
Servicing Agreement, the Trustee shall furnish to the Insurer no later than
12:00 p.m., New York City time, on the fourth Business Day prior to the related
Distribution Date a completed Notice of Claim in the amount of the shortfall in
amounts so available to pay the Note Interest Distributable Amount and the Note
Principal Distributable Amount with respect to such Distribution Date (the
amount of any such shortfall being hereinafter referred to as the "Note Policy
Claim Amount"). Amounts paid by the Insurer pursuant to a claim submitted under
this Section shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Distribution Date.
(b) Any notice delivered by the Trustee to the Insurer pursuant to
Section 5.18(a) shall specify the Note Policy Claim Amount claimed under the
Note Policy and shall constitute a "Notice of Claim" under the Note Policy. In
accordance with the provisions of the Note Policy, the Insurer is required to
pay to the Trustee the Note Policy Claim Amount properly claimed thereunder by
12:00 p.m., New York City time, on the later of (i) the fourth Business Day
following receipt of the Notice of Claim, and (ii) the applicable Distribution
Date. Any payment made by the Insurer under the Note Policy shall be applied
solely to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Noteholder
any Note Policy Claim Amount from the Insurer and (ii) deposit the same in the
Note Distribution Account for distribution to Noteholders as provided in
Sections 3.01 or 5.02. Any and all Note Policy Claim Amounts disbursed by the
Trustee from claims made under the Note Policy shall not be considered payment
by the Trust or from the Spread Account with respect to such Notes, and shall
not discharge the obligations of the Trust with respect thereto. The Insurer
shall, to the extent it makes any payment with respect to the Notes, become
subrogated to the rights of the recipients of such payments to the extent of
such payments. Subject to and conditioned upon any payment with respect to the
Notes by or on behalf of the Insurer, the Trustee shall assign to the Insurer
all rights to the payment of interest or principal with respect to the Notes
which are then due for payment to the extent of all payments made by the Insurer
and the Insurer may exercise any option, vote, right, power or the like with
respect to the Notes to the extent that it has made payment pursuant to the Note
Policy. To evidence such subrogation, the Note Registrar shall note the
Insurer's rights as subrogee upon the register of Noteholders upon receipt from
the Insurer of proof of payment by the Insurer of any Note Interest
Distributable Amount or Note Principal Distributable Amount. The foregoing
subrogation shall in all cases be subject to the rights of the Noteholders to
receive all Scheduled Payments in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Insurer into the Note Distribution Account and the allocation
of such funds to payment of interest on and principal paid in respect of any
Note. The Insurer shall have the right to inspect such records at reasonable
times upon one Business Day's prior notice to the Trustee.
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(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Indenture or any other Basic
Document, the Noteholders are not entitled to institute proceedings directly
against the Insurer.
Section 5.19. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Note Interest Distributable Amount or
Note Principal Distributable Amount paid on a Note has been avoided in whole or
in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Insurer of such avoided payment, and shall, at the time
it provides notice to the Insurer, notify Holders of the Notes by mail that, in
the event that any Noteholder's payment is so recoverable, such Noteholder will
be entitled to payment pursuant to the Note Policy. The Trustee shall furnish to
the Insurer its records evidencing the payments of principal of and interest on
Notes, if any, which have been made by the Trustee and subsequently recovered
from Noteholders, and the dates on which such payments were made. Pursuant to
the Note Policy, the Insurer will make such payment on behalf of the Noteholder
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order (as such term is defined in the Note Policy) and not to the
Trustee or any Noteholder directly (unless a Noteholder has previously paid such
payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Insurer will make such payment to the Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) To the extent that a Responsible Officer of the Trustee has actual
knowledge thereof, the Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any distribution made
with respect to the Notes. Each Holder, by its purchase of Notes, and the
Trustee hereby agree that so long as an Insurer Default shall not have occurred
and be continuing, the Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal at the expense
of the Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.18(c), the Insurer shall be subrogated to, and each Noteholder and the
Trustee hereby delegate and assign, to the fullest extent permitted by law, the
rights of the Trustee and each Noteholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim. In addition, for so long as the
Insurer guarantees amounts owing under the RIC and has not defaulted in the
making of any payment required to be made by it pursuant to such guaranty, the
Insurer shall have the right to initiate and control a proceeding against the
obligor under the RIC but only to the extent such proceeding relates to the
amounts so guaranteed and no settlement of any other proceeding or claim that
would adversely affect the Insurer's rights to recover such amounts shall be
affected without the prior written consent of the Insurer.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and in the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 3.07(e), the Trustee in performing such
duties shall use the degree of care and skill customarily exercised by a prudent
institutional servicer with respect to automobile retail installment sales
contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture and the other Basic Documents to which the Trustee is a
party.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of Section 6.01(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law or the terms of this Indenture or the
Sale and Servicing Agreement.
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(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) The Trustee shall, upon one Business Day's prior notice to the
Trustee, so long as no Insurer Default shall have occurred and be continuing, at
the expense of the Trust, and if an Insurer Default shall have occurred and be
continuing, at the expense of the Insurer, permit any representative of the
Insurer, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom and to discuss the Trustee's affairs and
actions, as such affairs and actions relate to the Trustee's duties with respect
to the Notes, with the Trustee's officers and employees responsible for carrying
out the Trustee's duties with respect to the Notes.
(j) The Trustee shall, and hereby agrees that it will (i) perform all of
the obligations and duties required of it under the Sale and Servicing Agreement
and (ii) hold the Note Policy in trust, and will hold any proceeds of any claim
on the Note Policy in trust solely for the use and benefit of the Noteholders.
(k) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Trustee to engage in any
business operations or any activities other than those set forth in this
Indenture. Specifically, the Trustee shall have no authority to engage in any
business operations, acquire any assets other than those specifically included
in the Trust Estate under this Indenture or otherwise vary the assets held by
the Trust. Similarly, the Trustee shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the
purpose of this Trust as set forth in this Indenture.
Section 6.02. Rights of Trustee.
(a) Except as otherwise provided in Section 6.02(g) and the second
succeeding sentence, the Trustee may conclusively rely and shall be protected in
acting upon or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, note,
direction, demand, election or other paper or document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document. Notwithstanding
the foregoing, the Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Indenture, shall examine them to determine whether they
comply as to form to the requirements of this Indenture.
(b) Other than with respect to actions required to be taken by the
Trustee pursuant to Section 5.18 and 5.19, before the Trustee acts or refrains
from acting, it may require an Officer's
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Certificate (with respect to factual matters) or an Opinion of Counsel, as
applicable. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on the Officer's Certificate or Opinion of
Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders or the Controlling Party shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise the rights
and powers vested in it by this Indenture with reasonable care and skill.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Insurer (so long as no
Insurer Default shall have occurred and be continuing) or (if an Insurer Default
shall have occurred and be continuing) by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
each such investigation shall be paid by the Person making such request, or, if
paid by the Trustee, shall be reimbursed by the Person making such request upon
demand.
Section 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.
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Section 6.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Trust Estate or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Insurer notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the redemption of Notes),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
Section 6.06. Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall, or shall
cause the Administrator to, pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall,
or shall cause the Administrator to, reimburse the Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall, or shall
cause the Administrator to, indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Issuer and the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so notify
the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall, or shall cause the
Administrator to, defend any such claim, and the Trustee may have separate
counsel and the Issuer shall, or shall cause the Administrator to, pay the fees
and expenses of such counsel. Neither the Issuer nor the Administrator need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Trustee. The Trustee may resign at any time
by so notifying the Issuer, the Master Servicer and the Insurer. The Issuer,
may, with the consent of the Insurer, and, at the request of the Insurer shall,
remove the Trustee, unless an Insurer Default shall have occurred and be
continuing) if:
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(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Trustee or for
any substantial part of the Trustee's property, or ordering the
winding-up or liquidation of the Trustee's affairs, provided any such
decree or order shall have continued unstayed and in effect for a period
of 30 consecutive days;
(iii) the Trustee commences a voluntary case under any federal
or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator or other similar official for the Trustee or for any
substantial part of the Trustee's property, or makes any assignment for
the benefit of creditors or fails generally to pay its debts as such
debts become due or takes any corporate action in furtherance of any of
the foregoing; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee reasonably acceptable to the Insurer (so long as an Insurer Default
shall not have occurred and be continuing). If the Issuer fails to appoint such
a successor Trustee, the Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Issuer or the successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Insurer
(provided that no Insurer Default shall have occurred and be continuing), the
Issuer or the Holders of a majority of the Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to the provisions of this Section shall not become effective
until acceptance of appointment by the successor Trustee pursuant to this
Section and payment of all fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee
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pursuant to this Section, the retiring Trustee shall be entitled to payment or
reimbursement of such amounts as such Person is entitled pursuant to Section
6.07.
Section 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided, that such corporation or
banking association shall be otherwise qualified and eligible under Section
6.11. The Trustee shall provide the Insurer and each Rating Agency prompt notice
of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
Section 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Trustee and the
Administrator acting jointly shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders and the Insurer, such title to
the Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee
and the Administrator may consider necessary or desirable. If the Administrator
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be
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exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee and the Administrator may at any time accept
the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of co-appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Indenture.
Section 6.11. Eligibility; Disqualification.
(a) The Trustee shall at all times satisfy the requirements of TIA
Section 310(a) and shall in addition have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall provide copies of such reports to the Insurer upon
request. The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
(b) If the long term debt rating of the Trustee shall not be at least
Baa3 from Moody's and BBB- from Standard & Poor's, the Rating Agencies shall be
given notice of such lower long-term debt rating.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. Representations and Warranties of Trustee. The Trustee
hereby makes the following representations and warranties on which the Issuer
and Noteholders shall rely:
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(i) the Trustee is a corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation; and
(ii) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Indenture and shall have taken all
necessary action to authorize the execution, delivery and performance by
it of this Indenture.
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Trustee shall take such action as, in its reasonable judgment, shall be
necessary to maintain the effectiveness of all licenses required under the
Pennsylvania Motor Vehicle Sales Finance Act in connection with this Indenture
and the transactions contemplated hereby until the lien and security interest of
this Indenture shall no longer be in effect in accordance with the terms hereof.
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ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (i)
not more than five days after the earlier of (a) each Record Date and (b) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date and (ii) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than ten days prior to the
time such list is furnished; provided, however, that so long as the Trustee is
the Note Registrar, no such list shall be required to be furnished. The Trustee
or, if the Trustee is not the Note Registrar, the Issuer shall furnish to the
Insurer in writing at such times as the Insurer may reasonably request a copy of
the list.
Section 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA Section 313(c)) such summaries
of any information, documents and
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reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Trustee. To the extent that any of the events
described in TIA Section 313(a) shall have occurred, the Trustee shall, within
60 days after each December 15 beginning with December 15, 20__, mail to the
Insurer and each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Trustee with the Commission and with each stock exchange, if any,
on which the Notes are listed and of which listing the Trustee has been
informed. The Issuer shall notify the Trustee if and when the Notes are listed
on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article Five.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Master
Servicer to establish and maintain, in the name of the Trustee, for the benefit
of the Noteholders and the Certificateholders, the Trust Accounts as provided in
Section 5.01 of the Sale and Servicing Agreement.
(b) All Net Collections with respect to each Due Period will be
deposited in the Collection Account as provided in Section 5.02 of the Sale and
Servicing Agreement. On the Business Day immediately preceding each Distribution
Date, all amounts required to be deposited in the Note Distribution Account with
respect to the preceding Due Period pursuant to Section 5.05 of the Sale and
Servicing Agreement will be transferred from the Collection Account and/or the
Spread Account to the Note Distribution Account.
(c) On each Distribution Date, the Trustee shall distribute all amounts
on deposit in the Note Distribution Account in respect of such Distribution Date
to Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest as follows:
(i) to each Class of Noteholders, accrued and unpaid interest on
the outstanding principal amount of the related Class of Notes at the
related Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of the
Outstanding Amount of the Class A-1 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-1 Notes
is reduced to zero;
(iii) to the Class A-2 Noteholders in reduction of the
Outstanding Amount of the Class A-2 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-2 Notes
is reduced to zero; and
(iv) to the Class A-3 Noteholders in reduction of the
Outstanding Amount of the Class A-3 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-3 Notes
is reduced to zero.
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(d) If on any Distribution Date there will be insufficient funds in the
Note Distribution Account to make any payment required to be made pursuant to
Section 8.02(c) or 8.02(d), the Trustee will make a claim under the Note Policy
as described in Section 5.18.
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts other than the
Holding Account shall be invested in Eligible Investments and reinvested by the
Trustee upon receipt of an Issuer Order, subject to the provisions of Section
5.01(b) of the Sale and Servicing Agreement. Except as otherwise provided in
Section 5.01(b) of the Sale and Servicing Agreement, all income or other gain
from investments of monies deposited in such Trust Accounts shall be deposited
by the Trustee in the Collection Account, and any loss resulting from such
investments shall be charged to the related Trust Account. The Issuer will not
direct the Trustee to make any investment of any funds or to sell any investment
held in any of the Trust Accounts unless the security interest Granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Trustee to make any such
investment or sale, if requested by the Trustee, the Issuer shall deliver to the
Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m., New
York City time (or such other time as may be agreed by the Issuer and Trustee),
on any Business Day, (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes have not been declared due
and payable pursuant to Section 5.02 or (iii) if such Notes have been declared
due and payable following an Event of Default but amounts collected or
receivable from the Trust Estate are being applied in accordance with Section
5.05 as if there had not been such a declaration, then the Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts in
one or more Eligible Investments.
Section 8.04. Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article shall be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
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(b) The Trustee shall, at such time as there are no Notes Outstanding
and all sums due the Trustee pursuant to Section 6.07 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.04(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
Section 8.05. Opinion of Counsel. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.04(a), accompanied by copies of any instruments involved, and the
Trustee shall also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the consent
of the Insurer (unless an Insurer Default shall have occurred and be continuing)
and with prior notice to each Rating Agency, the Issuer and the Trustee, when
authorized by an Issuer Order, and the other parties hereto at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
or confirm unto the Trustee any property subject or required to be
subjected to the lien created by this Indenture, or to subject to the
lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the other Basic Documents or to make any other provisions
with respect to matters or questions arising under this Indenture or in
any supplemental indenture that shall not be inconsistent with the
provisions of this Indenture; provided that such action shall not
adversely affect the interests of the Holders of the Notes or result in
the creation of a new security;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article Six; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may he expressly required by the TIA.
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The Trustee is hereby authorized to join in the exemption of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Notes but with the consent
of the Insurer (unless an Insurer Default shall have occurred and be continuing)
and with prior notice to each Rating Agency, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder or result in the creation of a new security.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to each Rating Agency, with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes, by
Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that, subject to the express
rights of the Insurer under the Basic Documents, no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article Five, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the second proviso to
the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to sell or liquidate the Trust
Estate pursuant to Section 5.04 or amend
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the provisions of this Article which specify the percentage of the
Outstanding Amount of the Notes required to amend this Indenture or the
other Basic Documents;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Holder of each Outstanding
Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security provided by the lien created by this Indenture, and further
provided that any such action will not, as evidenced by an Opinion of
Counsel satisfactory to the Trustee, result in the creation of a new
security.
The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination shall
be conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture. Any failure
of the Trustee to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments,
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and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
Section 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) In the event that the Seller pursuant to Section 9.01(a) of the Sale
and Servicing Agreement purchases the corpus of the Trust, the Notes are subject
to redemption in whole, but not in part, on the Distribution Date on which such
repurchase occurs, for a purchase price equal to the Redemption Price; provided,
however, that the Issuer has available funds sufficient to pay the Redemption
Price. The Seller, the Master Servicer or the Issuer shall furnish the Insurer
and each Rating Agency notice of such redemption. If the Notes are to be
redeemed pursuant to this Section 10.01(a), the Master Servicer or the Issuer
shall furnish notice of such election to the Trustee not later than 20 days
prior to the Redemption Date and the Issuer shall deposit with the Trustee in
the Note Distribution Account the Redemption Price of the Notes to be redeemed
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.02 to each Holder of the
Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 5.02(b) of this Indenture, the proceeds of such sale shall be
distributed as provided in Section 5.06. If amounts are to be paid to
Noteholders pursuant to this Section 10.01(b), the Master Servicer or the Issuer
shall, to the extent practicable, furnish notice of such event to the Trustee
not later than 20 days prior to the Redemption Date whereupon all such amounts
shall be payable on the Redemption Date.
Section 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than 20 days prior
to the applicable Redemption Date to each Holder of Notes, as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register. In addition, the Administrator
shall notify the Rating Agencies upon the redemption of any Class of Notes,
pursuant to Section 1(a)(i) of the Administration Agreement.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02); and
(iv) that on the Redemption Date, the Redemption Price will
become due and payable upon each Note and that interest thereon shall
cease to accrue from and after the Redemption Date.
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Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required to
be given to Noteholders.
Section 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section.
Notwithstanding the foregoing, in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b)(i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release
of any property subject to the lien created by this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a)
or elsewhere in this Indenture, furnish to the Trustee and the Insurer
(so long as no Insurer Default shall have occurred and be continuing) an
Officer's Certificate certifying or stating the opinion of the signer
thereof such certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the Collateral or other property or securities
to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Trustee and the
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Insurer an Independent Certificate as to the same matters, if the fair
value to the Issuer of the property to be so deposited and of all other
such property made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth
in the Officer's Certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the Notes,
but such Officer's Certificate need not be furnished with respect to any
property so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.01(b)(v), whenever any property or securities
are to be released from the lien created by this Indenture, the Issuer
shall also furnish to the Trustee and the Insurer (so long as no Insurer
Default shall have occurred and be continuing) an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security
created by this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Trustee and the
Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property (other
than property described in clauses (A) or (B) of Section 11.01(b)(v)) or
securities released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
Officer's Certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but
such Officer's Certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth
in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
Notwithstanding Section 2.12 or any other provision of this Section, the
Issuer may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Basic Documents, (B) make cash payments out
of the Trust Accounts as and to the extent permitted or required by the Basic
Documents, so long as the Issuer shall deliver to the Trustee every six months,
commencing __________ __, 20__, an Officer's Certificate stating that all the
dispositions of Collateral described in clauses (A) or (B) that occurred during
the preceding six calendar months were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the Basic
Documents.
Section 11.02. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
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other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Master
Servicer, the Seller or the Issuer, stating that the information with respect to
such factual matters is in the possession of the Master Servicer, the Seller or
the Issuer, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute to or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
Six.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 11.04. Notices, etc., to Trustee, Issuer, Insurer and Rating
Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to or with the Trustee at its Corporate Trust Office;
(ii) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Issuer addressed to: WFS Financial 20__-_
Owner Trust, in care of Chase Manhattan Bank Delaware, as Owner Trustee,
1201 Market Street, Wilmington, Delaware 19801, Attention: Corporate
Trust Administration Department, with a copy to: The Chase Manhattan
Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Structured Finance Services (ABS), or at any other address
furnished in writing to the Trustee by the Issuer; or
(iii) the Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the recipient as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head--Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or the Owner Trustee shall be in writing, personally delivered, sent
by facsimile transmission and
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confirmed or mailed by overnight service, to (i) in the case of Moody's, at the
following address: Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007 and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's, 26 Broadway (20th Floor),
New York, New York 10004, Attention: Asset Backed Surveillance Department; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a conclusion precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default
Section 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Trustee a copy of each such agreement
and the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
Section 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by
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this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
Section 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. The Insurer and its successors and
assigns shall be a third-party beneficiary to the provisions of this Indenture,
and shall be entitled to rely upon and directly to enforce such provisions of
this Indenture so long as no Insurer Default shall have occurred and be
continuing. Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Trust Estate, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
The Insurer may disclaim any of its rights and powers under this Indenture, but
not its duties and obligations under the Note Policy, upon delivery of a written
notice to the Trustee.
Section 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS INDENTURE SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE DUTIES OF THE TRUSTEE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 11.14. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee and the Insurer) to the effect that such recording is necessary
either for the protection of the Noteholders or any other Person secured
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hereunder or for the enforcement of any right or remedy granted to the Trustee
under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficiary
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Trustee or of any successor or assign of the Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, 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 11.17. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Seller or the Issuer, or join in any institution against the Seller
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
Section 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee or of the Insurer,
during the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees and independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested, the
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
Section 11.19. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties
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or obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Articles Six, Seven
and Eight of the Trust Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee under the Trust
Agreement
By:
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee
By:
---------------------------------
Name:
Title:
<PAGE> 77
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On ____________________ before me, _____________________________________
[insert date] [Here insert name and title of notary]
personally appeared ___________________________________________________________,
M personally known to me, or
M proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
--------------------------
<PAGE> 78
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On ____________________ before me, _____________________________________
[insert date] [Here insert name and title of notary]
personally appeared ___________________________________________________________,
M personally known to me, or
M proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
--------------------------
<PAGE> 79
SCHEDULE A
SCHEDULE OF CONTRACTS
Omitted -- Schedules of Contracts on file at the offices of the Seller, the
Master Servicer and the Owner Trustee.
SA-1
<PAGE> 80
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE> 81
EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
B-1
<PAGE> 82
EXHIBIT C
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 20__-_ OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-1
REGISTERED $______
No. R-A1 CUSIP NO. ______
WFS Financial 20__-_ Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ____________ Dollars ($______), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of ______ __, 20__ (the "Class A-1 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date
C-1
<PAGE> 83
from and including the most recent Distribution Date on which interest has been
paid to but excluding such Distribution Date or, in the case of the first
Distribution Date or if no interest has yet been paid, from__________ __, 20__.
The Issuer shall pay interest on overdue installments of interest at the Class
A-1 Interest Rate to the extent lawful. Interest will be computed on the basis
of a 360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________ __, 20__ WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:
---------------------------------
Name:
Title:
C-2
<PAGE> 84
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:
---------------------------------
Authorized Signatory
C-3
<PAGE> 85
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Auto Receivable Backed Notes, Class A-1 (the "Class
A-1 Notes"), all issued under an Indenture, dated as of __________ 1, 20__ (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-1 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-1 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-1 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
C-4
<PAGE> 86
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
C-5
<PAGE> 87
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
C-6
<PAGE> 88
EXHIBIT D
FORM OF CLASS A-2 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES TO
THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 20__-_ OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-2
REGISTERED $______
No. R-A2 CUSIP NO. ______
WFS Financial 20__-_ Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ____________ Dollars ($______), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of __________ __, 20__ (the "Class A-2 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture. No
payments of principal of the Class A-2 Notes shall be made until the principal
amount of the Class A-1 Notes has been reduced to zero.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect
D-1
<PAGE> 89
to all payments of principal made on the preceding Distribution Date), or on the
Closing Date in the case of the first Distribution Date or if no interest has
yet been paid, subject to certain limitations contained in the Indenture.
Interest on this Note will accrue for each Distribution Date from and including
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, in the case of the first Distribution Date
or if no interest has yet been paid, from __________ __, 20__. The Issuer shall
pay interest on overdue installments of interest at the Class A-2 Interest Rate
to the extent lawful. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2
<PAGE> 90
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________ __, 20__ WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:
---------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee,
By:
---------------------------------
Authorized Signatory
D-3
<PAGE> 91
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Auto Receivable Backed Notes, Class A-2 (the "Class
A-2 Notes"), all issued under an Indenture, dated as of __________ 1, 20__ (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-2 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-2 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-2 Notes shall be made pro rata
to the Class A-2 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
D-4
<PAGE> 92
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
D-5
<PAGE> 93
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
D-6
<PAGE> 94
EXHIBIT E
FORM OF CLASS A-3 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES AND
THE CLASS A-2 NOTES AS DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 20__-_ OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-3
REGISTERED $______
No. R-A3 CUSIP NO. ______
WFS Financial 20__-_ Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum ____________ Dollars ($______), payable to the extent described in
the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of __________ __, 20__ (the "Class A-3 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture. No
payments of principal of the Class A-3 Notes shall be made until the principal
amount of the Class A-1 Notes and the Class A-2 Notes has been reduced to zero.
E-1
<PAGE> 95
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, in the case of the first Distribution Date or if no
interest has yet been paid, from __________ __, 20__. The Issuer shall pay
interest on overdue installments of interest at the Class A-3 Interest Rate to
the extent lawful. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
E-2
<PAGE> 96
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________ __, 20__ WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee,
under the Trust Agreement
By:
---------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:
---------------------------------
Authorized Signatory
E-3
<PAGE> 97
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Auto Receivable Backed Notes, Class A-3 (the "Class
A-3 Notes"), all issued under an Indenture, dated as of __________ 1, 20__ (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-3 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-3 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-3 Notes shall be made pro rata
to the Class A-3 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
E-4
<PAGE> 98
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
E-5
<PAGE> 99
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
E-6
<PAGE> 100
EXHIBIT F
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
------------------
Signature Guaranteed By:
- -------------------------------------- ------------------------------------
Signature must be guaranteed by an Notice: The signature(s) on this
eligible guarantor institution which assignment must correspond with the
is a participant in the Securities name(s) as it appears on the face of
Transfer Agent's Medallion Program the within Note in every particular,
(STAMP) or similar signature guarantee without alteration, enlargement, or
program. any change whatsoever.
- -------------------------------------
(Authorized Officer)
F-1
<PAGE> 101
EXHIBIT G
FORM OF NOTE POLICY
G-1
<PAGE> 1
EXHIBIT 4.2.2
================================================================================
WFS FINANCIAL 2000-A OWNER TRUST,
as Issuer,
and
BANKERS TRUST COMPANY,
as Trustee
____________________________________
INDENTURE
Dated as of __________ 1, 2000
____________________________________
$_________________
Auto Receivable Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
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Section 1.01. Definitions................................................................ 2
Section 1.02. Incorporation by Reference of Trust Indenture Act.......................... 10
Section 1.03. Rules of Construction...................................................... 11
ARTICLE TWO
THE NOTES
Section 2.01. Form....................................................................... 12
Section 2.02. Execution, Authentication and Delivery..................................... 12
Section 2.03. Temporary Notes............................................................ 12
Section 2.04. Registration; Registration of Transfer and Exchange........................ 13
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes................................. 14
Section 2.06. Persons Deemed Owner....................................................... 15
Section 2.07. Payment of Principal and Interest; Defaulted Interest...................... 15
Section 2.08. Cancellation............................................................... 16
Section 2.09. Book-Entry Notes........................................................... 16
Section 2.10. Notices to Clearing Agency................................................. 17
Section 2.11. Definitive Notes........................................................... 17
Section 2.12. Release of Collateral...................................................... 18
Section 2.13. Tax Treatment.............................................................. 18
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest.......................................... 19
Section 3.02. Maintenance of Office or Agency............................................ 19
Section 3.03. Money for Payments to be Held in Trust..................................... 19
Section 3.04. Existence.................................................................. 21
Section 3.05. Protection of Trust Estate................................................. 21
Section 3.06. Opinions as to Trust Estate................................................ 21
Section 3.07. Performance of Obligations; Servicing of Contracts......................... 22
Section 3.08. Negative Covenants......................................................... 24
Section 3.09. Annual Statement as to Compliance.......................................... 24
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Section 3.10. Issuer May Consolidate, etc................................................ 25
Section 3.11. Successor or Transferee.................................................... 27
Section 3.12. No Other Business.......................................................... 27
Section 3.13. No Borrowing............................................................... 27
Section 3.14. Master Servicer's Obligations.............................................. 27
Section 3.15. Guarantees, Loans, Advances and Other Liabilities.......................... 27
Section 3.16. Capital Expenditures....................................................... 27
Section 3.17. Restricted Payments........................................................ 27
Section 3.18. Notice of Events of Default................................................ 28
Section 3.19. Further Instruments and Acts............................................... 28
Section 3.20. Compliance with Laws....................................................... 28
Section 3.21. Amendments of Sale and Servicing Agreement and Trust Agreement............. 28
Section 3.22. Removal of Administrator................................................... 28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.................................... 29
Section 4.02. Application of Trust Money................................................. 30
Section 4.03. Repayment of Monies Held by Paying Agent................................... 30
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.......................................................... 31
Section 5.02. Rights upon Event of Default............................................... 32
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee;
Authority of Controlling Party.......................................... 33
Section 5.04. Remedies................................................................... 35
Section 5.05. Optional Preservation of the Contracts..................................... 36
Section 5.06. Priorities................................................................. 36
Section 5.07. Limitation of Suits........................................................ 37
Section 5.08. Unconditional Rights of Noteholders to Receive Principal and Interest...... 38
Section 5.09. Restoration of Rights and Remedies......................................... 38
Section 5.10. Rights and Remedies Cumulative............................................. 38
Section 5.11. Delay or Omission Not a Waiver............................................. 38
Section 5.12. Control by Noteholders..................................................... 39
Section 5.13. Waiver of Past Defaults.................................................... 39
Section 5.14. Undertaking for Costs...................................................... 39
Section 5.15. Waiver of Stay or Extension Laws........................................... 40
Section 5.16. Action on Notes............................................................ 40
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Section 5.17. Performance and Enforcement of Certain Obligations......................... 40
Section 5.18. Claims Under Note Policy................................................... 41
Section 5.19. Preference Claims.......................................................... 42
ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee.......................................................... 43
Section 6.02. Rights of Trustee.......................................................... 44
Section 6.03. Individual Rights of Trustee............................................... 45
Section 6.04. Trustee's Disclaimer....................................................... 46
Section 6.05. Notice of Defaults......................................................... 46
Section 6.06. Reports by Trustee to Holders.............................................. 46
Section 6.07. Compensation and Indemnity................................................. 46
Section 6.08. Replacement of Trustee..................................................... 46
Section 6.09. Successor Trustee by Merger................................................ 48
Section 6.10. Appointment of Co-Trustee or Separate Trustee.............................. 48
Section 6.11. Eligibility; Disqualification.............................................. 49
Section 6.12. Preferential Collection of Claims Against Issuer........................... 49
Section 6.13. Representations and Warranties of Trustee.................................. 49
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses...................... 50
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of Noteholders............... 51
Section 7.02. Preservation of Information; Communications to Noteholders................. 51
Section 7.03. Reports by Issuer.......................................................... 51
Section 7.04. Reports by Trustee......................................................... 52
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money........................................................ 53
Section 8.02. Trust Accounts............................................................. 53
Section 8.03. General Provisions Regarding Accounts...................................... 54
Section 8.04. Release of Trust Estate.................................................... 54
Section 8.05. Opinion of Counsel......................................................... 55
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders..................... 56
Section 9.02. Supplemental Indentures With Consent of Noteholders........................ 57
Section 9.03. Execution of Supplemental Indentures....................................... 58
Section 9.04. Effect of Supplemental Indenture........................................... 58
Section 9.05. Conformity With Trust Indenture Act........................................ 59
Section 9.06. Reference in Notes to Supplemental Indentures.............................. 59
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption................................................................ 60
Section 10.02. Form of Redemption Notice................................................. 60
Section 10.03. Notes Payable on Redemption Date.......................................... 61
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc................................. 62
Section 11.02. Form of Documents Delivered to Trustee.................................... 63
Section 11.03. Acts of Noteholders....................................................... 64
Section 11.04. Notices, etc.............................................................. 65
Section 11.05. Notices to Noteholders; Waiver............................................ 66
Section 11.06. Alternate Payment and Notice Provisions................................... 66
Section 11.07. Conflict With Trust Indenture Act......................................... 66
Section 11.08. Effect of Headings and Table of Contents.................................. 67
Section 11.09. Successors and Assigns.................................................... 67
Section 11.10. Separability.............................................................. 67
Section 11.11. Benefits of Indenture..................................................... 67
Section 11.12. Legal Holidays............................................................ 67
Section 11.13. Governing Law............................................................. 67
Section 11.14. Counterparts.............................................................. 67
Section 11.15. Recording of Indenture.................................................... 67
Section 11.16. Trust Obligation.......................................................... 68
Section 11.17. No Petition............................................................... 68
Section 11.18. Inspection................................................................ 68
Section 11.19. Limitation of Liability of Owner Trustee.................................. 68
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EXHIBITS
Schedule A - Schedule of Contracts.................................................. SA-1
Exhibit A - Form of Sale and Servicing Agreement................................... A-1
Exhibit B - Form of Depository Agreement........................................... B-1
Exhibit C - Form of Class A-1 Note................................................. C-1
Exhibit D - Form of Class A-2 Note................................................. D-1
Exhibit E - Form of Class A-3 Note................................................. E-1
Exhibit E - Form of Class A-4 Note................................................. F-1
Exhibit F - Form of Note Assignment................................................ G-1
Exhibit G - Form of Note Policy.................................................... H-1
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<PAGE> 7
This Indenture, dated as of __________ 1, 2000, is among WFS Financial
2000-A Owner Trust, a Delaware business trust (the "Issuer"), and Bankers Trust
Company, a New York banking corporation, in its capacity as trustee (the
"Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the holders of the Issuer's ______% Auto
Receivable Backed Notes, Class A-1 (the "Class A-1 Notes"), ______ % Auto
Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"), ______ % Auto
Receivable Backed Notes, Class A-3 (the "Class A-3 Notes") and ______ % Auto
Receivable Backed Notes, Class A-4 (the "Class A-4 Notes" and together with the
Class A-1 Notes, the Class A-2 Notes and Class A-3, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee on the Closing Date, on behalf
of and for the benefit of the Holders of the Notes, without recourse, all of the
Issuer's right, title and interest (exclusive of the amount, if any, allocable
to any rebatable insurance premium financed by any Contract) in, to and under
(i) the Contracts secured by the Financed Vehicles (which Contracts shall be
listed in the Schedule of Contracts); (ii) certain monies due under the
Contracts on and after __________ 1, 2000, including, without limitation, all
payments of Monthly P&I with respect to any Financed Vehicle to which a Contract
relates received on or after __________ 1, 2000 and all other proceeds received
on or in respect of such Contracts (other than payments of Monthly P&I due prior
to __________ 1, 2000; (iii) security interests in the Financed Vehicles; (iv) a
financial guaranty insurance policy to be issued by Financial Security for the
exclusive benefit of Noteholders, which will unconditionally and irrevocably
guarantee payment of the Scheduled Payments on each Distribution Date; (v)
amounts on deposit in the Collection Account, the Note Distribution Account, the
Spread Account and the Holding Account, including all Eligible Investments
therein and all income from the investment of funds therein and all proceeds
therefrom; (vi) proceeds from claims under certain insurance policies in respect
of individual Financed Vehicles or obligors under the Contracts; (vii) certain
rights under the Sale and Servicing Agreement; (viii) the protective security
interest in certain of the above-described property granted by the Seller in
favor of the Issuer; (ix) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing; and (x) all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion, voluntary
or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (as each such defined term is defined in
Section 1.01) (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
<PAGE> 8
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes may be adequately and effectively protected.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
(a) 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 Indenture. Capitalized terms used herein that are not
otherwise defined herein shall have the meaning ascribed thereto in the Sale and
Servicing Agreement.
"Act" shall have the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Issuer, the Sellers and the
Trustee.
"Administrator" means the Master Servicer, or any successor
Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, 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 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" and "controlled" have
meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the foregoing
list of Authorized Officers.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Administration Agreement, the Note
Depository Agreement, the Insurance Agreement, the Note Policy and this
Indenture.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
2
<PAGE> 9
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
governmental decree to remain closed.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the _________, ____
Distribution Date.
"Class A-1 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year and actual number of days elapsed since the immediately
preceding Distribution Date).
"Class A-1 Notes" means the Class A-1 Notes, substantially in the form
of Exhibit C.
"Class A-2 Final Distribution Date" means the _________, ____
Distribution Date.
"Class A-2 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-2 Notes" means the Class A-2 Notes, substantially in the form
of Exhibit D.
"Class A-3 Final Distribution Date" means the _________, ____
Distribution Date.
"Class A-3 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 Notes, substantially in the form
of Exhibit E.
"Class A-4 Final Distribution Date" means the _________, ____
Distribution Date.
"Class A-4 Interest Rate" means ______% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-4 Notes" means the Class A-3 Notes, substantially in the form
of Exhibit F.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means March __, 2000.
"Code" means the Internal Revenue Code of 1986, as amended.
3
<PAGE> 10
"Collateral" shall have the meaning specified in the Granting Clause of
this Indenture.
"Controlling Party" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing, and the Trustee, for so long as an
Insurer Default shall have occurred and be continuing.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Indenture is located at Four
Albany Street, 10th Floor, New York, New York 10006, Attention: Corporate Trust
Department - Asset Backed Group; or at such other address as the Trustee may
designate from time to time by notice to the Noteholders, the Insurer and the
Issuer, or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Noteholders, the Insurer
and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Distribution Date" means each ________ 20, ________ 20, ________ 20,
and ________ 20 or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing ________ 20, 2000.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation or depository
institution, the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, President, Executive Vice President, any Vice President, the
Secretary or the Treasurer of such corporation or depository institution; and
with respect to any partnership, any general partner thereof.
"Financial Security" means Financial Security Assurance Inc.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
4
<PAGE> 11
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such Person;
or (viii) obligations of such Person under any interest rate or currency
exchange agreement.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, either Seller and any of their respective Affiliates, (ii) does not
have any direct financial interest or any material indirect financial interest
in the Issuer, any such other obligor, either Seller or any of their respective
Affiliates, and (iii) is not connected with the Issuer, any such other obligor,
either Seller or any of their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.01, made by an Independent
appraiser or other expert appointed by an Issuer Order and approved by the
Trustee in the exercise of reasonable care, and such opinion or certificate
shall state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Sellers, the Master Servicer and the Trustee.
"Insurance Agreement Obligations" means, as of any date, the aggregate
amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurer" means Financial Security.
"Insurer Default" means the occurrence and continuance of any of the
following:
(i) the Insurer shall have failed to make a payment required to
be made under the Note Policy;
5
<PAGE> 12
(ii) the Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (b) made a general
assignment for the benefit of its creditors or (c) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property
of the Insurer).
"Interest Period" means, with respect to any Distribution Date and any
Class of Notes, the period from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including ________, 2000) to but excluding such Distribution
Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate or Class A-4 Interest Rate, as
applicable.
"Issuer" means WFS Financial 2000-A Owner Trust until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by an Authorized Officer and delivered to the
Trustee.
"Master Servicer" means WFS, in its capacity as master servicer under
the Sale and Servicing Agreement, and any successor Master Servicer thereunder.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or
Class A-4 Note.
"Note Depository Agreement" means the agreement dated ________, 2000,
among the Issuer, the Trustee and DTC, as the initial Clearing Agency, relating
to the Notes, substantially in the form of Exhibit B hereto.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
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"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Insurer with respect to the Notes, including any endorsements thereto,
substantially in the form of Exhibit G hereto.
"Note Policy Claim Amount" shall have the meaning specified in Section
5.18(a).
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.04.
"Notice of Claim" shall have the meaning specified in Section 5.18(b).
"Officer's Certificate" means a certificate signed by an Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer and who shall be satisfactory to the Trustee and, if
addressed to the Insurer, satisfactory to the Insurer, and which shall comply
with any applicable requirements of Section 11.01, and shall be in form and
substance satisfactory to the Trustee, and if addressed to the Insurer,
satisfactory to the Insurer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice has been made, satisfactory to the Trustee, has been
made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by
a protected purchaser (as such term is defined in Article 8 of the UCC);
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Trustee, and the Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of the requisite Outstanding Amount have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder or under any other Basic Document, Notes owned by the Issuer, any
other obligor upon the Notes, a Seller, WFS or any of their respective
Affiliates shall be disregarded and deemed not to be Outstanding, except that,
in
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determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Trustee knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, a Seller, WFS or any of their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Owner Trustee" means Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and, so long as
no Insurer Default shall have occurred and be continuing, is consented to by the
Insurer and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" shall have the meaning specified in Section 5.19(b).
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means each of Moody's and Standard & Poor's.
"Rating Agency Condition" means, with respect to any action, that (i)
Standard & Poor's shall have been given ten Business Days (or such shorter
period as is acceptable to Standard & Poor's) prior notice thereof and that
Standard & Poor's shall have notified the Sellers, the Master Servicer, the
Insurer and the Issuer in writing that such action will not result in a
qualification, reduction or withdrawal of its then-current rating of any Class
of Notes and will not result in an increased capital charge to the Insurer and
(ii) Moody's shall have been given ten Business Days (or such shorter period as
is acceptable to Moody's) prior notice thereof and copies of all documentation
relating to the event requiring such Rating Agency Condition.
"Rating Event" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
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"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date, or, in the event that Definitive Notes are
issued, the close of business on the 15th day of the month immediately preceding
the month in which such Distribution Date or Redemption Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Master Servicer or the Issuer
pursuant to Section 10.01(a) or 10.01(b), as the case may be.
"Redemption Price" means (i) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon at the weighted
average of the Interest Rate for each Class of Notes being so redeemed to but
excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Repurchase Premium" has the meaning set forth in the Sale and Servicing
Agreement.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust and Agency Group (or any successor group of the
Trustee), including any Vice President, assistant secretary or other officer or
assistant officer of the Trustee customarily performing function similar to
those performed by the people who at such time shall be officers, respectively,
or to whom any corporate trust matter is referred at the Corporate Trust Office
of the Trustee because of his knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Issuer, the Sellers and the Master
Servicer, substantially in the form of Exhibit A hereto.
"Schedule of Contracts" means the listing of the Contracts set forth in
Schedule A hereto.
"Scheduled Payments" shall have the meaning specified therefor in the
Note Policy.
"Sellers" means WFS Financial Auto Loans, Inc. and WFS Receivables
Corporation, in their capacity as sellers under the Sale and Servicing
Agreement, and their respective successors.
"State" means any one of the 50 states of the United States or the
District of Columbia.
"Successor Master Servicer" shall have the meaning specified in Section
3.07(e).
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have received payment and performance of all
amounts and obligations which the Issuer may owe to
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or on behalf of the Insurer under this Indenture and (iii) the date on which the
Trustee shall have received payment and performance of all amounts and
obligations which the Issuer may owe to or on behalf of the Trustee for the
benefit of the Noteholders under this Indenture or the Notes.
"Trust Agreement" means the Trust Agreement, dated as ________, 2000, as
amended and restated as of ________, 2000, among the Sellers, the Insurer and
the Owner Trustee.
"Trust Estate" means the Collateral Granted to the Trustee under this
Indenture, including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"Trustee" means Bankers Trust Company, as Trustee under this Indenture,
or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Note Policy for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"United States" means the United States of America.
"WFAL" means WFS Financial Auto Loans, Inc., a California corporation.
"WFS" means WFS Financial Inc, and its successors.
"WFSRC" means WFS Receivables Corporation, a California corporation.
"WFSRC Contracts" has the meaning set forth in the Sale and Servicing
Agreement.
(b) Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture to be Qualified" means this Indenture.
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"Indenture Trustee" or "Institutional Trustee" means the Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. 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; (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 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 permitted successors and assigns; (viii) the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Indenture shall refer to this Indenture as a whole and not to any particular
provision of this Indenture; and (ix) Section, subsection and Schedule
references contained in this Indenture are references to Sections, subsections
and Schedules in or to this Indenture unless otherwise specified.
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ARTICLE TWO
THE NOTES
Section 2.01. Form. The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes, in each case together with the Trustee's
certificate of authentication, shall be in substantially the forms set forth as
Exhibits to this Indenture with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of the Note Policy and an Issuer Order,
authenticate and deliver for original issue the following aggregate principal
amount of Notes: (i) $___,___,000 of Class A-1 Notes, (ii) $___,___,000 of Class
A-2 Notes, (iii) $___,___,000 of Class A-3 Notes and (iv) $___,___,000 of Class
A-4 Notes. The aggregate principal amount of Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes outstanding at any time may not exceed such
respective amounts, except as otherwise provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such
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variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the related Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, a like tenor and principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be the "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, provided that
the requirements of Section 8-401 of the UCC are met, the Issuer shall execute,
and the Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, in the name of the designated transferee or transferees, one or more
new Notes of the same Class in any authorized denominations, of a like aggregate
principal amount.
At the option of a Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, provided that the
requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and
the Trustee shall authenticate and the Noteholder shall obtain from the Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
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Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for the payment in full of such Note.
Copies of this Indenture (without exhibits) may be obtained by
Noteholders upon request in writing to the Trustee at the Corporate Trust
Office.
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, (ii) there is
delivered to the Trustee and the Insurer (unless an Insurer Default shall have
occurred and be continuing) such security or indemnity as may be required by
them to hold the Issuer, the Trustee and the Insurer harmless and (iii) the
requirements of Section 8-405 of the UCC are met, then, in the absence of notice
to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a protected purchaser (as defined in Article 8 of the UCC), the
Issuer shall execute and upon its request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same Class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser (as defined in Article 8 of the UCC)
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer, the Insurer and the Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a protected purchaser (as defined in Article 8 of the UCC), and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
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Upon the issuance of any replacement Note under this Section, the Issuer
or the Trustee may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Insurer and
any of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Insurer, the Trustee nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related Interest
Rate, and such interest shall be payable on each Distribution Date as specified
in Article Five of the Sale and Servicing Agreement and in the form of the
related Note set forth as an Exhibit hereto, subject to Section 3.01. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date, a Redemption Date or on the related Final Distribution Date,
as the case may be (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.01(a)), which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Distribution
Date to the extent provided in Article Five of the Sale and Servicing Agreement
and in the form of the related Note set forth as an Exhibit hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the related Final
Distribution Date or on the date on which an Event of Default shall have
occurred and be
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continuing, so long as an Insurer Default shall not have occurred and be
continuing or, if an Insurer Default shall have occurred and be continuing, on
the date on which an Event of Default shall have occurred and be continuing and
the Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount have declared the Notes to be immediately due and payable in
the manner provided in Section 5.02. All principal payments on each Class of
Notes shall be made pro rata to the Noteholders of such Class entitled thereto.
The Trustee shall notify the Person in whose name a Note is registered at the
close of business on the Record Date preceding the Distribution Date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Such notice shall be mailed within five Business Days of
such Distribution Date (or, in the case of Notes registered in the name of Cede
& Co., as nominee of DTC, such notice shall be provided within one Business Day
of such Distribution Date) or receipt of notice of termination of the Trust
pursuant to Section 9.01(c) of the Trust Agreement and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02. In addition, the Administrator shall notify the Rating Agencies upon the
final payment of interest and principal of each Class of Notes, and upon the
termination of the Trust, in each case pursuant to Section 1(a)(i) of the
Administration Agreement.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the related payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to the Trustee and each Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Insurer has paid any amount in respect of the
Notes under the Note Policy which has not been reimbursed to it, deliver such
surrendered Notes to the Insurer.
Section 2.08. Cancellation. Subject to Section 2.07(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by the Trustee. Subject to Section 2.07(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.07(d), all cancelled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it; provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
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Section 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Clearing Agency, by, or on behalf of,
the Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Note
Owner will receive a Definitive Note representing such Note Owner's interest in
such Note, except as provided in Section 2.11. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the
giving of instructions or directions hereunder) as the sole holder of
the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants; pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.11,
the Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of
and interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Trustee.
Section 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
Section 2.11. Definitive Notes. If (i)(A) the Administrator advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as described in the Note Depository
Agreement, and (B) Trustee or the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency,
or (iii) after the occurrence of an Event of Default, the Note Owners
representing not less than 51% of the Outstanding Amount of a Class of Notes
advise the Trustee and the Clearing Agency through the Clearing
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Agency Participants in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the related
Note Owners, then the Trustee shall notify all Note Owners of the related Class
of Notes, through the Clearing Agency, of the occurrence of such event and of
the availability of Definitive Notes of the related Class of Notes to Note
Owners requesting the same. Upon surrender to the Trustee of the Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes of a Class, the Trustee shall recognize the Holders of the
Definitive Notes as Noteholders hereunder.
The Trustee shall not be liable if the Trustee or the Administrator is
unable to locate a qualified successor Clearing Agency. The Definitive Notes
shall be typewritten, printed, lithographed or engraved or produced by any
combination of these methods (with or without steel engraved borders), all as
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
Section 2.12. Release of Collateral. Subject to Section 11.01 and the
other Basic Documents, the Trustee shall release property from the lien of this
Indenture only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of such
Independent Certificates to the effect that the TIA does not require any such
Independent Certificates.
Section 2.13. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
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ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account in respect of the
related Due Period on a Distribution Date deposited therein pursuant to the Sale
and Servicing Agreement for the benefit of (i) the Class A-1 Notes, to the Class
A-1 Noteholders, (ii) the Class A-2 Notes, to the Class A-2 Noteholders, (iii)
the Class A-3 Notes, to the Class A-3 and (iii) the Class A-4 Notes, to the
Class A-4 Noteholders. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Chase Manhattan Bank,
as agent for the Issuer, will maintain in The City of New York an office or
agency where Notes may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints the Trustee
to serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to be Held in Trust. As provided in
Sections 5.06 and 8.02, all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(b) shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On the Business Day immediately preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Trustee) shall promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Insurer an instrument in which such
Paying Agent shall agree with the Trustee (and if the Trustee acts as Paying
Agent, it hereby so agrees), subject to the provisions of this Section, that
such Paying Agent will:
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(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the
Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
receipt of an Issuer Request with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) shall be deposited by the Trustee
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that if such money or any portion
thereof had been previously deposited by the Insurer with the Trustee for the
payment of principal or interest on the Notes, to the extent any amounts are
owing to the Insurer, such amounts shall be paid promptly to the Insurer upon
receipt of a written request by the Insurer to such effect, and provided,
further, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Trustee may also adopt and
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employ, at the expense of the Issuer, any other reasonable means of notification
of such repayment (including, but not limited to, mailing notice of such
repayment to Holders whose Notes have been called but have not been surrendered
for redemption or whose right to or interest in monies due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) 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
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the Trust
Estate, and the Issuer shall take all actions necessary to obtain and maintain,
for the benefit of the Trustee on behalf of the Noteholders, a first lien on and
a first priority, perfected security interest in the Trust Estate, subject to
the rights of the Insurer under the Insurance Agreement. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Master Servicer and
delivered to the Issuer, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the rights
of the Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute all financing statements, continuation statements or other
instruments required to be executed pursuant to this Section.
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Section 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Trustee and the Insurer an Opinion of Counsel to the
effect that, in the opinion of such counsel, either (i) all financing statements
and continuation statements have been executed and filed that are necessary to
create and continue the Trustee's first priority perfected security interest in
the collateral (subject to the rights of the Insurer under the Insurance
Agreement) for the benefit of the Noteholders, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest.
(b) 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, the Issuer shall furnish to the Trustee and the Insurer an Opinion of
Counsel, dated as of a date during such 90-day period, to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Trustee's first priority perfected security interest in
the collateral (subject to the rights of the Insurer under the Insurance
Agreement) for the benefit of the Noteholders, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest.
Section 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others, including the Servicer, that
would release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Trust Estate or
that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in the Basic Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the Insurer
(so long as no Insurer Default shall have occurred and be continuing) to assist
it in performing its duties and obligations under this Indenture, and any
performance of such duties by a Person identified to the Trustee and the Insurer
in an Officer's Certificate shall be deemed to be action taken by the Issuer.
The Trustee shall not be responsible for the action or inaction of the Master
Servicer or the Administrator. Initially, the Issuer has contracted with the
Master Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will, and will cause the Administrator to, punctually
perform and observe all of the obligations and agreements of the Issuer and the
Administrator contained in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the other Basic Documents in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the
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consent of the Trustee or the Holders of at least a majority of the Outstanding
Amount or such greater percentage as may be specified in the particular
provision.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly notify the Trustee, the Insurer and each
Rating Agency thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect of such default. If a Servicer Default shall arise
from the failure of the Master Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Contracts, the Issuer shall take all reasonable steps available to it to remedy
such failure.
(e) If an Insurer Default shall have occurred and be continuing and if
the Issuer has given notice of termination to the Master Servicer of the Master
Servicer's rights and powers pursuant to Section 8.02 of the Sale and Servicing
Agreement, as promptly as possible thereafter, the Issuer shall appoint a
successor servicer (the "Successor Master Servicer"), and such Successor Master
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. In the event that a Successor Master Servicer has not
been appointed and accepted its appointment at the time when the Master Servicer
ceases to act as Master Servicer, the Trustee without further action shall
automatically be appointed the Successor Master Servicer. The Trustee may resign
as the Successor Master Servicer by giving written notice of such resignation to
the Issuer and in such event will be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new servicer as the Successor
Master Servicer under the Sale and Servicing Agreement. Any Successor Master
Servicer other than the Trustee shall (i) be an established financial
institution having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of motor vehicle receivables and (ii) enter into
a servicing agreement with the Issuer having substantially the same provisions
as the provisions of the Sale and Servicing Agreement applicable to the Master
Servicer. If within 30 days after the delivery of the notice referred to above,
the Issuer shall not have obtained such a new Master Servicer, the Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor Master Servicer. In connection with any such appointment, the Trustee
may make such arrangements for the compensation of such successor as it and such
successor shall agree, subject to the limitations set forth below and in the
Sale and Servicing Agreement, and in accordance with Section 8.02 of the Sale
and Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Contracts (such agreement to be in form and
substance satisfactory to the Trustee). If the Trustee shall succeed to the
Master Servicer's duties as servicer of the Contracts as provided herein, it
shall do so in its individual capacity and not in its capacity as Trustee and,
accordingly, the provisions of Article Six shall be inapplicable to the Trustee
in its duties as the successor to the Master Servicer and the servicing of the
Contracts. In case the Trustee shall become successor to the Master Servicer
under the Sale and Servicing Agreement, the Trustee shall be entitled to appoint
as Master Servicer one of its Affiliates, provided that it shall be fully liable
for the actions and omissions of such Affiliate in such capacity as Successor
Master Servicer.
(f) Upon any termination of the Master Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a
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successor Master Servicer is appointed, the Issuer shall notify the Trustee of
such appointment, specifying in such notice the name and address of such
successor Master Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Master Servicer or the Seller of their respective duties under
the Basic Documents: (i) without the prior consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) or (ii) if the effect
thereof would adversely affect the Holders of the Notes.
Section 3.08. Negative Covenants. Until the Termination Date, the Issuer
shall not:
(i) except as expressly permitted by the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien created by this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture or
the lien in favor of the Insurer created by the Insurance Agreement) to
be created on or extend to or otherwise arise upon or burden the Trust
Estate or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on a Financed Vehicle and
arising solely as a result of an action or omission of the related
Obligor), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate, or
(D) amend, modify or fail to comply with the provisions of the Basic
Documents without the prior written consent of the Controlling Party,
except where the Basic Documents allow for amendment or modification
without the consent or approval of the Controlling Party; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09. Annual Statement as to Compliance. The Issuer will deliver
to the Trustee and the Insurer, on or before 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
2000) an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
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(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form and substance satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing), the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture and each other Basic Document
on the part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such consolidation or
merger, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) to the effect that such consolidation or merger will not
have any material adverse tax consequence to the Trust, the Insurer, any
Certificateholder or any Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken as required by clause (v) above or that no such actions will be
taken) each stating that such consolidation or merger and such
supplemental indenture comply with this Article Three and that all
conditions precedent herein provided for relating to such transaction
have been compiled with (including any filings required by the Exchange
Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such consolidation or merger at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero
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and (B) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States citizen
or a Person organized and existing under the laws of the United States
or any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form and substance
satisfactory to the Trustee and the Insurer (so long as no Insurer
Default shall have occurred and be continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Basic Document on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such conveyance or
transference, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such conveyance or transference;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) to the effect that such conveyance or transference will not
have any material adverse tax consequence to the Trust, the Insurer, any
Certificateholder or any Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken as required by clause (v) above or that no such actions will be
taken) each stating that such conveyance or transference and such
supplemental indenture comply with this Article Three and that all
conditions precedent herein provided for relating to such transaction
have been complied with (including any filings required by the Exchange
Act); and
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(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such conveyance or transfer of properties or assets at least 20 Business
Days prior to the consummation of such action and shall have received
the prior written approval of the Insurer of such conveyance or transfer
and the Person acquiring by conveyance or transference the properties or
assets of the Issuer has a net worth, immediately after such conveyance
or transfer, that is (A) greater than zero and (B) not less than the net
worth of the Issuer immediately prior to giving effect to such
conveyance or transfer.
Section 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the assets
or properties of the Issuer pursuant to Section 3.10(b), the Issuer will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Trustee stating that the Issuer is to be
so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto.
Section 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations or Indebtedness owing
from time to time to the Insurer under the Insurance Agreement and (iii) any
other Indebtedness permitted by or arising under the other Basic Documents. The
proceeds of the Notes shall be used exclusively to fund the Issuer's purchase of
the Contracts and the other assets specified in the Sale and Servicing
Agreement, to fund the Spread Account and to pay the transactional expenses of
the Issuer.
Section 3.14. Master Servicer's Obligations. The Issuer shall cause the
Master Servicer to comply with Sections 4.09, 4.10, 4.11 and 5.07 and Article
Nine of the Sale and Servicing Agreement.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as otherwise contemplated by the Basic Documents, the Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuming another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, any
other interest in, or make any capital contribution to, any other Person.
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Section 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Restricted Payments. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Master Servicer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Master
Servicer, the Owner Trustee and the Certificateholders as contemplated by, and
to the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (B) payments to the Trustee and the Owner
Trustee pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the other Basic
Documents.
Section 3.18. Notice of Events of Default. The Issuer agrees to give the
Trustee, the Insurer and each Rating Agency prompt written notice of each Event
of Default hereunder and each default on the part of the Master Servicer or the
Seller of their respective obligations under the Sale and Servicing Agreement.
Section 3.19. Further Instruments and Acts. Upon request of the Trustee
or the Insurer, the Issuer will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
Section 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.
Section 3.22. Removal of Administrator. If an Insurer Default shall have
occurred and be continuing, so long as any Notes are issued and outstanding, the
Issuer shall not remove the Administrator without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07,
3.08, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee under
Section 6.07 and the obligations of the Trustee under Section 4.02), (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them and (vii) the
obligation of the Trustee to make claims under the Note Policy, which shall
survive the Class A-4 Final Distribution Date and extend through any preference
period applicable with respect to the Notes or any payments made in respect of
the Notes, and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 2.05
and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuer
and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the
Trustee for cancellation and the Note Policy has expired and
been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable,
(ii) will become due and payable at the Class
A-4 Final Distribution Date within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above,
has irrevocably deposited or caused to be irrevocably deposited
with the Trustee cash or direct obligations of or obligations
guaranteed by the United States (which will mature prior to the
date such amounts are payable), in trust in an Eligible Account
for such purpose, in an amount sufficient to pay and discharge
the entire indebtedness on such Notes not theretofore delivered
to the Trustee for cancellation when due to the related Final
Distribution Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.01(a)), as the case
may be;
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(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on
behalf of (1) the Trustee for the benefit of the Noteholders under this
Indenture or the Notes and (2) the Insurer under this Indenture; and
(C) the Issuer has delivered to the Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the
TIA, the Trustee and the Insurer) an Independent Certificate from a firm
of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied with
(and, in the case of the foregoing Officer's Certificate, stating that
the Rating Agency Condition has been satisfied).
Section 4.02. Application of Trust Money. All monies deposited with the
Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine, to
the Holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest; but such monies need not be segregated from
other funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.
Section 4.03. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default by the Issuer in the payment of any interest on any
Note when the same becomes due and payable, and such default shall
continue for a period of five days, without taking into account the
effect of any payment under the Note Policy;
(ii) default by the Issuer in the payment of the principal of or
any installment of the principal of any Note when the same becomes due
and payable, without taking into account the effect of any payment under
the Note Policy;
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proves to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition
in respect of which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a period of 30
days after there shall have been given, by registered or certified mail,
to the Issuer and the Trustee by the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or, if an Insurer
Default shall have occurred and be continuing, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25%
of the Outstanding Amount of the Notes, voting together as a single
class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under
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any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee and the Insurer, within five
days after obtaining knowledge of the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause (iii) above,
its status and what action the Issuer is taking or proposes to take with respect
thereto.
Section 5.02. Rights upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing, if an
Event of Default shall have occurred and be continuing, then with the consent of
the Insurer, the Notes shall become immediately due and payable at par, together
with accrued interest thereon. The Trustee will have no discretion with respect
to the acceleration of the Notes under the foregoing circumstances. In the event
of any such acceleration of the Notes, the Trustee shall continue to be entitled
to make claims under the Note Policy pursuant to Section 5.18 for Scheduled
Payments on the Notes. Payments under the Note Policy following acceleration of
the Notes shall be applied by the Trustee:
(i) to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest; and
(ii) to each Class of Noteholders for amounts due and unpaid on
such Class of Notes for principal, ratably, without preference or
priority of any kind, according to amounts due and payable on the Notes
for principal.
(b) So long as no Insurer Default has occurred and is continuing, in the
event the Notes are accelerated due to an Event of Default, the Insurer shall
have the right (in addition to its obligation to pay Scheduled Payments on the
Notes in accordance with the Note Policy), but not the obligation, to elect:
(i) to cause the Trustee or the Master Servicer, subject to
Section 5.04, to sell or liquidate the Trust Estate, in whole or in
part, on any date or dates following such acceleration as the Insurer,
in its sole discretion, shall elect; or
(ii) to pay Scheduled Payments on the Notes in accordance with
the Note Policy.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee may, or if
so requested in writing by Holders of Notes representing at least 66K% of the
aggregate Outstanding Amount, upon prior written notice to each Rating Agency,
shall declare by written notice to the Issuer that the Notes
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become, whereupon they shall become, immediately due and payable at par,
together with accrued interest thereon. Notwithstanding anything to the contrary
in this paragraph (c), if an Event of Default specified in Section 5.01(iv) or
(v) shall occur and be continuing when an Insurer Default has occurred and is
continuing, the Notes shall become immediately due and payable at par, together
with accrued interest thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Controlling Party.
(a) The Issuer covenants that if the Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the applicable
Interest Rate and in addition thereto such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) Each of the Trustee and the Insurer hereby irrevocably and
unconditionally appoints the Controlling Party as the true and lawful
attorney-in-fact of such Person for so long as such Person is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Person such acts, things and deeds for or on behalf of and in the name
of such Person under this Indenture (including specifically under Section 5.04)
and under the other Basic Documents which such Person could or might do or which
may be necessary, desirable or convenient in such Controlling Party's sole
discretion to effect the purposes contemplated hereunder and under the other
Basic Documents and, without limitation, following the occurrence of an Event of
Default, exercise full right, power and authority to take, or defer from taking,
any and all acts with respect to the administration, maintenance or disposition
of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may in
its discretion but with the consent of the Controlling Party (except as provided
in Section 5.03(d)), proceed to protect and enforce the rights of the
Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this Indenture
and regardless of whether an Insurer Default shall have occurred and be
continuing, if the Issuer fails to perform its obligations under Section
10.01(b) when and as due, the Trustee may in its discretion (and without the
consent of the Controlling Party) proceed to protect and enforce its rights and
the rights of the Noteholders by such appropriate proceedings as the Trustee
shall deem most effective to protect and enforce any such rights, whether for
specific performance of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other remedy or
legal or equitable right vested in the Trustee by this Indenture or
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by law; provided that the Trustee shall only be entitled to take any such
actions without the consent of the Controlling Party to the extent such actions
(i) are taken only to enforce the Issuer's obligations to redeem the principal
amount of Notes, and (ii) are taken only against the portion of the Collateral,
if any, consisting of the Spread Account, any investments therein and any
proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee or the Holders of Notes allowed in any Proceedings relative to
the Issuer, its creditors and its property; and any trustee, receiver,
liquidator, custodian or other similar official in any such Proceeding
is hereby authorized by each of such Noteholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making
of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
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(f) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(g) All rights of action and of asserting claims under this Indenture or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(h) In any Proceedings brought by the Trustee (including any Proceedings
involving the interpretation of any provision of this Indenture), the Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing the Controlling Party may (subject to Sections 5.02 and 5.05):
(i) institute Proceedings in its own name and as or on behalf of
a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Trustee and take any other appropriate
action to protect and enforce the rights and remedies of the Trustee on
behalf of the Noteholders under this Indenture or the Notes; and
(iv) direct the Trustee or the Master Servicer to sell or
otherwise liquidate the Trust Estate or any portion thereof or rights or
interests therein, at one or more public or private sales called and
conducted in any manner permitted by law and deliver the proceeds of
such sale or liquidation to the Trustee for distribution in accordance
with the terms of this Indenture; provided, however, that, except as
otherwise provided in the immediately succeeding sentence, no such sale
or liquidation can be made if the proceeds of such sale or liquidation
distributable to the Noteholders are not sufficient to pay all
outstanding principal of and accrued interest on the Notes.
Notwithstanding the foregoing, the proceeds of such sale or liquidation
need not be sufficient to pay all outstanding principal of and accrued interest
on the Notes if (A) the Insurer is the Controlling Party and the related Event
of Default arose as described in clause (i), (ii), (iv)
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or (v) of Section 5.01 or (B) the Trustee is the Controlling Party and the
related Event of Default arose as described in clause (i), (ii), (iv) or (v) of
Section 5.01 and (1) the Holders of 100% of the Outstanding Amount of the Notes,
voting together as a single class, consent to such sale or liquidation or (2)
the Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
the Trustee provides prior written notice of such sale or liquidation to each
Rating Agency and Holders of 66K% of the Outstanding Amount of the Notes, voting
together as a single class, consent to such sale or liquidation. In determining
such sufficiency or insufficiency of (i) the proceeds of such sale or
liquidation to pay all outstanding principal of and accrued interest on the
Notes or (ii) the Trust Estate to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, the Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.05. Optional Preservation of the Contracts. If the Trustee is
the Controlling Party and if the Notes have been declared to be due and payable
under Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Trustee shall
take such desire into account when determining whether or not to maintain
possession of the Trust Estate. In determining whether to maintain possession of
the Trust Estate, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. Priorities.
(a) If the Trustee collects any money or property pursuant to this
Article (excluding any payments made under the Note Policy), it shall pay out
the money or property in the following order and priority:
(i) amounts due and owing and required to be distributed to the
Master Servicer, the Owner Trustee and the Trustee, respectively,
pursuant to clauses (i) and (ii) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed, in the order of such
priorities and without preference or priority of any kind within such
priorities;
(ii) to each Class of Noteholders, accrued and unpaid interest
on the outstanding principal amount of the related Class of Notes at the
related Interest Rate, together with, to the extent permitted by
applicable law, interest at the related Interest Rate on any interest
accrued but not timely paid;
(iii) to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for principal, ratably, without preference
or priority of any kind,
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according to the amounts due and payable on the Class A-1 Notes for
principal, until the Outstanding Amount of the Class A-1 Notes is
reduced to zero;
(iv) to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for principal, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Class A-2 Notes for principal, until the Outstanding Amount of the Class
A-2 Notes is reduced to zero;
(v) to Holders of the Class A-3 Notes for amounts due and unpaid
on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A-3 Notes for principal, until the Outstanding Amount of the Class
A-3 Notes is reduced to zero;
(vi) to Holders of the Class A-4 Notes for amounts due and
unpaid on the Class A-4 Notes for principal, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Class A-4 Notes for principal, until the Outstanding Amount of the Class
A-4 Notes is reduced to zero;
(vii) amounts due and owing and required to be distributed to
the Insurer pursuant to clause (vii) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed; and
(viii) any excess amounts remaining after making the
distributions described in clauses (i) through (vi) above shall be
distributed in the following order of priority: into the Spread Account
until the amounts deposited therein equal the Specified Spread Account
Balance, with any excess being distributed, first, to the Insurer, to
the extent of any Unreimbursed Insurer Amounts, second, to WFAL until
WFAL has received an aggregate amount equal to the Spread Account
Initial Deposit and third, to each Certificateholder in proportion to
its Certificate Percentage Interest.
(b) The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
Section 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount
of the Notes have made written request to the Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
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(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes, voting together as a
single class; and
(vi) an Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder; provided, however, that so long as an
Insurer Default shall not have occurred and be continuing, no such suit shall be
instituted.
Section 5.09. Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or
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Event of Default shall impair any such right or remedy or constitute a waiver of
any such Default or Event of Default or an acquiescence therein. Every right and
remedy given by this Article Five or by law to the Trustee or to the Noteholders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Noteholders, as the case may be.
Section 5.12. Control by Noteholders. If the Trustee is the Controlling
Party, the Holders of a majority of the Outstanding Amount of the Notes shall
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the terms of Section 5.04, any direction to the
Trustee to sell or liquidate the Trust Estate shall be by the Holders of
Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Trustee need not take any action that it determines, in its
sole discretion, might involve it in liability or might materially adversely
affect the rights of any Noteholders not consenting to such action.
Section 5.13. Waiver of Past Defaults. If an Insurer Default shall have
occurred and be continuing, the Holders of Notes of not less than a majority of
the Outstanding Amount of the Notes may waive any past Default or Event of
Default and its consequences except a Default (i) in payment of principal of or
interest on any of the Notes or (ii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder of
each Note. In the case of any such waiver, the Issuer, the Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court
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may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Trustee, (ii) any suit instituted by any Noteholder, or group of Noteholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount of
the Notes or (iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in and manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.16. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer. Any money or property collected by the Trustee shall be applied in
accordance with Section 5.06.
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Sellers and the Master Servicer as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
a Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by such
Seller or the Master Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Trustee is the Controlling Party and if an Event of Default
has occurred and is continuing, the Trustee may, and at the direction (which
direction shall be in writing and may include a facsimile) of the Holders of
66K% of the Outstanding Amount of the Notes shall exercise all rights, remedies,
powers, privileges and claims of the Issuer against any Seller or the Master
Servicer under or in connection with the Sale and Servicing Agreement, including
the
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right or power to take any action to compel or secure performance or observance
by a Seller or the Master Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
Section 5.18. Claims Under Note Policy.
(a) In the event that the Trustee has received a Deficiency Notice with
respect to any Distribution Date pursuant to Section 5.02(c) of the Sale and
Servicing Agreement, the Trustee shall furnish to the Insurer no later than
12:00 p.m., New York City time, on the fourth Business Day prior to the related
Distribution Date a completed Notice of Claim in the amount of the shortfall in
amounts so available to pay the Note Interest Distributable Amount and the Note
Principal Distributable Amount with respect to such Distribution Date (the
amount of any such shortfall being hereinafter referred to as the "Note Policy
Claim Amount"). Amounts paid by the Insurer pursuant to a claim submitted under
this Section shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Distribution Date.
(b) Any notice delivered by the Trustee to the Insurer pursuant to
Section 5.18(a) shall specify the Note Policy Claim Amount claimed under the
Note Policy and shall constitute a "Notice of Claim" under the Note Policy. In
accordance with the provisions of the Note Policy, the Insurer is required to
pay to the Trustee the Note Policy Claim Amount properly claimed thereunder by
12:00 p.m., New York City time, on the later of (i) the fourth Business Day
following receipt of the Notice of Claim, and (ii) the applicable Distribution
Date. Any payment made by the Insurer under the Note Policy shall be applied
solely to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Noteholder
any Note Policy Claim Amount from the Insurer and (ii) deposit the same in the
Note Distribution Account for distribution to Noteholders as provided in
Sections 3.01 or 5.02. Any and all Note Policy Claim Amounts disbursed by the
Trustee from claims made under the Note Policy shall not be considered payment
by the Trust or from the Spread Account with respect to such Notes, and shall
not discharge the obligations of the Trust with respect thereto. The Insurer
shall, to the extent it makes any payment with respect to the Notes, become
subrogated to the rights of the recipients of such payments to the extent of
such payments. Subject to and conditioned upon any payment with respect to the
Notes by or on behalf of the Insurer, the Trustee shall assign to the Insurer
all rights to the payment of interest or principal with respect to the Notes
which are then due for payment to the extent of all payments made by the Insurer
and the Insurer may exercise any option, vote, right, power or the like with
respect to the Notes to the extent that it has made payment pursuant to the Note
Policy. To evidence such subrogation, the Note Registrar shall note the
Insurer's rights as subrogee upon the register of Noteholders upon receipt from
the Insurer of proof of payment by the Insurer of any Note Interest
Distributable Amount or Note Principal Distributable Amount. The foregoing
subrogation shall in all cases be subject to the rights of the Noteholders to
receive all Scheduled Payments in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Insurer into the Note Distribution Account and the allocation
of such funds to payment of
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interest on and principal paid in respect of any Note. The Insurer shall have
the right to inspect such records at reasonable times upon one Business Day's
prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Indenture or any other Basic
Document, the Noteholders are not entitled to institute proceedings directly
against the Insurer.
Section 5.19. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Note Interest Distributable Amount or
Note Principal Distributable Amount paid on a Note has been avoided in whole or
in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Insurer of such avoided payment, and shall, at the time
it provides notice to the Insurer, notify Holders of the Notes by mail that, in
the event that any Noteholder's payment is so recoverable, such Noteholder will
be entitled to payment pursuant to the Note Policy. The Trustee shall furnish to
the Insurer its records evidencing the payments of principal of and interest on
Notes, if any, which have been made by the Trustee and subsequently recovered
from Noteholders, and the dates on which such payments were made. Pursuant to
the Note Policy, the Insurer will make such payment on behalf of the Noteholder
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order (as such term is defined in the Note Policy) and not to the
Trustee or any Noteholder directly (unless a Noteholder has previously paid such
payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Insurer will make such payment to the Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) To the extent that a Responsible Officer has actual knowledge
thereof, the Trustee shall promptly notify the Insurer of any proceeding or the
institution of any action seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long as
an Insurer Default shall not have occurred and be continuing, the Insurer may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim including, without
limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 5.18(c), the Insurer shall
be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the Trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim. In addition, for so long as the Insurer guarantees
Scheduled Payments and has not defaulted in the making of any payment required
to be made by it pursuant to such guaranty, the Insurer shall have the right to
initiate and control a proceeding against the obligor under the RIC but only to
the extent such
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proceeding relates to the amounts so guaranteed and no settlement of any other
proceeding or claim that would adversely affect the Insurer's rights to recover
such amounts shall be affected without the prior written consent of the Insurer.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and in the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 3.07(e), the Trustee in performing such
duties shall use the degree of care and skill customarily exercised by a prudent
institutional servicer with respect to automobile retail installment sales
contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture and the other Basic Documents to which the Trustee is a
party.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of Section 6.01(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law or the terms of this Indenture or the
Sale and Servicing Agreement.
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(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) The Trustee shall, upon one Business Day's prior notice to the
Trustee, so long as no Insurer Default shall have occurred and be continuing, at
the expense of the Trust, and if an Insurer Default shall have occurred and be
continuing, at the expense of the Insurer, permit any representative of the
Insurer, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom and to discuss the Trustee's affairs and
actions, as such affairs and actions relate to the Trustee's duties with respect
to the Notes, with the Trustee's officers and employees responsible for carrying
out the Trustee's duties with respect to the Notes.
(j) The Trustee shall, and hereby agrees that it will (i) perform all of
the obligations and duties required of it under the Sale and Servicing Agreement
and (ii) hold the Note Policy in trust, and will hold any proceeds of any claim
on the Note Policy in trust solely for the use and benefit of the Noteholders.
(k) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Trustee to engage in any
business operations or any activities other than those set forth in this
Indenture. Specifically, the Trustee shall have no authority to engage in any
business operations, acquire any assets other than those specifically included
in the Trust Estate under this Indenture or otherwise vary the assets held by
the Trust. Similarly, the Trustee shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the
purpose of this Trust as set forth in this Indenture.
Section 6.02. Rights of Trustee.
(a) Except as otherwise provided in Section 6.02(g) and the second
succeeding sentence, the Trustee may conclusively rely and shall be protected in
acting upon or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, note,
direction, demand, election or other paper or document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document. Notwithstanding
the foregoing, the Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Indenture, shall examine them to determine whether they
comply as to form to the requirements of this Indenture.
(b) Other than with respect to actions required to be taken by the
Trustee pursuant to Section 5.18 and 5.19, before the Trustee acts or refrains
from acting, it may require an Officer's
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Certificate (with respect to factual matters) or an Opinion of Counsel, as
applicable. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on the Officer's Certificate or Opinion of
Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders or the Controlling Party shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise the rights
and powers vested in it by this Indenture with reasonable care and skill.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Insurer (so long as no
Insurer Default shall have occurred and be continuing) or (if an Insurer Default
shall have occurred and be continuing) by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
each such investigation shall be paid by the Person making such request, or, if
paid by the Trustee, shall be reimbursed by the Person making such request upon
demand.
Section 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.
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Section 6.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Trust Estate or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Insurer notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the redemption of Notes),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
Section 6.06. Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall, or shall
cause the Administrator to, pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall,
or shall cause the Administrator to, reimburse the Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall, or shall
cause the Administrator to, indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Issuer and the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so notify
the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall, or shall cause the
Administrator to, defend any such claim, and the Trustee may have separate
counsel and the Issuer shall, or shall cause the Administrator to, pay the fees
and expenses of such counsel. Neither the Issuer nor the Administrator need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Trustee. The Trustee may resign at any time
by so notifying the Issuer, the Master Servicer and the Insurer. The Issuer,
may, with the consent of the Insurer, and, at the request of the Insurer shall,
remove the Trustee, unless an Insurer Default shall have occurred and be
continuing) if:
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(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Trustee or for
any substantial part of the Trustee's property, or ordering the
winding-up or liquidation of the Trustee's affairs, provided any such
decree or order shall have continued unstayed and in effect for a period
of 30 consecutive days;
(iii) the Trustee commences a voluntary case under any federal
or state banking or bankruptcy laws, as now or hereafter constituted, or
any other applicable federal or state bankruptcy, insolvency or other
similar law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator or other similar official for the Trustee or for any
substantial part of the Trustee's property, or makes any assignment for
the benefit of creditors or fails generally to pay its debts as such
debts become due or takes any corporate action in furtherance of any of
the foregoing; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee reasonably acceptable to the Insurer (so long as an Insurer Default
shall not have occurred and be continuing). If the Issuer fails to appoint such
a successor Trustee, the Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Issuer or the successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Insurer
(provided that no Insurer Default shall have occurred and be continuing), the
Issuer or the Holders of a majority of the Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to the provisions of this Section shall not become effective
until acceptance of appointment by the successor Trustee pursuant to this
Section and payment of all fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee
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pursuant to this Section, the retiring Trustee shall be entitled to payment or
reimbursement of such amounts as such Person is entitled pursuant to Section
6.07.
Section 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided, that such corporation or
banking association shall be otherwise qualified and eligible under Section
6.11. The Trustee shall provide the Insurer and each Rating Agency prompt notice
of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
Section 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Trustee and the
Administrator acting jointly shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders and the Insurer, such title to
the Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee
and the Administrator may consider necessary or desirable. If the Administrator
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be
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exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee and the Administrator may at any time accept
the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of co-appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Indenture.
Section 6.11. Eligibility; Disqualification.
(a) The Trustee shall at all times satisfy the requirements of TIA
Section 310(a) and shall in addition have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall provide copies of such reports to the Insurer upon
request. The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
(b) If the long term debt rating of the Trustee shall not be at least
Baa3 from Moody's and BBB- from Standard & Poor's, the Rating Agencies shall be
given notice of such lower long-term debt rating.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. Representations and Warranties of Trustee. The Trustee
hereby makes the following representations and warranties on which the Issuer
and Noteholders shall rely:
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(i) the Trustee is a corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation; and
(ii) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Indenture and shall have taken all
necessary action to authorize the execution, delivery and performance by
it of this Indenture.
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Trustee shall take such action as, in its reasonable judgment, shall be
necessary to maintain the effectiveness of all licenses required under the
Pennsylvania Motor Vehicle Sales Finance Act in connection with this Indenture
and the transactions contemplated hereby until the lien and security interest of
this Indenture shall no longer be in effect in accordance with the terms hereof.
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ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (i)
not more than five days after the earlier of (a) each Record Date and (b) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date and (ii) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than ten days prior to the
time such list is furnished; provided, however, that so long as the Trustee is
the Note Registrar, no such list shall be required to be furnished. The Trustee
or, if the Trustee is not the Note Registrar, the Issuer shall furnish to the
Insurer in writing at such times as the Insurer may reasonably request a copy of
the list.
Section 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA Section 313(c)) such summaries
of any information, documents and
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reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Trustee. To the extent that any of the events
described in TIA Section 313(a) shall have occurred, the Trustee shall, within
60 days after each December 15 beginning with December 15, 2000, mail to the
Insurer and each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Trustee with the Commission and with each stock exchange, if any,
on which the Notes are listed and of which listing the Trustee has been
informed. The Issuer shall notify the Trustee if and when the Notes are listed
on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article Five.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Master
Servicer to establish and maintain, in the name of the Trustee, for the benefit
of the Noteholders and the Certificateholders, the Trust Accounts as provided in
Section 5.01 of the Sale and Servicing Agreement.
(b) All Net Collections with respect to each Due Period will be
deposited in the Collection Account as provided in Section 5.02 of the Sale and
Servicing Agreement. On the Business Day immediately preceding each Distribution
Date, all amounts required to be deposited in the Note Distribution Account with
respect to the preceding Due Period pursuant to Section 5.05 of the Sale and
Servicing Agreement will be transferred from the Collection Account and/or the
Spread Account to the Note Distribution Account.
(c) On each Distribution Date, the Trustee shall distribute all amounts
on deposit in the Note Distribution Account in respect of such Distribution Date
to Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest as follows:
(i) to each Class of Noteholders, accrued and unpaid interest on
the outstanding principal amount of the related Class of Notes at the
related Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of the
Outstanding Amount of the Class A-1 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-1 Notes
is reduced to zero;
(iii) to the Class A-2 Noteholders in reduction of the
Outstanding Amount of the Class A-2 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-2 Notes
is reduced to zero;
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(iv) to the Class A-3 Noteholders in reduction of the
Outstanding Amount of the Class A-3 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-3 Notes
is reduced to zero; and
(v) to the Class A-4 Noteholders in reduction of the Outstanding
Amount of the Class A-4 Notes, the Note Principal Distributable Amount
until the Outstanding Amount of the Class A-4 Notes is reduced to zero.
(d) Notwithstanding clause (c) above, if , pursuant to Section
5.05(a)(ii) of the Sale and Servicing Agreement, the Indenture Trustee has
deposited the Optional Repurchase Amount in respect of the WFSRC Contracts that
have been repurchased as of such Distribution Date, the Repurchase Premium shall
be distributed to each Class of Notes, pro rata, based on the outstanding
principal balance of each Class of Notes after making the distributions
described in Section 5.05(a)(i) of the Sale and Servicing Agreement, but
excluding the amount of Net Collections consisting of the Base Price.
(e) If on any Distribution Date there will be insufficient funds in the
Note Distribution Account to make any payment required to be made pursuant to
Section 8.02(c) or 8.02(d), the Trustee will make a claim under the Note Policy
as described in Section 5.18.
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts other than the
Holding Account shall be invested in Eligible Investments and reinvested by the
Trustee upon receipt of an Issuer Order, subject to the provisions of Section
5.01(b) of the Sale and Servicing Agreement. Except as otherwise provided in
Section 5.01(b) of the Sale and Servicing Agreement, all income or other gain
from investments of monies deposited in such Trust Accounts shall be deposited
by the Trustee in the Collection Account, and any loss resulting from such
investments shall be charged to the related Trust Account. The Issuer will not
direct the Trustee to make any investment of any funds or to sell any investment
held in any of the Trust Accounts unless the security interest Granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Trustee to make any such
investment or sale, if requested by the Trustee, the Issuer shall deliver to the
Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m., New
York City time (or such other time as may be agreed by the Issuer and Trustee),
on any Business Day, (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes have not
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been declared due and payable pursuant to Section 5.02 or (iii) if such Notes
have been declared due and payable following an Event of Default but amounts
collected or receivable from the Trust Estate are being applied in accordance
with Section 5.05 as if there had not been such a declaration, then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
Section 8.04. Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article shall be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Trustee shall, at such time as there are no Notes Outstanding
and all sums due the Trustee pursuant to Section 6.07 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.04(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
Section 8.05. Opinion of Counsel. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.04(a), accompanied by copies of any instruments involved, and the
Trustee shall also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the consent
of the Insurer (unless an Insurer Default shall have occurred and be continuing)
and with prior notice to each Rating Agency, the Issuer and the Trustee, when
authorized by an Issuer Order, and the other parties hereto at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the TIA as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
or confirm unto the Trustee any property subject or required to be
subjected to the lien created by this Indenture, or to subject to the
lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the other Basic Documents or to make any other provisions
with respect to matters or questions arising under this Indenture or in
any supplemental indenture that shall not be inconsistent with the
provisions of this Indenture; provided that such action shall not
adversely affect the interests of the Holders of the Notes or result in
the creation of a new security;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as shall
be necessary to facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of Article Six; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may he expressly required by the TIA.
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The Trustee is hereby authorized to join in the exemption of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Notes but with the consent
of the Insurer (unless an Insurer Default shall have occurred and be continuing)
and with prior notice to each Rating Agency, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder or result in the creation of a new security.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to each Rating Agency, with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes, by
Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that, subject to the express
rights of the Insurer under the Basic Documents, no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article Five, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the second proviso to
the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to sell or liquidate the Trust
Estate pursuant to Section 5.04 or amend
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the provisions of this Article which specify the percentage of the
Outstanding Amount of the Notes required to amend this Indenture or the
other Basic Documents;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Holder of each Outstanding
Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security provided by the lien created by this Indenture, and further
provided that any such action will not, as evidenced by an Opinion of
Counsel satisfactory to the Trustee, result in the creation of a new
security.
The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination shall
be conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture. Any failure
of the Trustee to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments,
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and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
Section 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) In the event that the Sellers, pursuant to Section 9.01(a) of the
Sale and Servicing Agreement, purchase the corpus of the Trust, the Notes are
subject to redemption in whole, but not in part, on the Distribution Date on
which such repurchase occurs, for a purchase price equal to the Redemption
Price; provided, however, that the Issuer has available funds sufficient to pay
the Redemption Price. The Sellers, the Master Servicer or the Issuer shall
furnish the Insurer and each Rating Agency notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.01(a), the Master Servicer
or the Issuer shall furnish notice of such election to the Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Trustee in the Note Distribution Account the Redemption Price of the Notes to be
redeemed whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 5.02(b) of this Indenture, the proceeds of such sale shall be
distributed as provided in Section 5.06. If amounts are to be paid to
Noteholders pursuant to this Section 10.01(b), the Master Servicer or the Issuer
shall, to the extent practicable, furnish notice of such event to the Trustee
not later than 20 days prior to the Redemption Date whereupon all such amounts
shall be payable on the Redemption Date.
Section 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than 20 days prior
to the applicable Redemption Date to each Holder of Notes, as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register. In addition, the Administrator
shall notify the Rating Agencies upon the redemption of any Class of Notes,
pursuant to Section 1(a)(i) of the Administration Agreement.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02); and
(iv) that on the Redemption Date, the Redemption Price will
become due and payable upon each Note and that interest thereon shall
cease to accrue from and after the Redemption Date.
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Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required to
be given to Noteholders.
Section 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section.
Notwithstanding the foregoing, in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release
of any property subject to the lien created by this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a)
or elsewhere in this Indenture, furnish to the Trustee and the Insurer
(so long as no Insurer Default shall have occurred and be continuing) an
Officer's Certificate certifying or stating the opinion of the signer
thereof such certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the Collateral or other property or securities
to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Trustee and the
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Insurer an Independent Certificate as to the same matters, if the fair
value to the Issuer of the property to be so deposited and of all other
such property made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set forth
in the Officer's Certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the Notes,
but such Officer's Certificate need not be furnished with respect to any
property so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.01(b)(v), whenever any property or securities
are to be released from the lien created by this Indenture, the Issuer
shall also furnish to the Trustee and the Insurer (so long as no Insurer
Default shall have occurred and be continuing) an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security
created by this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Trustee and the
Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property (other
than property described in clauses (A) or (B) of Section 11.01(b)(v)) or
securities released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
Officer's Certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but
such Officer's Certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth
in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
Notwithstanding Section 2.12 or any other provision of this Section, the
Issuer may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Basic Documents, (B) make cash payments out
of the Trust Accounts as and to the extent permitted or required by the Basic
Documents, so long as the Issuer shall deliver to the Trustee every six months,
commencing April 15, 2000, an Officer's Certificate stating that all the
dispositions of Collateral described in clauses (A) or (B) that occurred during
the preceding six calendar months were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the Basic
Documents.
Section 11.02. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
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other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Master
Servicer, a Seller or the Issuer, stating that the information with respect to
such factual matters is in the possession of the Master Servicer, such Seller or
the Issuer, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute to or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
Six.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 11.04. Notices, etc., to Trustee, Issuer, Insurer and Rating
Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to or with the Trustee at its Corporate Trust Office;
(ii) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Issuer addressed to: WFS Financial 2000-A
Owner Trust, in care of Chase Manhattan Bank Delaware, as Owner Trustee,
1201 Market Street, Wilmington, Delaware 19801, Attention: Corporate
Trust Administration Department, with a copy to: The Chase Manhattan
Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001,
Attention: Structured Finance Services (ABS), or at any other address
furnished in writing to the Trustee by the Issuer; or
(iii) the Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the recipient as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head--Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or the Owner Trustee shall be in writing, personally delivered, sent
by facsimile transmission and
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confirmed or mailed by overnight service, to (i) in the case of Moody's, at the
following address: Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007 and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's, 26 Broadway (20th Floor),
New York, New York 10004, Attention: Asset Backed Surveillance Department; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a conclusion precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default
Section 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Trustee a copy of each such agreement
and the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
Section 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by
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this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
Section 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. The Insurer and its successors and
assigns shall be a third-party beneficiary to the provisions of this Indenture,
and shall be entitled to rely upon and directly to enforce such provisions of
this Indenture so long as no Insurer Default shall have occurred and be
continuing. Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Trust Estate, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
The Insurer may disclaim any of its rights and powers under this Indenture, but
not its duties and obligations under the Note Policy, upon delivery of a written
notice to the Trustee.
Section 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS INDENTURE SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE DUTIES OF THE TRUSTEE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 11.14. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee and the Insurer) to the effect that such recording is necessary
either for the protection of the Noteholders or any other Person secured
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hereunder or for the enforcement of any right or remedy granted to the Trustee
under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficiary
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Trustee or of any successor or assign of the Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, 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 11.17. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against either Seller or the Issuer, or join in any institution against either
Seller or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the other Basic Documents.
Section 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee or of the Insurer,
during the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees and independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested, the
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
Section 11.19. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties
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or obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Articles Six, Seven
and Eight of the Trust Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee under
the Trust Agreement
By:_________________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:_________________________________
Name:
Title:
<PAGE> 78
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On_______________________before me,_____________________________________
[insert date] [Here insert name and title of notary]
personally appeared_____________________________________________________________
M personally known to me, or
M proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature___________________________________ [Seal]
<PAGE> 79
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On_______________________before me,_____________________________________
[insert date] [Here insert name and title of notary]
personally appeared_____________________________________________________________
M personally known to me, or
M proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature___________________________________ [Seal]
<PAGE> 80
SCHEDULE A
SCHEDULE OF CONTRACTS
Omitted -- Schedules of Contracts on file at the offices of the Seller, the
Master Servicer and the Owner Trustee.
SA-1
<PAGE> 81
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE> 82
EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
B-1
<PAGE> 83
EXHIBIT C
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 2000-A OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-1
REGISTERE $___,___,000
No. R-A1 CUSIP NO. ______
WFS Financial 2000-A Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______ Dollars ($___,___,000), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of _________, ____ (the "Class A-1 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date
C-1
<PAGE> 84
from and including the most recent Distribution Date on which interest has been
paid to but excluding such Distribution Date or, in the case of the first
Distribution Date or if no interest has yet been paid, from ________, 2000. The
Issuer shall pay interest on overdue installments of interest at the Class A-1
Interest Rate to the extent lawful. Interest will be computed on the basis of a
360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ________, 2000 WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:_________________________________
Name:
Title:
C-2
<PAGE> 85
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:_________________________________
Authorized Signatory
C-3
<PAGE> 86
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Auto Receivable Backed Notes, Class A-1 (the "Class
A-1 Notes"), all issued under an Indenture, dated as of ________ 1, 2000 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Class A-1 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-1 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-1 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
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<PAGE> 87
As provided in the Sale and Servicing Agreement, the Notes may be
partially prepaid, at the option of WFSRC, on any Distribution Date as of which
the Aggregate Scheduled Balance is less than or equal to 20% of the Cut-Off Date
Aggregate Scheduled Balance.
As provided in the Indenture, the Notes may be redeemed, in whole, but
not in part, at the option of either Seller, on any Distribution Date as of
which the Aggregate Scheduled Balance is less than or equal to 10% of the
Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against either Seller or the Issuer,
or join in any institution against either Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not
C-5
<PAGE> 88
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
C-6
<PAGE> 89
EXHIBIT D
FORM OF CLASS A-2 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES TO
THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 2000-A OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-2
REGISTERED $___,___,000
No. R-A2 CUSIP NO. ______
WFS Financial 2000-A Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______ Dollars ($___,___,000), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of _________, ____ (the "Class A-2 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture. No
payments of principal of the Class A-2 Notes shall be made until the principal
amount of the Class A-1 Notes has been reduced to zero.
The Issuer will pay interest on this Note at the rate per annum shown above on
each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in
D-1
<PAGE> 90
the case of the first Distribution Date or if no interest has yet been paid,
subject to certain limitations contained in the Indenture. Interest on this Note
will accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, in the case of the first Distribution Date or if no
interest has yet been paid, from ________ 1, 2000. The Issuer shall pay interest
on overdue installments of interest at the Class A-2 Interest Rate to the extent
lawful. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2
<PAGE> 91
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ________, 2000 WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee,
By:_________________________________
Authorized Signatory
D-3
<PAGE> 92
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Auto Receivable Backed Notes, Class A-2 (the "Class
A-2 Notes"), all issued under an Indenture, dated as of ________ 1, 2000 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Class A-2 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-2 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-2 Notes shall be made pro rata
to the Class A-2 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
D-4
<PAGE> 93
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of either Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against either Seller or the Issuer,
or join in any institution against either Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
D-5
<PAGE> 94
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
D-6
<PAGE> 95
EXHIBIT E
FORM OF CLASS A-3 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES AND
THE CLASS A-2 NOTES AS DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 2000-A OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-3
REGISTERED $___,___,000
No. R-A3 CUSIP NO. ______
WFS Financial 2000-A Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______ Dollars ($___,___,000), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of _________, ____ (the "Class A-3 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture. No
payments of principal of the Class A-3 Notes shall be made until the principal
amount of the Class A-1 Notes and the Class A-2 Notes has been reduced to zero.
E-1
<PAGE> 96
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, in the case of the first Distribution Date or if no
interest has yet been paid, from _______ 1, 2000. The Issuer shall pay interest
on overdue installments of interest at the Class A-3 Interest Rate to the extent
lawful. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
E-2
<PAGE> 97
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ________, 2000 WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:_________________________________
Authorized Signatory
E-3
<PAGE> 98
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ___% Auto Receivable Backed Notes, Class A-3 (the "Class A-3
Notes"), all issued under an Indenture, dated as of ________ 1, 2000 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Class A-3 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-3 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-3 Notes shall be made pro rata
to the Class A-3 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
E-4
<PAGE> 99
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of either Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against either Seller or the Issuer,
or join in any institution against either Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
E-5
<PAGE> 100
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
E-6
<PAGE> 101
EXHIBIT F
FORM OF CLASS A-4 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES AND
THE CLASS A-2 NOTES AS DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 2000-A OWNER TRUST
______% AUTO RECEIVABLE BACKED NOTE, CLASS A-4
REGISTERED $___,___,000
No. R-A3 CUSIP NO. ______
WFS Financial 2000-A Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ______ Dollars ($___,___,000), payable to the extent described
in the Indenture referred to on the reverse hereof on each Distribution Date;
provided, however, that the entire unpaid principal amount of this Note shall be
payable on the earlier of _________, ____ (the "Class A-4 Final Distribution
Date") and the Redemption Date, if any, selected pursuant to the Indenture. No
payments of principal of the Class A-4 Notes shall be made until the principal
amount of the Class A-1 Notes and the Class A-2 Notes has been reduced to zero.
F-1
<PAGE> 102
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, in the case of the first Distribution Date or if no
interest has yet been paid, from _______ 1, 2000. The Issuer shall pay interest
on overdue installments of interest at the Class A-4 Interest Rate to the extent
lawful. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed payment
of the Note Interest Distributable Amount and the Note Principal Distributable
Amount on each Distribution Date, all as more fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
F-2
<PAGE> 103
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: ________, 2000 WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely on behalf of the
Issuer as Owner Trustee, under
the Trust Agreement
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Trustee
By:_________________________________
Authorized Signatory
F-3
<PAGE> 104
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ___% Auto Receivable Backed Notes, Class A-4 (the "Class A-4
Notes"), all issued under an Indenture, dated as of ________ 1, 2000 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal payable on the Class A-4 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-4 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-4 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-4 Notes shall be made pro rata
to the Class A-4 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
F-4
<PAGE> 105
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of either Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against either Seller or the Issuer,
or join in any institution against either Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the other Basic
Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
F-5
<PAGE> 106
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
F-6
<PAGE> 107
EXHIBIT G
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
________________________________________________________________________________
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:______________________
Signature Guaranteed By:
_____________________________ ______________________________
Signature must be guaranteed Notice: The signature(s) on
by an eligible guarantor this assignment must
institution which is a correspond with the name(s) as
participant in the Securities it appears on the face of the
Transfer Agent's Medallion within Note in every
Program (STAMP) or similar particular, without
signature guarantee program. alteration, enlargement,
or any change whatsoever.
____________________________
(Authorized Officer)
G-1
<PAGE> 108
EXHIBIT H
FORM OF NOTE POLICY
G-1
<PAGE> 1
EXHIBIT 5.1
[LAW OFFICES MITCHELL SILBERBERG & KNUPP LLP LETTERHEAD]
March 2, 2000
VIA EDGAR
- ---------
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, DC 20549
WFS Financial Inc
23 Pasteur Road
Irvine, California 92618
Re: WFS Financial Owner Trusts
Registration Statement on Form S-3, File Number 333-95233
---------------------------------------------------------
Dear Ladies and Gentlemen:
We are counsel for WFS Financial Auto Loans, Inc. ("WFAL") and WFS
Receivables Corporation ("WFSRC" and with WFAL the "Registrant") in connection
with the proposed offering of one or more series of Auto Receivable Backed Notes
as identified in the above referenced Registration Statement to be issued by one
or more series of WFS Financial Owner Trusts (the "Trust") to be originated by
one or both of the Registrants. The Notes will be obligations of a Trust secured
by the assets of that Trust. The Notes will be issued pursuant to an indenture
between the Trust and a Trustee qualified to act as such under the Trust
Indenture Act (the "Indenture"). The Notes will be registered for sale pursuant
to the accompanying Form S-3 Registration Statement.
In our capacity as counsel for the Registrants and for purposes of this
opinion, we have made those examinations and investigations of the legal and
factual matters we deemed advisable, and have examined the originals, or copies
identified to our satisfaction as being true copies of the originals, of the
certificates, documents, corporate records, and other instruments which we, in
our judgment, have considered necessary or appropriate to enable us to render
the opinion expressed below. We have relied, without independent investigation
or confirmation, upon certificates provided by public officials and officers of
the Company as to certain factual matters. In the course of our examinations and
investigations, we have assumed the genuineness of all signatures on original
documents, and the due execution and delivery of all documents requiring due
execution and delivery for the effectiveness thereof.
<PAGE> 2
Securities and Exchange Commission
WFS Financial Inc
March 2, 2000
Page 2
Based upon and subject to the foregoing and in reliance thereon, and
subject to the assumptions, exceptions and qualifications set forth herein, it
is our opinion that:
The Notes, when executed and authenticated as specified in an Indenture and
delivered to and paid for by the Underwriters as to that series of Notes
pursuant to the underwriting agreement among the Underwriters, the Registrants
and WFS Financial Inc (the "Underwriting Agreement"), will constitute legal,
valid and binding obligations of the issuing Trust, entitled to the benefits of
the Indenture, and enforceable in accordance with their terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other laws, provisions or principles now or hereafter in effect affecting the
enforcement of creditors' rights generally and except that no opinion is
expressed as to the availability of remedies of specific performance, injunction
or other forms of equitable relief, all of which may be subject to certain tests
of equity jurisdiction, equitable defenses and the discretion of the court
before which any such proceeding may be brought.
We consent to the filing of this opinion with, and to the reference to our
firm under the caption "Legal Matters" in the Registration Statement. In giving
our consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations thereunder. This opinion is given as of
the date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/ MITCHELL SILBERBERG & KNUPP LLP
Mitchell Silberberg & Knupp LLP
AEK:tf
<PAGE> 1
EXHIBIT 8.1
[MITCHELL, SILBERBERG & KNUPP LLP LETTERHEAD]
March 2, 2000
VIA EDGAR
- ---------
WFS Financial Auto Loans, Inc.
23 Pasteur
Irvine, California 92618
Re: WFS Financial Owner Trusts
Registration Statement on Form S-3, File Number 333-95233
---------------------------------------------------------
Dear Ladies and Gentlemen:
We have acted as legal counsel for WFS Financial Auto Loans, Inc. ("WFAL"),
a California corporation and WFS Receivables Corporation ("WFSRC" and with WFAL
the "Registrants"), a California corporation, in connection with the preparation
of the Registrants' Registration Statement, as amended, on Form S-3 under the
Securities Act of 1933, as amended (the "Registration Statement"), filed with
the Securities and Exchange Commission relating to the issuance of one or more
series of asset-backed notes (the "Notes") secured by the assets of one or more
series of WFS Financial Owner Trusts (each a "Trust").
In rendering the opinion set forth below, we have examined the Registration
Statement dated as filed on March 3, 2000 (the "Form S-3") and such exhibits to
the Form S-3 as we have considered necessary or appropriate for the purposes of
this opinion. In rendering this opinion, we have assumed that a final version of
the Form S-3 will become the effective Registration Statement of the Registrants
without material change in the facts stated, and that the issuance of the Notes
will be duly authorized by all necessary action and duly executed substantially
in the manner described in the Form S-3. In rendering this opinion, we have
relied upon certain representations regarding the underlying facts set forth in
the Form S-3, including the existence, nature and sufficiency of the retail
installment contracts and installment loans which shall be held as assets of
each Trust, as set forth in certain certificates provided by officers of the
Registrants and by officers of Western Financial Bank and WFS Financial Inc. The
opinion set forth herein is expressly based upon such assumptions and
representations and upon the accuracy of those facts so assumed or represented.
With respect to the underlying facts, we have made only such factual inquiries
as we have deemed appropriate and have not independently verified any facts.
<PAGE> 2
WFS Financial Auto Loans, Inc.
March 2, 2000
Page 2
Based upon and subject to the foregoing, and in reliance thereon and
subject to the assumptions, exceptions and qualifications set forth herein, it
is our opinion that the information contained in the Form S-3 under the caption
"Federal and California Income Tax Consequences" and the opinions set forth
under that caption, to the extent that such information constitutes matters of
law or legal conclusions, is correct.
The opinions expressed in this letter are based upon relevant provisions of
the Internal Revenue Code of 1986, as amended, the California Revenue and
Taxation Code, federal and state income tax regulations, and current
interpretations thereof as expressed in court decisions and administrative
determinations in effect on this date. All of these provisions, regulations and
interpretations are subject to changes which might result in substantial
modifications of our opinions, and we do not undertake to advise you of any such
modification. We caution that although the opinions expressed in this letter
represents our best legal judgment as to such matter, our opinions have no
binding effect on the Internal Revenue Service, the California Franchise Tax
Board or the courts.
We have expressed no opinion as to other tax issues affecting the
Registrants, the purchasers of the Notes or any other participant to the
transactions described in the Form S-3. We expressly refrain from rendering any
opinion as to the tax laws of any state (or subdivision thereof) other than
California or any foreign country.
We consent to the filing of this opinion with, and to the reference to our
firm under the caption "Legal Matters" in the Registration Statement. In giving
our consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations thereunder. This opinion is given as of
the date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/ Mitchell, Silberberg & Knupp LLP
Mitchell, Silberberg & Knupp LLP
<PAGE> 1
EXHIBIT 10.1.1
REINVESTMENT CONTRACT
AGREEMENT dated as of ______________ by and among WESTERN FINANCIAL
BANK, a federally chartered savings association formerly known as Western
Financial Savings Bank, F.S.B. (including its successors and assigns, the
"Bank"), WFS FINANCIAL AUTO LOANS 2, INC., a California corporation (including
its successors and assigns, "WFAL 2"), and BANKERS TRUST COMPANY, not in its
individual capacity but solely in its respective capacities as trustee (the
"Indenture Trustee") and as collateral agent, under the Indenture dated as of
______________ (the "Indenture"), between the Trust and the Indenture Trustee.
R E C I T A L S
WFS Financial _______ Owner Trust (the "Trust"), created by the Trust
Agreement dated as of _______________________________________, among WFS
Financial Auto Loans, Inc., WFS Investments, Inc., Financial Security Assurance
Inc. (the "Insurer") and Chase Manhattan Bank Delaware, has issued
$______________ aggregate principal amount of ______% Auto Receivable Backed
Notes, Class A-1 (the "Class A-1 Notes"), $______________ aggregate principal
amount of ____% Auto Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"),
$_________ aggregate principal amount of ____% Auto Receivable Backed Notes,
Class A-3 (the "Class A-3 Notes"), $________ aggregate principal amount of
_____% Auto Receivable Backed Notes, Class A-4 (the "Class A-4 Notes" and,
collectively with the Class A-1 Notes and the Class A-2 Notes, the "Notes"), and
one Auto Receivable Backed Certificate (the "Certificate"). The Contracts will
be transferred to the Trust and serviced by the Master Servicer pursuant to the
Sale and Servicing Agreement, dated as of ______________ (the "Sale and
Servicing Agreement"), among the Trust, WFS Financial Auto Loans, Inc. and WFS
Financial Inc (the "Master Servicer"). The Indenture Trustee as trustee under
the Indenture desires to assure that the funds deposited in or credited to the
Collection Account, the Note Distribution Account and the Certificate
Distribution Account (collectively, the "Specified Accounts") from time to time
are invested and that funds deposited in or credited to the Holding Account are
held (but not invested) and applied in accordance with the Sale and Servicing
Agreement, and the Indenture Trustee as collateral agent desires to assure that
funds on deposit from time to time in the Spread Account are invested.
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in (i) the Amended and Restated Master RIC Reimbursement Agreement
dated as of November 1, 1998 among Western Financial Bank, WFS Financial Auto
Loans 2, Inc. and Financial Security Assurance Inc. (as may be amended, the
"Master RIC Reimbursement Agreement") and (ii) the Indenture.
A G R E E M E N T S
The parties hereto agree as follows:
Section 1. Investments by the Indenture Trustee. In accordance with, but
subject to, Section 2, the Indenture Trustee shall invest pursuant to this
Agreement with the Bank or WFAL 2 or both, as directed by the Master Servicer,
(i) all funds credited to the Specified Accounts,
<PAGE> 2
from time to time, on the Business Day on which such funds are so credited (such
funds so invested being herein referred to as the "Specified Account Invested
Funds"), and (ii) all funds credited to the Spread Account, from time to time,
on the Business Day on which such funds are so credited (such funds so invested
being herein referred to as the "Spread Account Invested Funds"). Each of the
Indenture Trustee, WFAL 2 and the Bank agrees that the aggregate amount of funds
that are permitted to be invested hereunder with WFAL 2 that are Specified
Account Invested Funds on any day shall not exceed twenty-five percent (25%) of
the aggregate amount of Specified Account Invested Funds on such day. The
Indenture Trustee, in addition, shall deliver to WFAL 2 or the Bank pursuant to
this Agreement as directed by the Master Servicer, all funds in the Holding
Account, from time to time, on the Business Day on which such funds are so
credited (such funds so held being herein referred to as the "Holding Account
Deposited Funds"). The Specified Account Invested Funds and the Spread Account
Invested Funds are herein referred to collectively as the "Invested Funds."
Section 2. Investment of Invested Funds. (a) The Master Servicer will
deposit in the Collection Account upon receipt certain collections on the
Contracts as described in Sections 4.01 and 5.02 of the Sale and Servicing
Agreement and the Indenture Trustee will deposit in the Spread Account, the Note
Distribution Account and the Certificate Distribution Account amounts from time
to time required to be deposited in such Accounts pursuant to Article Five of
the Sale and Servicing Agreement. Subject to paragraphs (b) and (c) below, each
of the Bank and WFAL 2, as the case may be, may invest the Invested Funds
received by it in investments selected by it at its discretion (including,
without limitation, in the case of the Bank, the use of such funds in its
operations, or, in the case of WFAL 2, the use of such funds to purchase
Contracts as permitted by its Articles) so long as this Agreement is an Eligible
Investment. Except as specified in paragraphs (b) and (c) below, it shall not be
necessary for the Bank or WFAL 2 to segregate the Invested Funds or the Holding
Account Deposited Funds deposited with it hereunder. If on any date this
Agreement shall cease to be an Eligible Investment or is terminated, then on
such date and on each date thereafter funds in the Specified Accounts will not
be delivered to and invested by the Bank and/or WFAL 2 but will instead be
invested by the Indenture Trustee in Eligible Investments pursuant to the Sale
and Servicing Agreement, funds in the Holding Account will be maintained in such
Account and will not be deposited with the Bank or WFAL 2 pursuant to this
Agreement and funds in the Spread Account will (in each case) not be invested by
the Bank or WFAL 2 but will instead be invested by the Indenture Trustee as
collateral agent in Eligible Investments pursuant to the Sale and Servicing
Agreement.
(b) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Specified Account
Invested Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Specified Account
Invested Funds shall be held in segregated trust accounts established by the
Indenture Trustee as Eligible Accounts at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Invested Funds held in an
account established pursuant to this paragraph shall be invested in Eligible
Investments, except pursuant to paragraph (a) above, pursuant to instructions by
the Bank or WFAL 2 in its discretion or, in the absence of such instructions by
the Bank or WFAL 2, as the case may be, or if any Event of Default shall have
occurred and is continuing, pursuant to instructions by the Insurer.
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<PAGE> 3
(c) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
collateral agent) in writing that the Spread Account Invested Funds are to be
held in a segregated trust account, then on such date (or, if such date is not a
Business Day, the next succeeding Business Day) and on each day thereafter
during the term of this Agreement all Spread Account Invested Funds shall be
held in a segregated trust account established by the Indenture Trustee as an
Eligible Account at Bankers Trust Company or at another depositary institution
approved by the Insurer. All Invested Funds held in an account established
pursuant to this paragraph shall be invested in Eligible Investments, except
pursuant to paragraph (a) above, pursuant to instructions by the Master Servicer
or, in the absence of such instructions, as otherwise provided in Section
5.06(c) of the Sale and Servicing Agreement.
(d) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Holding Account
Deposited Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Holding Account
Deposited Funds shall be held in a segregated trust account established by the
Indenture Trustee as an Eligible Account at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Holding Account Deposited
Funds held in an account established pursuant to this paragraph shall not be
invested.
Section 3. Payments by the Bank and WFAL 2. Each of the Bank and WFAL 2
shall be obligated to make payments in accordance with this Section until this
Agreement shall have terminated and all amounts owing by it under this Agreement
shall have been paid by it in full. On the fifth Business Day prior to each
Distribution Date, the Bank and/or WFAL 2, as the case may be, shall deposit,
and each shall cause the other to deposit, its Proportionate Share (as defined
below), if any, of the following amounts in the following accounts: (A) in the
related Specified Account, the portion of the Specified Account Invested Funds
allocable to such Specified Account with respect to such Distribution Date plus
the amount, if any (the "Reinvestment Earnings"), by which the Interest Payment
(as defined below) for such Distribution Date exceeds the sum of (i) the
aggregate amount of interest collected on the Contracts (adjusted with respect
to each Contract to the Pass-Through Rate and exclusive of such collections that
have been paid to the Master Servicer in reimbursement of a previous Advance)
that is part of the Net Collections for such Distribution Date and (ii) the
amount of the interest portion of the Advance for the related Due Period
(assuming for this purpose that an Advance was made in respect of each
delinquent Contract); (B) in the Spread Account, the Spread Account Invested
Funds; and (C) in the Holding Account, the Holding Account Deposited Funds;
provided, however, that if Invested Funds (or Holding Account Deposited Funds,
as the case may be) are held in one or more segregated trust accounts at the
Indenture Trustee or another depositary institution pursuant to paragraph (b),
(c), or (d) of Section 2, then the Indenture Trustee shall, on the fifth
Business Day prior to each Distribution Date, make or cause to be made the
following respective deposits (as paragraphs (b), (c), and (d) of Section 2 are
then applicable, respectively): (A) in each Specified Account, the Specified
Account Invested Funds with respect to such Specified Account and such
Distribution Date plus the net reinvestment income, if any, thereon, (B) in the
Spread Account, the Spread Account Invested Funds plus the net reinvestment
income, if any, thereon, (C) in the Holding Account, the Holding Account
3
<PAGE> 4
Deposited Funds; provided, further, that solely for purposes of this Agreement
the Interest Payment for the first Distribution Date shall be calculated as
interest for the period from the Cut-Off Date to and including _______________.
"Interest Payment" means, with respect to any Distribution Date, an
amount equal to the sum of (i) interest at the Class A-1 Interest Rate on the
outstanding principal balance of the Class A-1 Notes as of the immediately
preceding Distribution Date, (ii) interest at the Class A-2 Interest Rate on the
outstanding principal balance of Class A-2 Notes as of the immediately preceding
Distribution Date, (iii) interest at the Class A-3 Interest Rate on the
outstanding principal balance of Class A-3 Notes as of the immediately preceding
Distribution Date, and (iv) interest at the Class A-4 Interest Rate on the
outstanding principal balance of Class A-4 Notes as of the immediately preceding
Distribution Date.
"Proportionate Share" means, with respect to the Specified Account
Invested Funds, the Spread Account Invested Funds or the Holding Account
Deposited Funds, as applicable, and with respect to the Bank or WFAL 2, as
applicable, the amount of Specified Account Invested Funds or Spread Account
Invested Funds invested hereunder or Holding Account Deposited Funds deposited
hereunder, as applicable, either with the Bank or WFAL 2, as applicable, divided
by the total amount of the Specified Account Invested Funds, the Spread Account
Invested Funds or the Holding Account Deposited Funds, as applicable, invested
or deposited hereunder as of the fifth Business Day before a Distribution Date.
Section 4. Timing of Payments. On the fifth Business Day immediately
prior to each Distribution Date (each, a "RIC Maturity Date"), (i) the
investment pursuant to this Agreement of Specified Account Invested Funds with
respect to such Distribution Date and of all Spread Account Invested Funds shall
mature and be due and payable, and the Holding Account Deposited Funds shall be
required to be returned to and deposited into the Holding Account.
Section 5. Manner of Payments. Deposits into any Specified Account by
the Bank and WFAL 2 in accordance with this Agreement shall be made in
immediately available funds to such Specified Account under advice to the
Indenture Trustee at its address set forth in Section 8. Deposits into the
Spread Account by the Bank and WFAL 2 in accordance with this Agreement shall be
made in immediately available funds to the Spread Account under advice to the
Indenture Trustee as collateral agent at its address set forth in Section 8.
Deposits into the Holding Account by the Bank and WFAL 2 in accordance with this
Agreement shall be made in immediately available funds to the Holding Account
under advice to the Indenture Trustee at its address set forth in Section 8.
Section 6. Term of Agreement. This Agreement shall terminate on the
first date on which (i) the Notes shall have been paid in full as provided in
the Sale and Servicing Agreement, (ii) each of the Bank and WFAL 2 shall have
paid the aggregate amount of all Specified Account Invested Funds and Holding
Account Deposited Funds hereunder to the Indenture Trustee and the aggregate
amount of all Spread Account Invested Funds hereunder to the Indenture Trustee
as collateral agent, and (iii) each of the Bank and WFAL 2 shall have paid all
other remaining amounts owing by it hereunder; provided that no termination of
this Agreement shall limit or restrict any rights of the Insurer under the
Insurance Agreement to recover Unreimbursed Insurer Amounts in respect of any
claims paid under the Policy in respect of this Agreement. This Agreement may be
terminated by the Bank and WFAL 2, with the prior written consent of the
Insurer, upon written notice to the Insurer and the Indenture Trustee on any
date following
4
<PAGE> 5
receipt by the Bank and WFAL 2 of a notice from the Insurer pursuant to
paragraph (b) of Section 2 hereof; provided that such termination by the Bank
and WFAL 2 may occur on any RIC Maturity Date without such consent of the
Insurer if (i) each of the Bank and WFAL 2 shall have made all of the payments
referred to in clauses (ii) and (iii) of the immediately preceding sentence, and
(ii) each of the Bank and WFAL 2 shall have paid the amount of the Proportionate
Share of Reinvestment Earnings and net reinvestment income accrued under Section
3 but not otherwise owing on such RIC Maturity Date. If on any date this
Agreement shall cease to be an Eligible Investment, then (A) on such date and on
each date thereafter funds in the Specified Accounts and in the Spread Account
will be invested, and funds in the Holding Account will be maintained, in the
manner specified in the last sentence of Section 2(a), (B) on the next
succeeding RIC Maturity Date, the Bank and WFAL 2 shall make all of the payments
referred to in clause (ii) of the second preceding sentence (other than
Specified Account Invested Funds, if any, relating to the second Distribution
Date immediately following such RIC Maturity Date) and clause (iii) of the
second preceding sentence, and (C) on the RIC Maturity Date next succeeding the
RIC Maturity Date referred to in clause (B) of this sentence, the Bank and WFAL
2 shall pay the aggregate amount of any remaining Specified Account Invested
Funds hereunder to the Indenture Trustee and shall pay all remaining amounts
owing by the Bank or WFAL 2 hereunder, including its Proportionate Share of the
Reinvestment Earnings and net reinvestment income accrued under Section 3 for
the period ending on such date, to the Indenture Trustee, as trustee under the
Indenture and as collateral agent, respectively, in the manner specified in
Section 5, and upon the making of all such payments pursuant to clauses (B) and
(C) of this sentence this Agreement shall terminate; provided, that no such
termination of this Agreement shall limit or restrict any rights of the Insurer
under the Insurance Agreement to recover Unreimbursed Insurer Amounts in respect
of any claims paid under the Policy in respect of this Agreement.
Section 7. Representations. (a) Each of the Bank and WFAL 2 hereby makes
the representations and warranties set forth in Section 2 of the Master RIC
Reimbursement Agreement, on and as of the date hereof as if set forth in full
herein.
(b) Each of the Indenture Trustee, solely in its respective capacities
as trustee under the Indenture and as collateral agent and not in its individual
capacity, the Bank and WFAL 2 represent and warrant, each as to itself to the
other, that this Agreement has been duly authorized, executed and delivered and
constitutes a valid and binding agreement and that neither the execution and
delivery of this Agreement by it nor the performance of its obligations under
this Agreement will contravene any federal or state law or any order, decree,
license, permit or the like which is applicable to it or to which it is a party
or by which it is bound.
Section 8. Notices. All notices and other communications given pursuant
to this Agreement shall be communicated to the addresses listed below, in each
case with a copy to Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022, Attention: Surveillance Department, or to such other
address or to the attention of such other person as such party shall have
designated for such purpose in a written notice to the other:
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<PAGE> 6
If to the Indenture Bankers Trust Company
Trustee, as trustee Four Albany Street, 10th Floor
under the Indenture New York, New York 10006
and as collateral Attention: Corporate Trust
agent Department - Asset Backed
Group
If to the Bank: Western Financial Bank
16485 Laguna Canyon Road
Irvine, California 92618
Attention: Guy DuBose, Esq.
General Counsel
If to WFAL 2: WFS Financial Auto Loans 2, Inc.
23 Pasteur
Irvine, California 92618
Attention: Guy DuBose, Esq.
General Counsel
Section 9. Terms. All capitalized terms used herein and not defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement or, if not otherwise defined in the Sale and Servicing Agreement, in
the Indenture, as applicable.
Section 10. Amendments. This Agreement may not be amended except with
the prior written consent of the Insurer pursuant to an instrument signed by
each party hereto.
Section 11. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, transferees and assigns; provided that neither the Bank nor WFAL 2
may assign all or any part of this Agreement without the prior written consent
of the Insurer.
Section 12. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE DUTIES OF THE INDENTURE
TRUSTEE, AS TRUSTEE UNDER THE INDENTURE AND AS COLLATERAL AGENT, SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the day and year first
written above.
WESTERN FINANCIAL BANK
By:
----------------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS 2, INC.
By:
----------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee under
the Indenture and as collateral agent
By:
----------------------------------------
Name:
Title:
7
<PAGE> 1
EXHIBIT 10.1.2
REINVESTMENT CONTRACT
AGREEMENT dated as of ______________ by and among WESTERN FINANCIAL
BANK, a federally chartered savings association formerly known as Western
Financial Savings Bank, F.S.B. (including its successors and assigns, the
"Bank"), WFS FINANCIAL AUTO LOANS 2, INC., a California corporation (including
its successors and assigns, "WFAL 2"), and BANKERS TRUST COMPANY, not in its
individual capacity but solely in its respective capacities as trustee (the
"Indenture Trustee") and as collateral agent, under the Indenture dated as of
______________ (the "Indenture"), between the Trust and the Indenture Trustee.
R E C I T A L S
WFS Financial _______ Owner Trust (the "Trust"), created by the Trust
Agreement dated as of _______________________________________, as amended and
restated as of________among WFS Financial Auto Loans, Inc., WFS Receivables
Corporation, Financial Security Assurance Inc. (the "Insurer") and Chase
Manhattan Bank Delaware, has issued $______________ aggregate principal amount
of ______% Auto Receivable Backed Notes, Class A-1 (the "Class A-1 Notes"),
$______________ aggregate principal amount of ____% Auto Receivable Backed
Notes, Class A-2 (the "Class A-2 Notes"), $______________ aggregate principal
amount of ____% Auto Receivable Backed Notes, Class A-3 (the "Class A-3 Notes")
and $______________ aggregate principal amount of ____% Auto Receivable Backed
Notes, Class A-4 (the "Class A-4 Notes" and, collectively with the Class A-1
Notes, the Class A-2 Notes and the Class A-3 Notes, the "Notes"), and two Auto
Receivable Backed Certificates (the "Certificates"). The Contracts will be
transferred to the Trust and serviced by the Master Servicer pursuant to the
Sale and Servicing Agreement, dated as of ______________ (the "Sale and
Servicing Agreement"), among the Trust, WFS Financial Auto Loans, Inc., WFS
Receivables Corporation and WFS Financial Inc (the "Master Servicer"). The
Indenture Trustee as trustee under the Indenture desires to assure that the
funds deposited in or credited to the Collection Account, the Note Distribution
Account and the Certificate Distribution Account (collectively, the "Specified
Accounts") from time to time are invested and that funds deposited in or
credited to the Holding Account are held (but not invested) and applied in
accordance with the Sale and Servicing Agreement, and the Indenture Trustee as
collateral agent desires to assure that funds on deposit from time to time in
the Spread Account are invested. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in (i) the Amended and Restated
Master RIC Reimbursement Agreement dated as of November 1, 1998 among Western
Financial Bank, WFS Financial Auto Loans 2, Inc. and Financial Security
Assurance Inc. (as may be amended, the "Master RIC Reimbursement Agreement") and
(ii) the Indenture.
A G R E E M E N T S
The parties hereto agree as follows:
Section 1. Investments by the Indenture Trustee. In accordance with, but
subject to, Section 2, the Indenture Trustee shall invest pursuant to this
Agreement with the Bank or WFAL
<PAGE> 2
2 or both, as directed by the Master Servicer, (i) all funds credited to the
Specified Accounts, from time to time, on the Business Day on which such funds
are so credited (such funds so invested being herein referred to as the
"Specified Account Invested Funds"), and (ii) all funds credited to the Spread
Account, from time to time, on the Business Day on which such funds are so
credited (such funds so invested being herein referred to as the "Spread Account
Invested Funds"). Each of the Indenture Trustee, WFAL 2 and the Bank agrees that
the aggregate amount of funds that are permitted to be invested hereunder with
WFAL 2 that are Specified Account Invested Funds on any day shall not exceed
twenty-five percent (25%) of the aggregate amount of Specified Account Invested
Funds on such day. The Indenture Trustee, in addition, shall deliver to WFAL 2
or the Bank pursuant to this Agreement as directed by the Master Servicer, all
funds in the Holding Account, from time to time, on the Business Day on which
such funds are so credited (such funds so held being herein referred to as the
"Holding Account Deposited Funds"). The Specified Account Invested Funds and the
Spread Account Invested Funds are herein referred to collectively as the
"Invested Funds."
Section 2. Investment of Invested Funds. (a) The Master Servicer will
deposit in the Collection Account upon receipt certain collections on the
Contracts as described in Sections 4.01 and 5.02 of the Sale and Servicing
Agreement and the Indenture Trustee will deposit in the Spread Account, the Note
Distribution Account and the Certificate Distribution Account amounts from time
to time required to be deposited in such Accounts pursuant to Article Five of
the Sale and Servicing Agreement. Subject to paragraphs (b) and (c) below, each
of the Bank and WFAL 2, as the case may be, may invest the Invested Funds
received by it in investments selected by it at its discretion (including,
without limitation, in the case of the Bank, the use of such funds in its
operations, or, in the case of WFAL 2, the use of such funds to purchase
Contracts as permitted by its Articles) so long as this Agreement is an Eligible
Investment. Except as specified in paragraphs (b) and (c) below, it shall not be
necessary for the Bank or WFAL 2 to segregate the Invested Funds or the Holding
Account Deposited Funds deposited with it hereunder. If on any date this
Agreement shall cease to be an Eligible Investment or is terminated, then on
such date and on each date thereafter funds in the Specified Accounts will not
be delivered to and invested by the Bank and/or WFAL 2 but will instead be
invested by the Indenture Trustee in Eligible Investments pursuant to the Sale
and Servicing Agreement, funds in the Holding Account will be maintained in such
Account and will not be deposited with the Bank or WFAL 2 pursuant to this
Agreement and funds in the Spread Account will (in each case) not be invested by
the Bank or WFAL 2 but will instead be invested by the Indenture Trustee as
collateral agent in Eligible Investments pursuant to the Sale and Servicing
Agreement.
(b) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Specified Account
Invested Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Specified Account
Invested Funds shall be held in segregated trust accounts established by the
Indenture Trustee as Eligible Accounts at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Invested Funds held in an
account established pursuant to this paragraph shall be invested in Eligible
Investments, except pursuant to paragraph (a) above, pursuant to instructions by
the Bank or WFAL 2 in its discretion or, in the absence of such
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<PAGE> 3
instructions by the Bank or WFAL 2, as the case may be, or if any Event of
Default shall have occurred and is continuing, pursuant to instructions by the
Insurer.
(c) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
collateral agent) in writing that the Spread Account Invested Funds are to be
held in a segregated trust account, then on such date (or, if such date is not a
Business Day, the next succeeding Business Day) and on each day thereafter
during the term of this Agreement all Spread Account Invested Funds shall be
held in a segregated trust account established by the Indenture Trustee as an
Eligible Account at Bankers Trust Company or at another depositary institution
approved by the Insurer. All Invested Funds held in an account established
pursuant to this paragraph shall be invested in Eligible Investments, except
pursuant to paragraph (a) above, pursuant to instructions by the Master Servicer
or, in the absence of such instructions, as otherwise provided in Section
5.06(c) of the Sale and Servicing Agreement.
(d) If on any date the Insurer, acting in its sole discretion, shall
have notified the Bank and WFAL 2 and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Holding Account
Deposited Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Holding Account
Deposited Funds shall be held in a segregated trust account established by the
Indenture Trustee as an Eligible Account at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Holding Account Deposited
Funds held in an account established pursuant to this paragraph shall not be
invested.
Section 3. Payments by the Bank and WFAL 2. Each of the Bank and WFAL 2
shall be obligated to make payments in accordance with this Section until this
Agreement shall have terminated and all amounts owing by it under this Agreement
shall have been paid by it in full. On the fifth Business Day prior to each
Distribution Date, the Bank and/or WFAL 2, as the case may be, shall deposit,
and each shall cause the other to deposit, its Proportionate Share (as defined
below), if any, of the following amounts in the following accounts: (A) in the
related Specified Account, the portion of the Specified Account Invested Funds
allocable to such Specified Account with respect to such Distribution Date plus
the amount, if any (the "Reinvestment Earnings"), by which the Interest Payment
(as defined below) for such Distribution Date exceeds the sum of (i) the
aggregate amount of interest collected on the Contracts (adjusted with respect
to each Contract to the Pass-Through Rate and exclusive of such collections that
have been paid to the Master Servicer in reimbursement of a previous Advance)
that is part of the Net Collections for such Distribution Date and (ii) the
amount of the interest portion of the Advance for the related Due Period
(assuming for this purpose that an Advance was made in respect of each
delinquent Contract); (B) in the Spread Account, the Spread Account Invested
Funds; and (C) in the Holding Account, the Holding Account Deposited Funds;
provided, however, that if Invested Funds (or Holding Account Deposited Funds,
as the case may be) are held in one or more segregated trust accounts at the
Indenture Trustee or another depositary institution pursuant to paragraph (b),
(c), or (d) of Section 2, then the Indenture Trustee shall, on the fifth
Business Day prior to each Distribution Date, make or cause to be made the
following respective deposits (as paragraphs (b), (c), and (d) of Section 2 are
then applicable, respectively): (A) in each Specified Account, the Specified
Account Invested Funds with respect to such Specified Account and such
Distribution Date plus the net reinvestment
3
<PAGE> 4
income, if any, thereon, (B) in the Spread Account, the Spread Account Invested
Funds plus the net reinvestment income, if any, thereon, (C) in the Holding
Account, the Holding Account Deposited Funds; provided, further, that solely for
purposes of this Agreement the Interest Payment for the first Distribution Date
shall be calculated as interest for the period from the Cut-Off Date to and
including _______________.
"Interest Payment" means, with respect to any Distribution Date, an
amount equal to the sum of (i) interest at the Class A-1 Interest Rate on the
outstanding principal balance of the Class A-1 Notes as of the immediately
preceding Distribution Date, (ii) interest at the Class A-2 Interest Rate on the
outstanding principal balance of Class A-2 Notes as of the immediately preceding
Distribution Date, (iii) interest at the Class A-3 Interest Rate on the
outstanding principal balance of Class A-3 Notes as of the immediately preceding
Distribution Date, and (iv) interest at the Class A-4 Rate on the outstanding
principal balance of Class A-4 Notes as of the immediately preceding
Distribution Date.
"Proportionate Share" means, with respect to the Specified Account
Invested Funds, the Spread Account Invested Funds or the Holding Account
Deposited Funds, as applicable, and with respect to the Bank or WFAL 2, as
applicable, the amount of Specified Account Invested Funds or Spread Account
Invested Funds invested hereunder or Holding Account Deposited Funds deposited
hereunder, as applicable, either with the Bank or WFAL 2, as applicable, divided
by the total amount of the Specified Account Invested Funds, the Spread Account
Invested Funds or the Holding Account Deposited Funds, as applicable, invested
or deposited hereunder as of the fifth Business Day before a Distribution Date.
Section 4. Timing of Payments. On the fifth Business Day immediately
prior to each Distribution Date (each, a "RIC Maturity Date"), (i) the
investment pursuant to this Agreement of Specified Account Invested Funds with
respect to such Distribution Date and of all Spread Account Invested Funds shall
mature and be due and payable, and the Holding Account Deposited Funds shall be
required to be returned to and deposited into the Holding Account.
Section 5. Manner of Payments. Deposits into any Specified Account by
the Bank and WFAL 2 in accordance with this Agreement shall be made in
immediately available funds to such Specified Account under advice to the
Indenture Trustee at its address set forth in Section 8. Deposits into the
Spread Account by the Bank and WFAL 2 in accordance with this Agreement shall be
made in immediately available funds to the Spread Account under advice to the
Indenture Trustee as collateral agent at its address set forth in Section 8.
Deposits into the Holding Account by the Bank and WFAL 2 in accordance with this
Agreement shall be made in immediately available funds to the Holding Account
under advice to the Indenture Trustee at its address set forth in Section 8.
Section 6. Term of Agreement. This Agreement shall terminate on the
first date on which (i) the Notes shall have been paid in full as provided in
the Sale and Servicing Agreement, (ii) each of the Bank and WFAL 2 shall have
paid the aggregate amount of all Specified Account Invested Funds and Holding
Account Deposited Funds hereunder to the Indenture Trustee and the aggregate
amount of all Spread Account Invested Funds hereunder to the Indenture Trustee
as collateral agent, and (iii) each of the Bank and WFAL 2 shall have paid all
other remaining amounts owing by it hereunder; provided that no termination of
this Agreement shall limit or restrict any rights of the Insurer under
the Insurance Agreement to recover Unreimbursed Insurer Amounts in respect of
any claims paid under the Policy in respect of this Agreement. This
4
<PAGE> 5
Agreement may be terminated by the Bank and WFAL 2, with the prior written
consent of the Insurer, upon written notice to the Insurer and the Indenture
Trustee on any date following receipt by the Bank and WFAL 2 of a notice from
the Insurer pursuant to paragraph (b) of Section 2 hereof; provided that such
termination by the Bank and WFAL 2 may occur on any RIC Maturity Date without
such consent of the Insurer if (i) each of the Bank and WFAL 2 shall have made
all of the payments referred to in clauses (ii) and (iii) of the immediately
preceding sentence, and (ii) each of the Bank and WFAL 2 shall have paid the
amount of the Proportionate Share of Reinvestment Earnings and net reinvestment
income accrued under Section 3 but not otherwise owing on such RIC Maturity
Date. If on any date this Agreement shall cease to be an Eligible Investment,
then (A) on such date and on each date thereafter funds in the Specified
Accounts and in the Spread Account will be invested, and funds in the Holding
Account will be maintained, in the manner specified in the last sentence of
Section 2(a), (B) on the next succeeding RIC Maturity Date, the Bank and WFAL 2
shall make all of the payments referred to in clause (ii) of the second
preceding sentence (other than Specified Account Invested Funds, if any,
relating to the second Distribution Date immediately following such RIC Maturity
Date) and clause (iii) of the second preceding sentence, and (C) on the RIC
Maturity Date next succeeding the RIC Maturity Date referred to in clause (B) of
this sentence, the Bank and WFAL 2 shall pay the aggregate amount of any
remaining Specified Account Invested Funds hereunder to the Indenture Trustee
and shall pay all remaining amounts owing by the Bank or WFAL 2 hereunder,
including its Proportionate Share of the Reinvestment Earnings and net
reinvestment income accrued under Section 3 for the period ending on such date,
to the Indenture Trustee, as trustee under the Indenture and as collateral
agent, respectively, in the manner specified in Section 5, and upon the making
of all such payments pursuant to clauses (B) and (C) of this sentence this
Agreement shall terminate; provided, that no such termination of this Agreement
shall limit or restrict any rights of the Insurer under the Insurance Agreement
to recover Unreimbursed Insurer Amounts in respect of any claims paid under the
Policy in respect of this Agreement.
Section 7. Representations. (a) Each of the Bank and WFAL 2 hereby makes
the representations and warranties set forth in Section 2 of the Master RIC
Reimbursement Agreement, on and as of the date hereof as if set forth in full
herein.
(b) Each of the Indenture Trustee, solely in its respective capacities
as trustee under the Indenture and as collateral agent and not in its individual
capacity, the Bank and WFAL 2 represent and warrant, each as to itself to the
other, that this Agreement has been duly authorized, executed and delivered and
constitutes a valid and binding agreement and that neither the execution and
delivery of this Agreement by it nor the performance of its obligations under
this Agreement will contravene any federal or state law or any order, decree,
license, permit or the like which is applicable to it or to which it is a party
or by which it is bound.
Section 8. Notices. All notices and other communications given pursuant
to this Agreement shall be communicated to the addresses listed below, in each
case with a copy to Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022, Attention: Surveillance Department, or to such other
address or to the attention of such other person as such party shall have
designated for such purpose in a written notice to the other:
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<PAGE> 6
If to the Indenture Bankers Trust Company
Trustee, as trustee Four Albany Street, 10th Floor
under the Indenture New York, New York 10006
and as collateral Attention: Corporate Trust
agent Department - Asset Backed
Group
If to the Bank: Western Financial Bank
16485 Laguna Canyon Road
Irvine, California 92618
Attention: Guy DuBose, Esq.
General Counsel
If to WFAL 2: WFS Financial Auto Loans 2, Inc.
23 Pasteur
Irvine, California 92618
Attention: Guy DuBose, Esq.
General Counsel
Section 9. Terms. All capitalized terms used herein and not defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement or, if not otherwise defined in the Sale and Servicing Agreement, in
the Indenture, as applicable.
Section 10. Amendments. This Agreement may not be amended except with
the prior written consent of the Insurer pursuant to an instrument signed by
each party hereto.
Section 11. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, transferees and assigns; provided that neither the Bank nor WFAL 2
may assign all or any part of this Agreement without the prior written consent
of the Insurer.
Section 12. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT THAT THE DUTIES OF THE INDENTURE
TRUSTEE, AS TRUSTEE UNDER THE INDENTURE AND AS COLLATERAL AGENT, SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the day and year first
written above.
WESTERN FINANCIAL BANK
By:
-----------------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS 2, INC.
By:
-----------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee under
the Indenture and as collateral agent
By:
-----------------------------------------
Name:
Title:
7
<PAGE> 1
EXHIBIT 10.2.1
================================================================================
SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 20__-_ OWNER TRUST,
as Issuer,
WFS FINANCIAL AUTO LOANS, INC.,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of __________ 1, 20__
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions................................................................ 1
Section 1.02. Usage of Terms............................................................. 24
Section 1.03. Section References......................................................... 24
Section 1.04. Calculations............................................................... 24
Section 1.05. Accounting Terms........................................................... 25
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.................................................... 26
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller............................... 28
Section 3.02. Purchase of Certain Contracts.............................................. 33
Section 3.03. Custody of Contract Files.................................................. 33
Section 3.04. Duties of Master Servicer as Custodian..................................... 34
Section 3.05. Instructions; Authority to Act............................................. 35
Section 3.06. Indemnification............................................................ 35
Section 3.07. Effective Period and Termination........................................... 36
Section 3.08. Nonpetition Covenant....................................................... 36
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date............... 37
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer.................................................. 38
Section 4.02. Collection of Contract Payments............................................ 42
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts.............. 42
Section 4.04. Insurance.................................................................. 43
Section 4.05. Maintenance of Security Interests in Financed Vehicles..................... 43
Section 4.06. Covenants, Representations and Warranties of Master Servicer............... 43
</TABLE>
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<TABLE>
<S> <C>
Section 4.07. Repurchase of Contracts upon Breach of Covenant............................ 45
Section 4.08. Servicing Compensation..................................................... 45
Section 4.09. Reporting by the Master Servicer........................................... 45
Section 4.10. Annual Statement as to Compliance.......................................... 48
Section 4.11. Annual Independent Certified Public Accountants' Report.................... 49
Section 4.12. Access to Certain Documentation and Information Regarding Contracts........ 49
Section 4.13. Fidelity Bond.............................................................. 49
Section 4.14. Indemnification; Third Party Claims........................................ 49
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts............................................ 51
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.................... 53
Section 5.03. Application of Collections................................................. 55
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts................... 55
Section 5.05. Distributions.............................................................. 56
Section 5.06. Spread Account............................................................. 57
Section 5.07. Statements to Securityholders.............................................. 58
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence........................................................ 60
Section 6.02. Liability of Seller; Indemnities........................................... 60
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of,
Seller; Certain Limitations............................................. 61
Section 6.04. Limitation on Liability of Seller and Others............................... 62
Section 6.05. Seller Not to Resign....................................................... 63
Section 6.06. Seller May Own Securities.................................................. 63
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities.................................. 64
Section 7.02. Corporate Existence; Status as Master Servicer; Merger..................... 65
Section 7.03. Performance of Obligations................................................. 65
Section 7.04. Master Servicer Not to Resign; Assignment.................................. 65
Section 7.05. Limitation on Liability of Master Servicer and Others...................... 66
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default........................................................... 68
Section 8.02. Indenture Trustee to Act; Appointment of Successor......................... 69
Section 8.03. Repayment of Advances...................................................... 70
Section 8.04. Notification to Noteholders and Certificateholders......................... 70
Section 8.05. Waiver of Past Defaults.................................................... 70
Section 8.06. Insurer Direction of Insolvency Proceedings................................ 70
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts......................................... 72
Section 9.02. Transfer to the Insurer.................................................... 73
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment................................................................. 74
Section 10.02. Protection of Title to Trust.............................................. 75
Section 10.03. Governing Law............................................................. 77
Section 10.04. Notices................................................................... 77
Section 10.05. Severability of Provisions................................................ 77
Section 10.06. Assignment................................................................ 77
Section 10.07. Third Party Beneficiaries................................................. 77
Section 10.08. Insurer Default or Insolvency............................................. 78
Section 10.09. Counterparts.............................................................. 78
Section 10.10. Headings.................................................................. 78
Section 10.11. Assignment by Issuer...................................................... 78
Section 10.12. Limitation of Liability of Owner Trustee.................................. 78
SCHEDULES
Schedule A Schedule of Contracts................................................... SA-1
Schedule B Location of Contract Files.............................................. SB-1
</TABLE>
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EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Insurance Agreement............................................. A-1
Exhibit B Form of Note Policy..................................................... B-1
Exhibit C Form of RIC............................................................. C-1
Exhibit D Form of Subservicing Agreement.......................................... D-1
Exhibit E Form of Distribution Date Statement..................................... E-1
</TABLE>
iv
<PAGE> 6
This SALE AND SERVICING AGREEMENT, dated as of __________ 1, 20__, is
among WFS Financial 20__-_ Owner Trust (the "Issuer"), WFS Financial Auto Loans,
Inc. (the "Seller") and WFS Financial Inc ("WFS" or, in its capacity as Master
Servicer, the "Master Servicer").
WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;
WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accelerated Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the sum of one-twelfth
of 0% of the Aggregate Scheduled Balance as of the first day of each month of
the Due Period relating to such Distribution Date and (ii) amounts remaining on
deposit in the Collection Account for such Distribution Date after giving effect
to the distributions pursuant to Section 5.05(a) without regard to the inclusion
of such amount as part of the Note Principal Distributable Amount. The
Accelerated Principal Distributable Amount shall be allocated and distributed on
each Distribution Date to the Note Distribution Account.
"Advance" means the aggregate amount, as of a Master Servicer Report
Date, that the Master Servicer is required to advance in respect of the
Contracts pursuant to Section 5.04(a).
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Net Liquidation Losses" means, with respect to any Due
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated
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<PAGE> 7
Contract pursuant to clause (ii) or (iv) of the definition of the term
"Liquidated Contract" during such Due Period plus accrued and unpaid interest
thereon (adjusted to the Net Contract Rate) to the last Due Date in such Due
Period exceeds (ii) the Net Liquidation Proceeds for such Contract.
"Aggregate Scheduled Balance" means, with respect to any Distribution
Date and the Outstanding Contracts, the aggregate of the Scheduled Balances of
such Contracts as of the end of the Due Period immediately preceding such
Distribution Date.
"Aggregate Scheduled Balance Decline" means, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period (or the Cut-Off Date Aggregate Scheduled
Balance in the case of the first Distribution Date) exceeds the Aggregate
Scheduled Balance at the end of such Due Period.
"Amount Financed" means, with respect to a Contract, the amount advanced
under the Contract toward the purchase price of the related Financed Vehicle and
any related costs, exclusive of any amount allocable to the premium of
force-placed physical damage insurance covering such Financed Vehicle.
"APR" of a Contract means annual percentage rate and is the annual rate
of finance charges specified in such Contract.
"Assignments" means, collectively, (i) the original instrument of
assignment of a Contract and all other documents securing such Contract made by
the Seller to the Owner Trustee (or in the case of any Contract acquired by the
Seller from another Person, from such other Person to the Seller and from the
Seller to the Owner Trustee), and (ii) the original instrument granting a
security interest in such Contract and other documents made by the Owner Trustee
to the Insurer, which, in the case of clause (i) above, is in a form sufficient
under the laws of the jurisdiction under which the security interest in the
related Financed Vehicle arises to permit the assignee to exercise all rights
granted by the Obligor under such Contract and such other documents and all
rights available under applicable law to the Obligee under such Contract and
such other documents and, in the case of clause (ii) above, is in a form
sufficient under the laws of the jurisdiction under which the security interest
in the related Financed Vehicle arises to permit the Insurer, as a secured
party, to exercise, upon default, all rights granted by the Obligor under such
Contract and such other documents and all rights available under applicable law
to the Obligee under such Contract and which, in the case of either clause (i)
or (ii) above, may, to the extent permitted by the laws of such jurisdiction, be
a blanket instrument of assignment covering other Contracts as well and which
may also, to the extent permitted by the laws of the jurisdiction governing such
Contract, be an instrument of assignment running directly from the Seller to the
Owner Trustee and the Insurer.
"Bank" means Western Financial Bank, and its successors.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
government decree to remain closed.
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<PAGE> 8
"Calculation Day" means the last day of each calendar month.
"Certificate Distributable Amount" means, the aggregate amount of the
Excess Spread Amount distributed to the Certificateholders pursuant to Section
5.05(b).
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Trust.
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Charge-Off Percentage" means, with respect to any three calendar month
period, the annualized percentage equivalent of the average of the percentages
of charged-off Contracts for each month in such period. For each month, the
percentage of charged-off Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the aggregate Scheduled Balance for such
month of all Contracts that became Liquidated Contracts pursuant to clauses (ii)
or (iv) of the definition of the term "Liquidated Contract" during such month,
less any Net Liquidation Proceeds received during such month (and not reflected
in prior periods) with respect to such Contracts or from any Contracts
charged-off in prior periods, and the denominator of which is the aggregate
Scheduled Balances of all Outstanding Contracts as of the end of the immediately
preceding month.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the July, 2002 Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"Class A-1 Rate" means ______% per annum.
"Class A-2 Final Distribution Date" means the __________, 20__
Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Rate" means ______% per annum.
"Class A-3 Final Distribution Date" means the __________, 20__
Distribution Date.
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<PAGE> 9
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Rate" means ______% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __________ 3, 20__.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent for the Insurer under the Insurance Agreement, and each
successor thereto.
"Collection Account" means the account established and maintained as
such pursuant to Section 5.01.
"Company" means WFS Investments, Inc., and its successors.
"Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Trust pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.
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<PAGE> 10
"Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.
"Contract Rate" means, with respect to a Contract that is a (i) Simple
Interest Contract, the interest rate borne by such Contract as determined by the
terms thereof, and (ii) Rule of 78's Contract, the discount rate used in
accordance with the definition of the term "Scheduled Balance" to derive the
Scheduled Balance of such Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four Albany Street - 10th Floor, New York, New York 10006, Attention:
Corporate Trust Department - Asset Backed Group; or at such other address as the
Indenture Trustee may designate from time to time by notice to the
Certificateholders, the Insurer, the Master Servicer and the Seller.
"Cut-Off Date" means __________ 1, 20__.
"Cut-Off Date Aggregate Scheduled Balance" means $______, the aggregate
of the Scheduled Balances of the Contracts as of the Cut-Off Date.
"Dealer" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract, including the Bank.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(i) which is, at the end of such Due Period, delinquent in the amount of at
least two monthly payments or (ii) with respect to which the related Financed
Vehicle has been repossessed or repossession efforts have been commenced.
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 5.02(c) by the Master Servicer to the
Indenture Trustee, with a copy to the Insurer and the Owner Trustee.
"Delinquency Percentage" means, with respect to any three calendar month
period, the average of the percentages of delinquent Contracts for each month in
such period. For each month the percentage of delinquent Contracts shall be the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Scheduled Balance of all Outstanding Contracts 61 days or more
delinquent (after taking into account permitted extensions), plus (ii) the
aggregate Scheduled Balance of all Contracts in respect of which the related
Financed Vehicles have been repossessed but have not been liquidated (to the
extent the related Contract is not otherwise reflected in clause (i) above), and
the denominator of which is the aggregate Scheduled Balance of all outstanding
Contracts, in each case, on the last day of such calendar month.
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<PAGE> 11
"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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<PAGE> 12
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means each January 20, April 20, July 20 and October
20, or, if any such date shall not be a Business Day, the next succeeding
Business Day, commencing January 20, 2000.
"Distribution Date Outstanding Principal Balance" means, with respect to
any Contract which has been the subject of a Partial Prepayment and under which
payments are applied on the basis of the Rule of 78's, the amount equal to the
total of all Monthly P&I due after the Distribution Date next succeeding the Due
Period during which such Partial Prepayment was received, less any unearned
finance charge as of the Due Date next preceding such Distribution Date computed
in accordance with the Rule of 78's.
"Distribution Date Statement" shall have the meaning specified in
Section 4.09(a).
"DTC" means The Depository Trust Company, and its successors.
"Due Date" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.
"Due Period" means, with respect to any Distribution Date, the three
month period commencing on the first day of the third month preceding the month
in which such Distribution Date occurs (or from October 1, 20__ in the case of
the first Distribution Date) to the last day of the month immediately preceding
the month in which such Distribution Date occurs.
"Eligible Account" means (i) a segregated trust account in the corporate
trust department that is maintained with a depository institution or trust
company the commercial paper or other short-term debt obligations of which have
credit ratings from Standard & Poor's at least equal to "A-1" and from Moody's
equal to "P-1", which account is fully insured up to applicable limits by the
FDIC or (ii) a general ledger account or deposit account that is (a) guaranteed
by an entity the long-term unsecured debt obligations of which are rated "Aa2"
by Moody's and "AAA" by Standard & Poor's or the commercial paper or other
short-term debt obligations of which have credit ratings from Standard & Poor's
at least equal to "A-1+" and from Moody's equal to "P-1" or (b) that otherwise
will not result in the qualification, reduction or withdrawal by any Rating
Agency of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to Noteholders).
If any Eligible Account falls below the ratings specified in (i) or (ii) above,
all monies in such Eligible Account will be moved within 15 days to an account
meeting the requirements of an Eligible Account.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality of the United States the obligations of which
are backed by the full faith and credit of the United States;
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(ii) general obligations of or obligations guaranteed as to
timely payment of principal and interest by FNMA, FHLMC or any state of
the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the
Owner Trustee) incorporated under the laws of the United States or any
state and subject to supervision and examination by federal and/or state
banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment either (a) the
long-term, unsecured debt obligations of such depository institution or
trust company have credit ratings from Moody's at least equal to "Aa2"
and shall have commercial paper or other short-term debt obligations
rated at least "A-1+" by Standard & Poor's and "P-1" by Moody's or (b)
the investment is guaranteed by an entity the long-term, unsecured debt
obligations of which have been rated "AAA" by Standard & Poor's and at
least "Aa2" by Moody's or otherwise will not result in the
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to
Noteholders); if the investments in this paragraph (iii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments as soon as the investment matures; however, no new monies
may be invested in any instrument that is not currently an Eligible
Investment;
(iv) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed as to timely payment of principal and interest by an agency
or instrumentality of the United States, in either case entered into
with a depository institution or trust company (including the Indenture
Trustee or the Owner Trustee), acting as principal and the counterparty,
the long-term unsecured debt obligations of which are rated "AAA" by
Standard & Poor's and at least "Aa2" by Moody's and commercial paper or
other short-term debt obligations are rated at least "A-1+" by Standard
& Poor's and "P-1" by Moody's;
(v) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
state thereof which at the time of such investment or contractual
commitment providing for such investment have long-term, unsecured debt
obligations rated "AAA" by Standard & Poor's and at least "Aa2" by
Moody's or better and shall have commercial paper or other short-term
debt obligations rated at least "A-1+" by Standard & Poor's and "P-1" by
Moody's; provided, however, that securities issued by any corporation
will not be Eligible Investments to the extent that investment therein
will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust to exceed 10% of the sum
of the aggregate Outstanding Principal Balances of the Contracts and all
Eligible Investments held as part of the Trust;
(vi) commercial paper given the highest rating by each Rating
Agency at the time of such investment; provided that the issuer of such
commercial paper must have a
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long-term unsecured debt rating of at least A1 from Moody's and AAA from
Standard & Poor's;
(vii) the RIC, if investment in such RIC will not result in a
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders); if the investments in this paragraph (vii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments on the fifth Business Day preceding the next succeeding
Distribution Date; however, no new monies may be invested in the RIC
until the RIC once again becomes an Eligible Investment; and
(viii) any other investments which meet the criteria of each
Rating Agency as being consistent with their then-current rating of each
Class of Notes.
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"Excess Spread Amount" means, with respect to a Distribution Date or
Calculation Day, the excess of the Spread Account Balance over the Specified
Spread Account Balance (after giving effect to all deposits to, and withdrawals
(other than withdrawals pursuant to Section 5.06(b)) from, the Spread Account on
such Distribution Date or Calculation Day).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Distribution Date" means the Class A-1 Final Distribution Date,
the Class A-2 Final Distribution Date or the Class A-3 Final Distribution Date
Date, as the case may be.
"Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.
"Fiscal Agent" shall have the meaning set forth in the Note Policy.
"Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract," together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with the purchase of a Contract pursuant to Section 3.02 or 4.07 or payment by
the Seller of the
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purchase price of a Contract in connection with the purchase of all Contracts
pursuant to Section 9.01.
"Holder" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"Holding Account" means the account established and maintained as such
pursuant to Section 5.01.
"Indenture" means the Indenture, dated as of the date hereof, among the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Seller, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of
Issuer, the Seller, WFS or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Seller or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment for the benefit of
creditors or the failure by such Person generally to pay its debts as such debts
become due or the taking of corporate action by such Person in furtherance of
any the foregoing.
"Insolvency Proceeding" shall have the meaning specified in Section
8.06.
"Insolvency Proceeds" shall have the meaning specified in Section
9.01(b).
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"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer, the Company and the Indenture Trustee, the form of
which is attached hereto as Exhibit B.
"Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.
"Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.
"Insurer" means Financial Security Assurance Inc., and its successors.
"Insurer Insolvency" means (i) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the Insurer
in an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bankruptcy, insolvency,
rehabilitation or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Insurer or of
any substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Insurer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days, or (ii) the
commencement by the Insurer of a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any other present or future federal or
state bankruptcy, insolvency, rehabilitation or similar law, or the consent by
the Insurer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Insurer or of any substantial part of its property or the making by the
Insurer of an assignment for the benefit of creditors or the failure by the
Insurer generally to pay its debts as such debts become due or the taking of
corporate action by the Insurer in furtherance of any of the foregoing.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including October 1, 20__) to but excluding such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate or the
Class A-3 Rate, as the case may be.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Holding Account, to be deposited
into the Collection Account on such Distribution Date pursuant to Section
5.01(b).
"Issuer" means the WFS Financial 20__-_ Owner Trust.
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"LDI Policy" means the limited dual interest policy providing coverage
for physical damage to, or loss of, a Financed Vehicle.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidated Contract" means a Contract which (i) has been the subject of
a Full Prepayment; (ii) was a Defaulted Contract and with respect to which the
related Financed Vehicle was repossessed and, after any cure period required by
law has expired, the Master Servicer has charged-off any losses prior to the end
of the four-month period referred to in clause (iv); (iii) has been paid in full
on or after its Maturity Date; or (iv) has become delinquent as to all or part
of four or more payments of Monthly P&I.
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination) as
such date may be extended pursuant to Section 4.02.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Collections" means, with respect to any Distribution Date and the
related Due Period, the sum of (i) all amounts of principal and interest
collected on or in respect of the
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Contracts during such Due Period (in the case of principal and interest that are
part of any Liquidation Proceeds or Insurance Proceeds, only to the extent of
the related Net Liquidation Proceeds or Net Insurance Proceeds), less (a) the
Retained Yield, if any, (b) any late payments of interest retained by the Master
Servicer as reimbursement for Advances pursuant to Section 5.04 and (c) any
installments of Monthly P&I or Prepayments retained by the Master Servicer as
reimbursement for Nonrecoverable Advances pursuant to Section 5.04; (ii) the
Advance for such Due Period to the extent actually made; (iii) the investment
earnings on funds in the Collection Account for such Distribution Date (which,
except as otherwise provided in Section 5.01, shall be the RIC Reinvestment
Earnings); (iv) amounts withdrawn from the Holding Account and deposited in the
Collection Account in such Due Period pursuant to Section 5.02; and (v) the
aggregate Repurchase Amount for Repurchased Contracts deposited in or credited
to the Collection Account pursuant to Section 5.04(c) on the related Master
Servicer Report Date.
"Net Contract Rate" means, with respect to any Contract, its Contract
Rate less the sum of the Servicing Fee Percent and the Retained Yield Percent.
"Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds net of any such amount applied to the repair of the related Financed
Vehicle, released to the related Obligor in accordance with the normal servicing
procedures of the Master Servicer or representing expenses incurred by the
Master Servicer and recoverable hereunder.
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.
"Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes, in each case as of the immediately preceding Distribution
Date (after giving effect to any distributions of principal made on such
preceding Distribution Date).
"Note Deficiency Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the amount of Net Collections actually deposited in
the Note Distribution Account on such Distribution Date in accordance with
Section 5.05.
"Note Distributable Amount" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"Note Distribution Account" means the account established and maintained
as such pursuant to Section 5.01.
"Note Final Distribution Date" means the Class A-1 Final Distribution
Date, the Class A-2 Final Distribution Date and the Class A-3 Final Distribution
Date, as the case may be.
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"Note Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
such Class on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account with
respect to such Class on such preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the amount of interest due but not paid
to Noteholders of such Class on the preceding Distribution Date at the related
Interest Rate for the related Interest Period.
"Note Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount for such Class of Notes for such Distribution Date and the
Note Interest Carryover Shortfall for such Class of Notes for such Distribution
Date. For all purposes of this Agreement and the other Basic Documents, interest
with respect to the (i) Class A-1 Notes shall be computed on the basis of a
360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date (or, with respect to the first Distribution Date,
since October 1, 20__) and (ii) Class A-2 Notes and Class A-3 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Note Percentage" means, (i) for each Distribution Date prior to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, (A) 100% until the
principal amount of the Class A-3 Notes has been reduced to zero and (B) with
respect to any remaining portion of the Principal Distributable Amount, zero;
and (iii) for any Distribution Date thereafter, zero.
"Note Policy" means the financial guaranty insurance policy issued by
the Insurer to the Indenture Trustee on behalf of the Noteholders, the form of
which is attached as Exhibit C hereto.
"Note Policy Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the sum of (i) the amount of Net Collections actually
deposited in the Note Distribution Account on such Distribution Date in
accordance with Section 5.05 and (ii) the amount of the Note Deficiency Claim
Amount, if any, paid to the Note Distribution Account from the Spread Account
pursuant to a Deficiency Notice delivered for such Distribution Date.
"Note Pool Factor" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after giving effect to any reductions thereof to
be made on such Distribution Date) divided by the original outstanding principal
amount of such Class of Notes.
"Note Principal Carryover Shortfall" means, as of any Distribution Date,
the excess of the sum of the Note Quarterly Principal Distributable Amount and
any outstanding Note Principal Carryover Shortfall for the immediately preceding
Distribution Date over the amount in respect of principal that is actually
deposited in the Note Distribution Account on such Distribution Date.
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<PAGE> 20
"Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
and the Accelerated Principal Distributable Amount, if any, for such
Distribution Date and any outstanding Note Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the Note
Principal Distributable Amount with respect to a Class of Notes shall not exceed
the outstanding principal amount of such Class of Notes; and provided, further,
that the Note Principal Distributable Amount on each Note Final Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Quarterly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Interest Period on each
Class of Notes at the related Interest Rate for such Class on the outstanding
principal amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to the
Noteholders of such Class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of such Class
of Notes).
"Note Quarterly Principal Distributable Amount" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
"Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Original Certificate Balance" means $______.
"Original Class A-1 Note Balance" means $______.
"Original Class A-2 Note Balance" means $______.
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"Original Class A-3 Note Balance" means $______.
"Original Pool Balance" means $______.
"Outstanding" means,
(i) with respect to a Contract and as of time of reference
thereto, a Contract that has not reached its Maturity Date, has not been
fully prepaid, has not become a Liquidated Contract and has not been
repurchased pursuant to Section 3.02, 4.07 or 9.01; and
(ii) with respect to Securities, as of the date of determination,
all Notes of one Class or of all Classes, all Certificates or all Notes
and Certificates, as the case may be, theretofore authenticated and
delivered except:
(a) Securities theretofore cancelled by the applicable
Registrar or delivered to the applicable Registrar for
cancellation;
(b) Securities or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the applicable Trustee or any Paying Agent, as the case may be,
in trust for the Holders of such Securities (provided, however,
that if such Securities are to be redeemed or repurchased, notice
of such redemption or repurchase has been duly given or provision
for such notice has been made, satisfactory to the applicable
Trustee); and
(c) Securities in exchange for or in lieu of other
Securities which have been authenticated and delivered unless
proof satisfactory to the applicable Trustee is presented that
any such Securities are held by a bona fide purchaser;
provided, however, that Securities which have been paid with proceeds of the
Note Policy, as the case may be, shall continue to remain Outstanding until the
Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the applicable Trustee, and the Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Insurer; provided,
further, that in determining whether the Holders of a specified Outstanding
Amount of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document,
Securities owned by the Issuer, any other obligor upon the Securities, the
Seller, WFS or any of their respective Affiliates shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the applicable
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
applicable Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the applicable Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Issuer, any other obligor upon the Securities, the Seller, WFS or any of their
respective Affiliates.
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"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, of all Certificates or of all Securities, as the
case may be, Outstanding at the date of determination.
"Outstanding Principal Balance" means, with respect to a Contract that
is a (i) Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all Monthly P&I due on or after October 1, 20__ less any
unearned interest as of the Due Date for such Contract next preceding October 1,
20__ computed in accordance with the Rule of 78's, less all amounts received on
or in respect of such Contract on or after October 1, 20__ that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
"Partial Prepayment" means, as to any Rule of 78's Contract, any partial
prepayment received by the Master Servicer that (i) is not accompanied by an
amount specified by the related Obligor to be interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of such prepayment and (ii) is required by the terms of such Contract to be
applied to the payment of principal thereunder on or prior to the Due Date next
succeeding the date of receipt.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Property" shall have the meaning specified in the definition
of the term "Delivery".
"Policies" means the Note Policy and the Certificate Policy.
"Pool Balance" as of the time of determination means the Aggregate
Scheduled Balance, exclusive of the Scheduled Balances of all Contracts that are
not Outstanding at the end of the Due Period ending immediately prior to such
time of determination.
"Preference Claim" shall have the meaning specified in Section 8.06.
"Preferential Transfer" shall have the meaning specified for the term
"Preference" in the Insurance Agreement.
"Prepayment" means a Full Prepayment or a Partial Prepayment.
"Principal Distributable Amount" means, with respect to any Distribution
Date, the Aggregate Scheduled Balance Decline for such Distribution Date.
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"Proprietary Fund" means money market funds having a rating from each
Rating Agency in the highest investment category granted by each Rating Agency,
including funds for which the Indenture Trustee or the Owner Trustee or any of
their respective Affiliates is investment manager or advisor.
"Rating Agency" means Moody's and Standard & Poor's.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, if Definitive Securities are issued, the 15th day of
the month preceding the month in which such Distribution Date occurs.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"Repurchase Amount" means, with respect to any Contract, the amount, as
of the date of repurchase, required to prepay in full the principal of and
accrued interest on such Contract to the last Due Date in the Due Period in
which such repurchase occurs.
"Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.
"Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group of the Indenture Trustee) including any
Vice President, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
"Retained Yield" shall mean the amount, if any, stripped off from the
interest portion of Monthly P&I by the Servicer and paid to the Seller on a
monthly basis. Such monthly payment shall be equal to (i) with respect to each
Rule of 78's Contract, an amount equal to the product of the Retained Yield
Percent and the Scheduled Balance of such Contract (as specified in the Schedule
of Contracts) for such month, but only to the extent that the Monthly P&I for
such Contract for such month has been collected and (ii) with respect to each
Simple Interest Contract, out of each payment of Monthly P&I collected on such
Contract, an amount equal to interest at the Retained Yield Percent of the
Scheduled Balance of such Contract on which, and for the period for which, the
interest portion of such payment of Monthly P&I was calculated.
"Retained Yield Percent" means, with respect to any Contract, the lesser
of (i) 0% per annum or (ii) a percent per annum equal to the APR of such
Contract less the sum of (A) 1% and (B) the Pass-Through Rate.
"RIC" means the reinvestment contract provided by the Bank and WFAL 2
or, with the prior written consent of the Insurer, a subsidiary thereof,
substantially in the form of Exhibit D
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<PAGE> 24
hereto, in consideration of the right to direct the investment of the funds on
deposit in all Trust Accounts other than the Holding Account.
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Due Period and the Contracts that were Outstanding at the
beginning of such Due Period, the amount by which the sum of the Note Quarterly
Interest Distributable Amount for such Distribution Date exceeds the sum of (i)
the aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Class A-3 Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each delinquent Contract).
"Rule of 78's Contract" means a Contract as to which payments thereunder
are applied on the basis of the Rule of 78's.
"Schedule of Contracts" means the list or lists of Contracts attached as
Schedule A to this Agreement, which Contracts are being transferred to the Owner
Trustee as part of the Trust Estate, which list or lists shall set forth the
following information with respect to each such Contract in numbered columns:
<TABLE>
<CAPTION>
Information Column Number
----------- -------------
<S> <C>
Contract Number ("ACCT NBR").............................. 2
Date of Origination ("ORG DT")............................ 9
Maturity Date ("MAT DT").................................. 15
Monthly P&I ("P&I")....................................... 10
Original Principal Balance ("ORIG AMT")................... 16 Top
Outstanding Principal Balance ("PRIN BAL")................ 16 Bottom
Discount Rate ("APR")..................................... 7
</TABLE>
In addition, the Scheduled Balance of each Rule of 78's Contract for each Due
Date on or after October 1, 20__, computed in accordance with the definition of
the term "Scheduled Balance," shall be contained on a computer disk or tape (the
"Disk") that shall be delivered by the Company to the Master Servicer not later
than the fifth Business Day following the Closing Date. The Disk shall be a part
of the Schedule of Contracts and shall be made available by the Master Servicer
to the Indenture Trustee and the Owner Trustee upon reasonable request. In
calculating the Outstanding Principal Balance of each Rule of 78's Contract to
be set forth in Column 16 Bottom, it shall be assumed that all payments of
principal and interest due on or before the Cut-Off Date were received and
applied. The Schedule of Contracts or the Disk shall also set forth the Original
Pool Balance and the Retained Yield Percent (if the Retained Yield Percent is
not the same for all the Contracts).
"Scheduled Balance" means, with respect to any Rule of 78's Contract for
each month and as of the Cut-Off Date, the amount set forth as the "Scheduled
Balance" of such Contract for such month or as of the Cut-Off Date on the
Schedule of Contracts. Each such amount shall be the present value (determined
as provided below) for the applicable month of all payments of
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<PAGE> 25
Monthly P&I on the Contract due after such month (due during or after the first
Due Period in the case of a Scheduled Balance at the Cut-Off Date). Such present
value as of a Distribution Date shall be determined by discounting, on a monthly
basis, each such payment of Monthly P&I from the last day of the month in which
such payment of Monthly P&I is due back to the first day of the month during
which such Distribution Date occurs, using the applicable discount rate
specified below. Such present value as of the Cut-Off Date shall be determined
by discounting, on a monthly basis, each such payment of Monthly P&I back from
the last day of the month in which such payment of Monthly P&I is due to the
Cut-Off Date, using the applicable discount rate specified below. The applicable
discount rate (the "Discount Rate") shall be the discount rate that will produce
a present value at the Cut-Off Date equal to the Outstanding Principal Balance
of the Contract. The Scheduled Balance of a Rule of 78's Contract that becomes a
Liquidated Contract or a Repurchased Contract shall be reduced to zero as of the
end of the Due Period in which such Contract became a Liquidated Contract. In
the case of a Simple Interest Contract, the Scheduled Balance thereof is its
actual principal balance. The principal balance of a Simple Interest Contract
that becomes a Repurchased Contract shall be deemed to be reduced to zero upon
the related repurchase thereof and the principal balance of a Simple Interest
Contract that becomes a Liquidated Contract shall be deemed to be reduced to
zero as of the date on which such Contract becomes a Liquidated Contract. If a
Partial Prepayment is received on any Rule of 78's Contract at any time after
the Cut-Off Date, the Schedule of Contracts shall be revised to reflect the new
Scheduled Balance of such Contract for each Due Date after the date of such
Partial Prepayment, any such recalculations being made in the manner described
above, except that "Outstanding Principal Balance" shall be read to mean
"Distribution Date Outstanding Principal Balance" and "Cut-Off Date" shall be
read to mean the Due Date next succeeding the Due Date after which such Partial
Prepayment was received. As used herein, reference to the Scheduled Balance of a
Contract for a Distribution Date shall mean (i) in the case of a Rule of 78's
Contract, the Scheduled Balance of such Contract on the last day for such
Contract in the Due Period ending immediately prior to such Distribution Date,
and (ii) in the case of a Simple Interest Contract, the Scheduled Balance of
such Contract at the close of business of the last day in such Due Period, and
reference to the Scheduled Balance of a Contract in a month shall mean (i) in
the case of a Rule of 78's Contract, the Scheduled Balance of such Contract for
the last day of such month and (ii) in the case of a Simple Interest Contract,
the Scheduled Balance of such Contract at the close of business on the last day
of such month.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Holders of the Notes and the Certificates.
"Seller" means WFS Financial Auto Loans, Inc., in its capacity as the
Seller of the Contracts under this Agreement, and each successor thereto (in the
same capacity) pursuant to Section 6.03.
"Servicer Default" means an event specified in Section 8.01.
"Servicing Fee" means, as to any Distribution Date, the fee payable to
the Master Servicer for services rendered during the related Due Period, which
shall equal with respect to each Contract that is a (i) Rule of 78's Contract,
the amount equal to, for each month in such Due Period, the product of the
Servicing Fee Percent and the Scheduled Balance of such Contract (as
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<PAGE> 26
specified in the Schedule of Contracts) for such month in the related Due
Period, but only to the extent that the Monthly P&I for such Contract for such
month has been collected or advanced by the Master Servicer pursuant to Section
5.04 and (ii) Simple Interest Contract, out of each payment of Monthly P&I
collected or advanced on such Contract an amount equal to interest at the
Servicing Fee Percent on the Scheduled Balance of such Contract on which, and
for the period for which, the interest portion of such payment of Monthly P&I
was calculated.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
"Specified Spread Account Balance" means, with respect to any
Calculation Day or Distribution Date, 7% of the Aggregate Scheduled Balance on
such date of calculation, except that if on any date of calculation (i) the
Charge-Off Percentage for the three calendar month period ending on such date of
calculation exceeds 4% or (ii) the Delinquency Percentage for the three calendar
month period ending on such date of calculation exceeds 2%, then the Specified
Spread Account Balance shall equal 10% of the Aggregate Scheduled Balance on
such date of calculation (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent date
of calculation). Notwithstanding the foregoing, in no event shall the Specified
Spread Account Balance be greater than $______ or less than $______; provided,
however, the Specified Spread Account Balance shall not be greater than the
Outstanding Amount of the Securities if such amount is less than $______.
"Spread Account" means the account established and maintained as such
pursuant to Section 5.01.
"Spread Account Balance" means the amount on deposit in the Spread
Account.
"Spread Account Initial Deposit" means $______, 100% of which will be
cash.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
"Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.
"Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts,
substantially in the form of Exhibit E hereto.
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<PAGE> 27
"Title Document" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Third Party Lender" means an independent finance company which has
originated or acquired one or more Contracts and assigned such Contract(s) to
WFS.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Spread Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Trust Agreement, dated __________ __, 20__,
as amended and restated as of __________ __, 20__, among the Depositor, the
Company, the Insurer and the Owner Trustee.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"United States" means the United States of America.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Policies for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"WFAL 2" means WFS Financial Auto Loans 2, Inc., a wholly-owned
subsidiary of WFS, and its successors and assigns.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references
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<PAGE> 28
to Persons include their permitted successors and assigns; and the term
"including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months (or, in the case of the Class A-1
Notes, on the basis of a 360-day year and the actual number of days elapsed
since the immediately preceding Distribution Date or __________ __, 20__, in the
case of the first Distribution Date) and will be carried out to at least six
decimal places. Collections of interest on Rule of 78's Contracts shall be
calculated as if such Contracts were actuarial contracts the scheduled principal
balances of which are the Scheduled Balances thereof, and collections of
interest on Simple Interest Contracts will be calculated in accordance with the
terms thereof.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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<PAGE> 29
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery to or upon the order of
the Seller of $______ of Outstanding Principal Balance of Contracts less the
Spread Account Initial Deposit, effective upon the Closing Date, the Seller
hereby sells, grants, transfers, assigns and otherwise conveys to the Issuer,
without recourse (subject to the obligations herein), all of the right, title
and interest of the Seller (exclusive of (i) the Retained Yield in respect of
the Contracts, and (ii) the amount, if any, allocable to any rebatable insurance
premium financed by any Contract) in, to and under the Contracts (which
Contracts shall be listed in the Schedule of Contracts), including, without
limitation, all payments of Monthly P&I (exclusive of the Retained Yield, which
shall be paid directly to the Seller as provided in Section 5.02(b)) due on or
after __________ 1, 20__ (excluding the amount allocable to principal and
interest due prior to __________ 1, 20__); all Net Liquidation Proceeds and Net
Insurance Proceeds with respect to any Financed Vehicle to which a Contract
relates received on or after __________ 1, 20__ and all other proceeds received
on or in respect of such Contracts (other than payments of Monthly P&I due prior
to __________ 1, 20__), and any and all security interests in the Financed
Vehicles; the Contract Documents relating to the Contracts (except the Contract
Documents for Contracts which have been the subject of a Full Prepayment
received on or after __________ 1, 20__ but no later than one Business Day prior
to the Closing Date, in lieu of which the Seller shall have deposited in or
credited to the Collection Account on or prior to the Closing Date an amount
equal to such Full Prepayment); and all proceeds in any way delivered with
respect to the foregoing, all rights to payments with respect to the foregoing
and all rights to enforce the foregoing, provided that $______ of the principal
amount of Contract number __________ is retained by the Seller.
(b) The Bank has filed or caused to be filed UCC-1 financing statements,
executed by the Bank as debtor, naming WFS as secured party and describing the
Contracts originated by the Bank and transferred to WFS on or prior to the
Closing Date as collateral with the Office of the Secretary of State of the
State of California. WFS has filed or caused to be filed UCC-1 financing
statements executed by WFS as debtor, naming the Seller as secured party and
describing the Contracts as collateral with the office of the Secretary of State
of the State of California. The Seller has filed or caused to be filed UCC-1
financing statements, executed by the Seller as debtor, naming the Collateral
Agent, on behalf of the Insurer, as secured party and describing the Contracts
as collateral, with the Office of the Secretary of State of the State of
California. The grant of a security interest to the Collateral Agent on behalf
of the Insurer and the rights of the Collateral Agent and the Insurer in respect
of such security interest shall be governed by the Insurance Agreement. The
Seller has filed or caused to be filed UCC-1 financing statements, executed by
the Seller as debtor, naming the Owner Trust as secured party and describing the
Contracts being sold by it to the Owner Trust as collateral, with the Office of
the Secretary of State of the State of California. The Owner Trust has filed or
caused to be filed UCC-1 financing statements, executed by the Owner Trust as
debtor, naming the Indenture Trustee, on behalf of the Noteholders, as secured
party and describing the Contracts as collateral, with the office of the
Secretary of State of the States of Delaware and California. The grant of a
security interest to the Indenture Trustee and the rights of the Indenture
Trustee in the Contracts shall be governed
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<PAGE> 30
by the Indenture. From time to time, the Master Servicer shall cause to be taken
such actions as are necessary to continue the perfection of the respective
interests of the Indenture Trustee, the Owner Trust and the Collateral Agent on
behalf of the Insurer in the Contracts and to continue the first priority
security interest of the Indenture Trustee (subject to the security interest of
the Insurer pursuant to the Insurance Agreement) in the Financed Vehicles and
their proceeds (other than, as to such priority, any statutory lien arising by
operation of law after the Closing Date which is prior to such interest),
including, without limitation, the filing of financing statements, amendments
thereto or continuation statements and the making of notations on records or
documents of title.
If any change in the name, identity or corporate structure of the Seller
or WFS or the relocation of the chief executive office of any of them would make
any financing or continuation statement or notice of lien filed under this
Agreement or the other Basic Documents seriously misleading within the meaning
of applicable provisions of the UCC or any title statute, the Master Servicer,
within the time period required by applicable law, shall file such financing
statements or amendments as may be required to preserve and protect the
interests of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer in the Contracts, Financed Vehicles and the proceeds thereof.
Promptly thereafter, the Master Servicer shall deliver to the Indenture Trustee,
the Owner Trustee and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary fully
to preserve and protect the interests of the Indenture Trustee, the Owner
Trustee, Securityholders and the Insurer in the Contracts, Financed Vehicles and
the proceeds thereof have been filed, and reciting the details of such filings.
During the term of this Agreement, the Seller and WFS shall each
maintain its chief executive office in one of the states of the United States,
other than Louisiana or Tennessee.
The Master Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
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<PAGE> 31
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which (i) the
Issuer is deemed to have relied in acquiring the Contracts and (ii) the Insurer
is deemed to have relied in issuing the Note Policy. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture.
(a) As to the Seller:
(i) Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business, and has the corporate power,
authority and legal right to acquire and own the Contracts.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications.
(iii) Power and Authority. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer, and
has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes (A) a
valid sale, transfer and assignment of the Contracts, enforceable
against creditors of and purchasers from the Seller and (B) a legal,
valid and binding obligation of the Seller enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or bylaws of the Seller, or
any indenture, agreement or other instrument to which the Seller is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents to which the Seller is a party); nor violate any law or,
to the best of the Seller's knowledge, any order, rule or regulation
applicable to the Seller of
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<PAGE> 32
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (A) asserting the invalidity of this Agreement or any of the
other Basic Documents, the Notes or the Certificates, (B) seeking to
prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of,
this Agreement, any of the other Basic Documents, the Notes or the
Certificates or (D) which might adversely affect the federal or state
income tax attributes of the Notes or the Certificates.
(b) As to each Contract or all of the Contracts, as the case may be:
(i) Schedule of Contracts. The information pertaining to such
Contract set forth in the related Schedule of Contracts was true and
correct in all material respects at the Closing Date and the
calculations of the Scheduled Balances appearing in such Schedule of
Contracts for each such Contract at the Closing Date and at each
Distribution Date thereafter prior to the related Maturity Date have
been performed in accordance with this Agreement and are accurate.
(ii) Security Interests. As of the Closing Date, such Contract
granted a valid and enforceable first priority security interest in
favor of WFS (or to the Bank, a Dealer or a Third Party Lender, which
security interest has been assigned to WFS) in the related Financed
Vehicle, and such security interest has been duly perfected and is prior
to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to
priority, for any lien for unpaid taxes or unpaid storage or repair
charges which may arise after the Closing Date).
(iii) Title Documents. (A) If the related Financed Vehicle was
originated in a state in which notation of a security interest on the
Title Document is required or permitted to perfect such security
interest, the Title Document for such Financed Vehicle shows, or if a
new or replacement Title Document is being applied for with respect to
such Financed Vehicle the Title Document will be received within 180
days of the Closing Date and will show WFS named as the original secured
party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show WFS named as the original secured party under the related
Contract, and in either case, the Indenture Trustee and the Owner
Trustee have the same rights as such secured party has or would have (if
such secured party were still the owner of the Contract) against all
parties claiming an interest in such Financed Vehicle. With respect to
each Contract for which the Title Document has not yet been returned
from the Registrar of Titles, WFS has received
27
<PAGE> 33
written evidence from the related Dealer that such Title Document
showing WFS as first lienholder has been applied for.
(iv) Title to the Contracts. Immediately prior to the issuance
of the Notes and the Certificates, the Seller had good and indefeasible
title to and was the sole owner of each Contract to be transferred to
the Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and indefeasible
title to and will be the sole owner of such Contract free of liens,
encumbrances and rights of others, except for the Lien of the Indenture
Trustee under the Indenture and the security interest granted to the
Insurer under the Insurance Agreement.
(v) Current in Payment. As of the Cut-Off Date, such Contract
is no more than 30 days delinquent in payment as to all or any portion
of any installment of Monthly P&I.
(vi) Tax Liens. As of the Closing Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(vii) Rescission, Offset, Etc. As of the Closing Date, there
is no right of rescission, offset, defense or counterclaim to the
obligation of the Obligor to pay the unpaid principal or interest due
under such Contract; the operation of the terms of such Contract or the
exercise of any right thereunder will not render such Contract
unenforceable in whole or in part or subject to any right of rescission,
offset, defense or counterclaim, and no such right of rescission,
offset, defense or counterclaim has been asserted.
(viii) Mechanics' Liens. As of the Closing Date, there are no
liens or claims for work, labor, material or storage affecting the
related Financed Vehicle which are or may become a lien prior to or
equal with the security interest granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the sale of the
Financed Vehicle sold thereunder, complied, at the time it was made, in
all material respects with all applicable state and federal laws (and
regulations thereunder), including without limitation usury, equal
credit opportunity, fair credit reporting, truth-in-lending or other
similar laws, the Federal Trade Commission Act, and applicable state
laws regulating retail installment sales contracts and loans in general
and motor vehicle retail installment contracts and loans in particular;
and the consummation of the transactions herein contemplated, including,
without limitation, the transfer of ownership of the Contracts to the
Issuer and the receipt of interest by the Securityholders, will not
involve the violation of any applicable state or federal law.
(x) Valid and Binding. Such Contract is the legal, valid and
binding obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; all parties to such Contract had full legal
capacity to execute and deliver such Contract and all other documents
related thereto and to grant the security interest purported to be
granted thereby; and the terms of such
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<PAGE> 34
Contract have not been waived or modified in any respect, except by
instruments that are part of the Contract Documents.
(xi) Enforceability. Such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder or assignee thereof adequate for the realization against the
collateral of the benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
(xii) No Default. As of the Cut-Off Date, there was no
default, breach, violation or event permitting acceleration existing
under such Contract (except payment delinquencies permitted by
subparagraph (v) above) and no event which, with notice and the
expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Contract,
and the Seller has not waived any such default, breach, violation or
event permitting acceleration except payment delinquencies permitted by
subparagraph (v) above.
(xiii) Insurance. At the Closing Date, the related Financed
Vehicle will be covered by (A) a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) its actual
cash value or (b) the principal amount due from the Obligor under the
related Contract, (ii) naming WFS as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision
coverage or (B) an LDI Policy; provided, however, that if such Financed
Vehicle has an unpaid principal balance of less than $______ or the
related Contract has six or fewer months remaining before its Maturity
Date, it will not be required to be covered by the insurance described
in this subparagraph. Each of the Seller, WFS and the Master Servicer
shall at all times comply with all of the provisions of such insurance
policies and the LDI Policy applicable to such Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was either
acquired by WFS (or its predecessor in interest) from a Dealer or a
Third Party Lender with which it ordinarily does business or the Bank or
originated directly by WFS in the ordinary course of its business, and
no adverse selection procedures have been utilized in selecting such
Contract from all other similar contracts purchased by the Seller.
(xv) Scheduled Payments. As of the Cut-Off Date, scheduled
payments under such Contract are applied in accordance with the Rule of
78's method or the simple interest method and are due monthly in level
payments through its Maturity Date sufficient to fully amortize the
principal balance of such Contract by its Maturity Date, assuming timely
payment by Obligors on Simple Interest Contracts, except that the
payment in the first or last month in the life of the Contract may be
minimally different from the level payment.
(xvi) One Original. There is only one original of such
Contract and such original, together with all other Contract Documents,
is being held by the Master Servicer pursuant to Section 3.04. Each
original Contract has been segregated and marked to
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show the Issuer as owner thereof, unless the Insurer has waived the
requirement for such segregation and marking by notice in writing to the
Owner Trustee, the Indenture Trustee and the Master Servicer.
(xvii) Characteristics. At the Cut-Off Date such Contract had
(i) an Outstanding Principal Balance of not less than $______ nor more
than $______, (ii) an original term not less than 7 months nor greater
than 84 months, (iii) a remaining maturity of not less than 3 months nor
greater than 84 months, and (iv) an APR of not less than ______%.
(xviii) Identification. The Master Servicer and WFS have
clearly marked their electronic records to indicate that such Contract
is owned by the Issuer.
(xix) Maturity. At the Cut-Off Date such Contract did not have
a Maturity Date later than the 90th day prior to the end of the Due
Period immediately preceding the Certificate Final Distribution Date.
(xx) Scheduled Balance. At the Cut-Off Date the initial
Scheduled Balance of such Contract was not greater than the purchase
price of the related vehicle.
(xxi) Location of Contract Files. The Contract Files are kept
at one or more of the locations listed in Schedule B hereto.
(xxii) Finance Charge. Such Contract provides for the payment
of a finance charge calculated at its APR based on the Rule of 78's or
the simple interest method and such APR shall be equal to or greater
than ______% for Rule of 78's Contracts and equal to or greater than
______% for Simple Interest Contracts.
(xxiii) Bank or Third Party Lender Originations. The aggregate
Scheduled Balance as of the Cut-Off Date of Contracts purchased or
originated by the Bank and Third Party Lenders is not more than
approximately 1.00% of the aggregate Scheduled Balance of all Contracts
as of such date.
(xxiv) Simple Interest Contracts. As of the Cut-Off Date,
approximately ______% of the aggregate Scheduled Balances of the
Contracts shall be Simple Interest Contracts and approximately ______%
of the aggregate Scheduled Balances of the Contracts shall be Rule of
78's Contracts.
(xxv) New or Used Vehicles. Approximately ______% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance shall be new
vehicles and approximately ______% shall be used vehicles.
(xxvi) States of Origination. Approximately ______% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated by
WFS or the Bank in California and approximately ______% of the Contracts
by Cut-Off Date Aggregate Scheduled Balance were originated in states
other than California.
(xxvii) No Government Entity Obligors. Each Contract shall
have an Obligor that is not a local, state or federal governmental
entity.
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Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 3.01 shall survive delivery of the
Contract Documents to the Owner Trustee and shall continue until the termination
of this Agreement. Upon discovery by the Seller, the Master Servicer or the
Owner Trustee, as the case may be, that any of such representations and
warranties was incorrect as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Owner
Trustee, such Person making such discovery shall give prompt notice to the other
such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee, the Issuer or the Insurer, the Seller
shall, within 90 days after discovery thereof or receipt of notice thereof, cure
the defect or eliminate or otherwise cure the circumstances or condition in
respect of which such representation or warranty was incorrect as of the time
made. If the Seller is unable to do so, it shall purchase such Contract on the
Master Servicer Report Date next succeeding the end of such 90-day period from
the Issuer for an amount equal to the related Repurchase Amount in the manner
set forth in Section 5.04. Upon any such purchase, the Owner Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Seller any Contract
purchased hereunder. The sole remedy of the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 3.01 shall be to
require the Seller to enforce the Master Servicer's obligation to repurchase
Contracts pursuant to Section 4.07; provided, however, that the Seller shall
indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and
the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach.
Section 3.03. Custody of Contract Files. Subject to Sections 3.07, 7.04
and 8.01, the Owner Trustee hereby irrevocably appoints the Master Servicer, and
the Master Servicer hereby accepts such appointment, to act as the agent of the
Owner Trustee as custodian of the Contract Documents and any and all other
documents that the Master Servicer shall keep on file, in accordance with its
customary procedures, relating to a Contract, Obligor or Financed Vehicle, which
are hereby constructively delivered to the Owner Trustee with respect to each
Contract:
(i) the original of the Contract;
(ii) documents evidencing the existence of physical damage
insurance covering the Financed Vehicles;
(iii) the original credit application fully executed by the
Obligor; and
(iv) the original certificate of title or such documents that
the Master Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Master Servicer in
the Financed Vehicle.
The Master Servicer shall maintain the Contract Documents held by it (by
itself or through one or more Subservicers) in a file area physically separate
from the other installment sales contracts and installment loans owned or
serviced by it or any of its Affiliates, which area
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shall be clearly marked to indicate the Trust as the owner of, and the security
interest of the Indenture Trustee and the Insurer in, the Contract Documents and
shall mark the Contracts in the same manner; except that if the Indenture
Trustee and the Insurer have waived the requirement for such segregation and
marking by notice in writing to the Owner Trustee, the Indenture Trustee and the
Master Servicer, such file area may contain contract documents for other motor
vehicle retail installment sales contracts and installment loans owned or
serviced by the Master Servicer.
The Master Servicer shall cause the electronic record of the Contracts
maintained by it to be clearly marked to indicate that the Contracts have been
sold to the Trust and shall not in any way assert or claim an ownership interest
in the Contracts. It is intended by the Master Servicer's and the Seller's
agreement pursuant to this Section that the Owner Trustee shall be deemed to
have possession of the Contract Documents for purposes of Section 9-305 of the
UCC of the state in which the Contract Documents are located.
Section 3.04. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the use
and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall be specified to the Owner Trustee, the
Indenture Trustee and the Insurer by 30 days' prior written notice. The Master
Servicer shall permit the Owner Trustee, the Indenture Trustee and the Insurer
or their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Master Servicer at such times as such Persons may
request.
(c) Release of Documents. Upon instruction from the Indenture Trustee (a
copy of which shall be furnished to the Owner Trustee and the Insurer), the
Master Servicer shall release any Contract File to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
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(d) Monthly Reports. On the tenth Business Day of each month, other than
a month in which a Distribution Date occurs, commencing with the month next
succeeding the month of the Closing Date, the Master Servicer shall mail to the
Indenture Trustee and the Owner Trustee, by first class mail, a certificate of a
Servicing Officer stating (i) the Contract Number and outstanding principal
balance of each Contract that has become a Liquidated Contract since the
Business Day next preceding the date of the last certificate delivered pursuant
to this subsection (or since the Closing Date in the case of the first such
certificate); (ii) that all proceeds received in respect of such Contract have
been deposited in or credited to the Collection Account or Holding Account as
required by Section 5.02; (iii) that, if such Contract has been the subject of a
Full Prepayment pursuant to clause (i) of the definition of the term "Full
Prepayment" or is a Liquidated Contract pursuant to clause (iii) of the
definition of the term "Liquidated Contract," all proceeds received in respect
thereof have been deposited in or credited to the Collection Account or Holding
Account in accordance with Section 5.02; (iv) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (ii) of the definition of
the term "Full Prepayment," the correct Repurchase Amount has been deposited in
or credited to the Collection Account in accordance with Section 4.07 or 5.04;
(v) that, if such Contract is a Liquidated Contract pursuant to clause (ii) of
the definition of the term "Liquidated Contract," there have been deposited in
or credited to the Collection Account or Holding Account the related Net
Liquidation Proceeds in accordance with Section 5.02; (vi) the current Aggregate
Scheduled Balance; (vii) the total dollar amount of charged-off Contracts;
(viii) the total dollar amount of delinquent Contracts; (ix) the total dollar
amount of all Contracts in respect of which the related Financed Vehicles have
been repossessed but have not been liquidated; (x) the current Charge-off
Percentage; and (xi) the current Delinquency Percentage. The information called
for in clauses (vi) through (xi) above shall be presented as of the Business Day
next preceding the date of the last certificate so delivered.
(e) Title Documents. The Master Servicer shall deliver to the Indenture
Trustee, the Owner Trustee and the Insurer (i) within 120 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date did not show the Master Servicer as first lienholder and (ii)
within 180 days of the Closing Date, a schedule of Title Documents for Financed
Vehicles which as of the date prior to such delivery do not show the Master
Servicer as first lienholder and as to which the Seller is obligated to
repurchase pursuant to the provisions hereof.
Section 3.05. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions (a copy of which shall be
furnished to the Owner Trustee and the Insurer) with respect to the Contract
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee.
Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Trust, the Owner Trustee, the Indenture Trustee,
the Insurer and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Trust, the Owner Trustee, the Indenture
Trustee, the Insurer, the Noteholders or the Certificateholders as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Master Servicer of the Contract Files, or the failure of the Master
Servicer to perform its duties and service the
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Contracts in compliance with the terms of this Agreement; provided, however,
that the Master Servicer shall not be liable to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Owner Trustee and the Master Servicer shall not be liable to
the Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee. The
Master Servicer shall also indemnify and hold harmless the Trust, the Trust
Estate and the Securityholders against any taxes that may be asserted at any
time against any of them with respect to the Contracts, including any sales,
gross receipts, general corporation, personal property, privilege or license
taxes (but exclusive of federal or other income taxes arising out of payments on
the Contracts) and the costs and expenses in defending against such taxes. The
Master Servicer shall immediately notify the Owner Trustee and the Indenture
Trustee if a claim is made by a third party with respect to the Contracts, shall
assume, with the consent of the Owner Trustee and the Indenture Trustee, the
defense of any such claim, pay all expenses in connection therewith, including
counsel fees, and shall promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or the Trust.
Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under to this Section or
until the Certificate Final Distribution Date. If the Master Servicer shall
resign in accordance with the provisions of this Agreement or if all of the
rights and obligations of the Master Servicer shall have been terminated
pursuant to Section 8.01, the appointment of the Master Servicer as custodian
shall be terminated by the Indenture Trustee, by the Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, by the Owner Trustee,
by Certificateholders evidencing not less than 51% of the aggregate Certificate
Percentage Interest, or by the Insurer, in the same manner as the Indenture
Trustee, the Owner Trustee, the Insurer or such Holders may terminate the rights
and obligations of the Master Servicer pursuant to Section 8.01. As soon as
practicable after any termination of such appointment, the Master Servicer
shall, at its own expense, deliver the Contract Files to the Owner Trustee or
its agent at such place or places as the Owner Trustee may reasonably designate
and shall cooperate in good faith to effect such delivery.
Section 3.08. Nonpetition Covenant.
(a) Neither the Seller nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust.
(b) The Master Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
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Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting
alone and/or through one or more Subservicers as provided in this Section,
shall, as agent for the Indenture Trustee, the Owner Trustee and the Insurer,
manage, service, administer and make collections on the Contracts. The Master
Servicer agrees that its servicing of the Contracts shall be carried out in
accordance with customary and usual procedures of financial institutions which
service motor vehicle retail installment sales contracts and installment loans
and, to the extent more exacting, the procedures used by the Master Servicer in
respect of such contracts serviced by it for its own account. In accordance with
the foregoing, the Master Servicer may, whenever an Obligor has become
delinquent or the Master Servicer believes an Obligor may become delinquent, in
order to preserve the ultimate collectability of amounts due on a Contract,
modify the payment schedule on any Contract by reducing the APR on such Contract
without the consent of the Insurer or any Rating Agency; provided, however, that
the new APR shall not be less than the sum of (i) the Class A-3 Rate, (ii) the
Servicing Fee Percent and (iii) the Retained Yield Percent. In addition, in
order to preserve the Trust Estate, the Master Servicer may, without the consent
of any Rating Agency or the Insurer, reduce the principal amount of a Contract
(i.e., write-down a portion of the principal amount due on such Contract and,
accordingly, lower the Monthly P&I on such Contract) to the extent funds are
available in the Spread Account to cover such reduction; provided however, the
total amount of such modifications pursuant to the immediately preceding
sentence and this sentence and reductions (i) may not affect more than 1% of the
Original Pool Balance through the Class A-3 Final Distribution Date and (ii)
during each three-month period between Distribution Dates (or in the case of the
first Distribution Date, from the Cut-Off Date to such Distribution Date) shall
not affect Contracts having an aggregate Scheduled Balance greater than 10/100
of one percent of the Pool Balance at the beginning of such period. Any such
modifications or reductions exceeding such limits may be made only with the
consent of the Insurer and each Rating Agency. The Master Servicer may also
extend the Maturity Date on a Contract in accordance with Section 4.02. The
Master Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee, the Owner Trustee and the Insurer with respect to
distributions and filing applicable U.S. tax returns for the Trust on an annual
basis, based on a tax year for the Trust that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Insurer, the Noteholders, the Certificateholders, the Indenture Trustee, the
Owner Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Owner Trustee shall furnish the Master
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Servicer all documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit D
hereto is merely provided for information and shall not be deemed to limit in
any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement or materially adversely affect the rights of Noteholders,
Certificateholders or the Insurer hereunder.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Insurer
which will be bound by the terms of the related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into an agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
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Master Servicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer or such other Affiliate, as the case may be, and
the Master Servicer alone, and none of the Indenture Trustee, the Owner Trustee,
the Noteholders nor the Certificateholders shall be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer except as set forth in the immediately succeeding paragraph;
provided that the Insurer may rely upon the representations and warranties of
the Subservicer contained therein.
In the event the Master Servicer shall for any reason no longer be a
servicer (including, but not limited to, by reason of an Event of Default), the
Indenture Trustee or its designee may, at the sole discretion of the Indenture
Trustee, thereupon assume all of the rights and obligations of such Master
Servicer under each Subservicing Agreement selected by the Indenture Trustee in
its sole discretion. In such event, the Indenture Trustee, its designee or the
successor servicer for the Indenture Trustee shall be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each such Subservicing Agreement to the same extent as if
such Subservicing Agreement had been assigned to the assuming party except that
the Master Servicer shall not thereby be relieved of any liability or
obligations under the Subservicing Agreement. The Master Servicer shall, upon
request of the Indenture Trustee but at the expense of the Master Servicer,
deliver to the assuming party all documents and records relating to each such
Subservicing Agreement and the Contracts then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreement to the assuming
party.
On the Closing Date, the Master Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after __________ __, 20__
and received by the Master Servicer at least two Business Days prior to the
Closing Date; (ii) the proceeds of each Prepayment (excluding any portion
allocable to principal and interest due before __________ __, 20__) of any such
Contract received by the Master Servicer on or after __________ __, 20__ but no
later than two Business Days prior to the Closing Date; and (iii) all Net
Liquidation Proceeds and Net Insurance Proceeds realized in respect of a
Financed Vehicle at least two Business Days prior to the Closing Date.
Subject to Section 5.02 respecting deposits in the Holding Account, the
Master Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after
__________ __, 20__ received by it on or in respect of the Contracts together
with the proceeds of all Prepayments and any accompanying interest; provided,
however, that, to the extent any such installment of Monthly P&I or any such
Prepayment proceeds are received in respect of a Contract as to which there is
an outstanding and unreimbursed Advance or Advances, such installment or
proceeds shall, to the extent of any such unreimbursed Advance or Advances, be
retained by the Master Servicer in reimbursement of itself. The Master Servicer
shall likewise deposit in the Collection Account within two Business Days of
receipt all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
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Account as required above, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees or collections allocable to payments to be made by the Master Servicer on
behalf of Obligors for payment of insurance premiums or similar items need not
be deposited in the Collection Account and may be retained by the Master
Servicer as additional servicing compensation or for application on behalf of
Obligors, as the case may be.
Amounts otherwise required to be deposited in the Collection Account
pursuant to the immediately preceding paragraph shall instead be deposited by
the Master Servicer in the Holding Account to the extent such amounts are
payments of Monthly P&I due in one or more months subsequent to the end of the
Due Period during which such payments are received.
With respect to payments of Monthly P&I made by Obligors to the Master
Servicer's lock box, the Master Servicer shall direct the Person maintaining the
lock box to deposit the amount collected on or in respect of the Contracts to
the Collection Account.
In those cases where a Subservicer is servicing a Contract pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer to remit
to the Master Servicer for deposit in the Collection Account, on a daily basis,
within two Business Days after receipt by the Subservicer, all proceeds of
Contracts and all Net Liquidation Proceeds and Net Insurance Proceeds received
by the Subservicer.
In order to facilitate the servicing of the Contracts by the Master
Servicer, the Master Servicer shall retain, subject to and only to the extent
permitted by the provisions of this Agreement, all collections on or in respect
of the Contracts prior to the time they are remitted or credited, in accordance
with such provisions, to the Collection Account or the Holding Account, as the
case may be. The Master Servicer acknowledges that the unremitted collections on
the Contracts are part of the Trust Estate and the Master Servicer agrees to act
as custodian and bailee of the Indenture Trustee, the Owner Trustee and the
Insurer in holding such monies and collections. The Master Servicer agrees, for
the benefit of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer, to act as such custodian and bailee, and to hold and deal with such
monies and such collections, as custodian and bailee for the Indenture Trustee,
the Owner Trustee and the Insurer, in accordance with the provisions of this
Agreement.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Contracts at the address of the Master
Servicer set forth as Schedule B to this Agreement, at the office of any
Subservicer or, upon 15 days' notice to the Insurer, the Indenture Trustee and
the Owner Trustee, at such other place where the servicing offices of the Master
Servicer are located, and shall give the Indenture Trustee, the Owner Trustee
and the Insurer access to all data at all reasonable times. While a Servicer
Default shall be continuing, the Master Servicer shall, on demand of the
Indenture Trustee, the Owner Trustee or the Insurer, deliver or cause to be
delivered to the Indenture Trustee, the Owner Trustee or the Insurer, as the
case may be, all data (including,
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without limitation, computerized records and, to the extent transferable,
related operating software) necessary for the servicing of the Contracts and all
monies collected by it and required to be deposited in or credited to the
Collection Account or the Holding Account, as the case may be.
Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided that in the case of any extension granted pursuant to
clause (ii) the Master Servicer makes an Advance in respect of such extension
and in no event can the last payment on such Contract be extended beyond the
last day of the Due Period ending immediately prior to the Class A-3 Final
Distribution Date. The Master Servicer shall not extend the Maturity Date of a
Contract except as provided in clause (ii) of the preceding sentence and shall
not modify any Contracts except in accordance with the criteria and limitations
specified in Section 4.01.
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Trust. The Master Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
defaulted Contract; provided,
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however, that it shall be entitled to reimbursement of such costs and expenses
to the extent they constitute Liquidation Expenses or expenses recoverable under
an applicable Insurance Policy. All Net Liquidation Proceeds, Net Insurance
Proceeds and proceeds of the sale of Contracts hereunder shall be deposited
directly in or credited to the Collection Account (without deposit in any
intervening account) to the extent required by Section 5.02.
Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $______ or the related
Contract has six or fewer months remaining before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Contracts. The Owner Trustee and the Indenture Trustee each hereby authorizes
the Master Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Trust in the event of the relocation of a
Financed Vehicle or for any other reason.
Section 4.06. Covenants, Representations and Warranties of Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which (i) the Issuer is deemed to have relied
in acquiring the Contracts and (ii) the Insurer is deemed to have relied in
issuing the Note Policy. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Master Servicer covenants as to the Contracts:
(i) Lien in Force. The Financed Vehicle securing each Contract
shall not be released from the lien granted by the Contract in whole or
in part, except as contemplated herein.
(ii) Impairment. The Master Servicer shall not impair the
rights of the Noteholders and Certificateholders in the Contracts.
(iii) Amendments. The Master Servicer shall not amend the
terms of any Contract, except that extensions or modifications may be
granted in accordance with Section 4.02.
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(iv) Transfers. The Master Servicer may consent to the sale or
transfer by an Obligor of any Financed Vehicle if the original Obligor
under the related Contract remains liable under such Contract and the
transferee assumes all of the Obligor's obligations thereunder.
(b) The Master Servicer represents, warrants, and covenants:
(i) Organization and Good Standing. The Master Servicer (A)
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, (B) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (C) has full power,
authority and legal right to own its property, to carry on its business
as presently conducted and to enter into and perform its obligations
under this Agreement
(ii) Power and Authority. The execution and delivery by the
Master Servicer of this Agreement are within the corporate power of the
Master Servicer and have been duly authorized by all necessary corporate
action on the part of the Master Servicer. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
herein contemplated, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default under,
any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Master Servicer or its
properties or the articles of incorporation or bylaws of the Master
Servicer, or any of the provisions of any indenture, mortgage, contract
or other instrument to which the Master Servicer is a party or by which
it is bound or result in the creation or imposition of any lien, charge
or encumbrance upon any of its property pursuant to the terms of any
such indenture, mortgage, contract or other instrument.
(iii) Governmental Consents. The Master Servicer is not
required to obtain the consent of any other party or consent, license,
approval or authorization, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except (in each case) such as have been obtained and are in
full force and effect.
(iv) Binding Obligation. This Agreement has been duly executed
and delivered by the Master Servicer and, assuming the due
authorization, execution and delivery thereof by the Owner Trustee and
the Indenture Trustee, constitutes a legal, valid and binding instrument
enforceable against the Master Servicer in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights generally).
(v) No Proceedings. There are no actions, suits or proceedings
pending or, to the knowledge of the Master Servicer, threatened against
or affecting the Master Servicer, before or by any court, administrative
agency, arbitrator or governmental body with respect to any of the
transactions contemplated by this Agreement, or which will, if
determined adversely to the Master Servicer, materially and adversely
affect it or its business, assets, operations or condition, financial or
otherwise, or adversely affect the Master
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Servicer's ability to perform its obligations hereunder. The Master
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by the
above-mentioned documents.
(vi) Other Consents. The Master Servicer has obtained or made
all necessary consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental persons, in each case in
connection with the execution and delivery of, and the consummation of
the transactions contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have
been cured within 30 days following such discovery, the Master Servicer shall
purchase any Contract materially and adversely affected by such breach. In
consideration of the purchase of such Contract, the Master Servicer shall remit
the Repurchase Amount in the manner specified in Section 5.04. The sole remedy
of the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
or the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or
4.06 shall be to require the Master Servicer to purchase Contracts pursuant to
this Section; provided, however, that the Master Servicer shall indemnify the
Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach. The Owner Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Contract pursuant to this
Section.
Section 4.08. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement and subject to the terms of
this Section, the Master Servicer shall be entitled to receive on each
Distribution Date the Servicing Fee in respect of each Contract that was
Outstanding at the beginning of the Due Period ending immediately prior to such
Distribution Date, to the extent the related payment of Monthly P&I has been
collected or advanced pursuant to Section 5.04. As servicing compensation in
addition to the Servicing Fee, the Master Servicer shall be entitled (i) to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts, and (ii) to receive, in respect of each Rule of 78's
Contract that is prepaid in full prior to its Maturity Date, the amount by which
the outstanding principal balance of such Contract exceeds the Scheduled Balance
of such Contract at the time of such prepayment; provided, however, that the
Master Servicer agrees that each amount payable to it pursuant to clause (ii)
above shall be deposited in the Spread Account and applied in accordance with
Article Five and the Insurance Agreement. The Master Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement of such expenses except to the extent
provided in Section 4.03.
Section 4.09. Reporting by the Master Servicer.
(a) On each Master Servicer Report Date, the Master Servicer shall
transmit to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a statement, substantially in
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the form of Exhibit F hereto (the "Distribution Date Statement"), setting forth
with respect to the next succeeding Distribution Date:
(i) the Note Interest Distributable Amount for such
Distribution Date;
(ii) the the Note Principal Distributable Amount for such
Distribution Date and the portion thereof constituting the Accelerated
Principal Distributable Amount;
(iii) the Net Collections and the Note Percentage for such
Distribution Date;
(iv) the amount otherwise distributable to each Class of
Noteholders and the Certificateholders that will be distributed to a
different Class of Noteholders on such Distribution Date;
(v) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto
and withdrawals therefrom to be made in respect of such Distribution
Date;
(vi) the Servicing Fee with respect to the related Due Period;
(vii) the amount of any Note Interest Carryover Shortfall and
Note Principal Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(viii) the aggregate amount of Monthly P&I which was due on
the Contracts during the related Due Period and was delinquent as of the
end of the related Due Period (any such payment of Monthly P&I being
presumed to be delinquent to the extent that it was not deposited in or
credited to the Collection Account during such Due Period);
(ix) the amount set forth in clause (viii) above which is
being advanced concurrently with such Distribution Date Statement by the
Master Servicer pursuant to Section 5.04, the amount of any such Advance
being deposited in or credited to the Collection Account on such Master
Servicer Report Date;
(x) the aggregate amount of any Nonrecoverable Advances
deducted by the Master Servicer from amounts otherwise required to be
deposited by the Master Servicer in the Collection Account during the
related Due Period;
(xi) the aggregate amount of Retained Yield for the related
Due Period;
(xii) the Aggregate Net Liquidation Losses for the related Due
Period;
(xiii) the Delinquency Percentage and the Charge-Off
Percentage for the most recent Calculation Day;
(xiv) the amount of Contracts which have had their APR or
principal amount modified pursuant to Section 4.01 and the percentage
that amount constitutes of the Original Principal Balance on a
cumulative basis; in addition the aggregate Scheduled
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Balance of Contracts so modified as a percentage of the Pool Balance for
the most recent Distribution Date;
(xv) the Certificate Distributable Amount;
(xvi) the Note Deficiency Claim Amount, if any, for such
Distribution Date, separately setting forth the amount thereof payable
in respect of each Class of Notes;
(xvii) the Note Policy Claim Amount, if any, for such
Distribution Date, separately setting forth the amount thereof payable
in respect of each Class of Notes; and
(xviii) if the data becomes available, the principal amount of
Contracts originated by WFS in respect of clauses (viii) and (xii)
above.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.
(b) On each Master Servicer Report Date, the Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a report, in respect of the immediately preceding Due Period, setting
forth the following:
(i) the aggregate amount, if any, paid by or due from it for
the purchase of Contracts which the Seller or the Master Servicer has
become obligated to purchase pursuant to Section 3.02 or 4.07 or the
Seller has elected to purchase pursuant to Section 9.01;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account or the Holding Account in respect of
such Due Period (including amounts, if any, collected during the
immediately preceding Due Period and deposited in the Holding Account
pursuant to Section 5.02) after giving effect to all permitted
deductions therefrom pursuant to Section 5.02;
(iii) with respect to each Contract that became a Liquidated
Contract during such Due Period, the following information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
(C) its Monthly P&I and Scheduled Balance as of the
immediately preceding Distribution Date (or as of the Cut-Off
Date in the case of the first Distribution Date); and
(D) if less than 100% of the outstanding principal balance
of and accrued and unpaid interest was recovered on such
Liquidated Contract, the amount of the Net Liquidation Proceeds
or Net Insurance Proceeds;
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(iv) with respect to each Contract which was the subject of a
Partial Prepayment during such Due Period, the following information:
(A) its Contract Number;
(B) the date of such Partial Prepayment;
(C) its new Maturity Date;
(D) the total amount received with respect to such Partial
Prepayment; and
(E) its Scheduled Balance as of the prior Distribution
Date (or as of the Cut-Off Date in the case of the first
Distribution Date) and its Scheduled Balance for each
Distribution Date having a Due Period prior to the Due Period of
its Maturity Date, computed on the basis set forth under the
definition of the term "Scheduled Balance";
(v) the Contract Numbers, Monthly P&I, Scheduled Balances and
Maturity Dates of all Contracts which became Defaulted Contracts during
such Due Period;
(vi) any other information relating to the Contracts
reasonably requested by the Owner Trustee, the Indenture Trustee, each
Rating Agency or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account or the Holding Account in respect of the Due Period ending
immediately prior to such Master Servicer Report Date and the cumulative
amount of Net Liquidation Proceeds and Net Insurance Proceeds deposited
in or credited to the Collection Account or the Holding Account during
the preceding Due Periods.
Section 4.10. Annual Statement as to Compliance. The Master Servicer
shall deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency
and the Insurer, on or before 90 days after the end of each fiscal year of the
Master Servicer, beginning with the fiscal year ended December 31, 20__, an
Officers' Certificate of the Master Servicer stating that (i) a review of the
activities of the Master Servicer during the preceding fiscal year (or since the
Closing Date in the case of the first such Officers' Certificate) and of its
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement
throughout such year and that no default under this Agreement has occurred and
is continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder, Certificate Owner,
Noteholder or Note Owner by a request in writing to the Owner Trustee addressed
to the Owner Trustee Corporate Trust Office. Upon the telephone request of the
Owner Trustee, the Indenture Trustee will promptly furnish the Owner Trustee a
list of Noteholders as of the date specified by the Owner Trustee.
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Section 4.11. Annual Independent Certified Public Accountants' Report.
On or before 90 days after the end of the first fiscal year of the Master
Servicer which ends more than three months after the Closing Date and each
fiscal year thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee, each Rating Agency and the Insurer to the
effect that (i) they have audited the balance sheet of the Master Servicer as of
the last day of said fiscal year and the related statements of operations,
retained earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as they considered
necessary in the circumstances, and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Notes and Certificates in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth such exceptions which, in their opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Insurer, the Indenture
Trustee and the Securityholders access to the Contract Files in such cases where
the Certificateholders or Noteholders shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a
fidelity bond in such form and amount as is customary for banks acting as
custodian of funds and documents in respect of mortgage loans or consumer
contracts on behalf of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the Owner Trustee, the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at a
depository institution (which may be the Indenture Trustee, the Bank or the
Master Servicer), the following accounts (the "Trust Accounts"):
(i) an account in the name of the Indenture Trustee (the
"Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(ii) an account in the name of the Indenture Trustee (the
"Holding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iii) an account in the name of the Indenture Trustee (the
"Spread Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iv) an account in the name of the Indenture Trustee (the
"Note Distribution Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders; and
(v) an account in the name of the Owner Trustee (the
"Certificate Distribution Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Certificateholders.
The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee, the Owner Trustee and the Insurer at least
five Business Days' written notice of any change in the location of any Trust
Account and any related account identification information. All monies
(exclusive of the Retained Yield) deposited in or credited to, from time to
time, the Trust Accounts shall be part of the Trust Estate and all monies
deposited in or credited to, from time to time, the Collection Account, the
Spread Account, the Certificate Distribution Account and the Note Distribution
Account shall be invested by the Indenture Trustee in Eligible Investments
pursuant to Section 5.01(b). On the Business Day following each Distribution
Date, all amounts, if any, on deposit in or credited to the Holding Account
(excluding any installments of Monthly P&I that are due in one or more Due
Periods ending subsequent to the Distribution Date immediately succeeding such
Distribution Date) shall be transferred to the Collection Account.
(b) All funds in the Collection Account, the Spread Account, the Note
Distribution Account and the Certificate Distribution Account shall be invested
by the Indenture Trustee in Eligible Investments and/or Proprietary Funds.
Unless and until the RIC is no longer an Eligible Investment, all funds in such
Trust Accounts, in each case that are available for investment in
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Eligible Investments or in Proprietary Funds, shall be invested in the RIC or in
Proprietary Funds. If the RIC is no longer an Eligible Investment then, subject
to the limitations set forth herein, the Master Servicer may direct the
Indenture Trustee in writing to invest funds in the foregoing Trust Accounts in
Eligible Investments or Proprietary Funds other than the RIC; provided that in
the absence of such directions from the Master Servicer, the Insurer may so
direct the Indenture Trustee. All such investments shall be in the name of the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders,
as applicable. All income or other gain from investment of monies deposited in
or credited to the Collection Account (including without limitation the RIC
Reinvestment Earnings) shall be deposited in or credited to the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Collection Account. All income or other gain from
investment of monies deposited in or credited to the Spread Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Spread Account immediately upon receipt, and any loss resulting
from such investment shall be charged to the Spread Account. All income or other
gain from investment of monies deposited in or credited to the Note Distribution
Account (including without limitation the RIC Reinvestment Earnings) shall be
deposited in or credited to the Note Distribution Account immediately upon
receipt, and any loss resulting from such investment shall be charged to the
Note Distribution Account. All income or other gain from investment of monies
deposited in or credited to the Certificate Distribution Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Certificate Distribution Account immediately upon receipt, and
any loss resulting from such investment shall be charged to the Certificate
Distribution Account. The maximum permissible maturities of any investments of
funds in the Collection Account, the Spread Account, the Note Distribution
Account and the Certificate Distribution Account on any date shall not be later
than the fifth Business Day immediately preceding the Distribution Date next
succeeding the date of such investment; provided, however, that such funds may
be invested by the Indenture Trustee in Eligible Investments (other than the
RIC) that mature on the Business Day before the Distribution Date or in
Proprietary Funds for a period not to exceed one Business Day. No investment in
Eligible Investments may be sold prior to its maturity and all investments in
Proprietary Funds shall be for a period not to exceed one Business Day.
(c) Funds in the Holding Account shall not be invested.
(d)(i) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts (exclusive of
Retained Yield, if any) and in all proceeds thereof (including all income
thereon) and all such funds, investments, proceeds and income shall be part of
the Trust Estate. The Trust Accounts, other than the Certificate Distribution
Account, shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be. The Certificate Distribution Account shall be in the name of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, any of the
Trust Accounts ceases to be an Eligible Account, the Indenture Trustee (or the
Master Servicer on its behalf) shall within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Trust Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Trust Account.
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(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject
to the last sentence of Section 5.01(d)(i); and each such
Eligible Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall
have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in
accordance with paragraph (i) of the definition of the term
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a Financial Intermediary
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance
with paragraph (ii) of the definition of the term "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article Eight of the UCC and that is not governed
by clause (C) above shall be delivered to the Indenture Trustee
in accordance with paragraph (iii) of the definition of the term
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued registration
of the Indenture Trustee's (or its nominee's) ownership of such
security.
(iii) The Master Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts for the purpose of permitting the
Master Servicer or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.
(a) Subject to Section 5.03 and subsections (b) and (e) hereof, the
Master Servicer shall remit or credit all payments by the Obligors on the
Contracts, all payments on behalf of Obligors on the Contracts, and all Net
Liquidation Proceeds and Net Insurance Proceeds to the Collection Account
(within two Business Days as specified in Section 4.01); provided that the
Master Servicer shall retain from collection of late payments and Net
Liquidation Proceeds or Net Insurance Proceeds in respect of a Contract an
amount equal to previously unreimbursed Advances in respect of such Contract
made pursuant to Section 5.04. Amounts otherwise required to be deposited in or
credited to the Collection Account pursuant to the immediately preceding
sentence shall instead be deposited in or credited to the Holding Account to the
extent
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that such amounts are installments of Monthly P&I which are due in a Due Period
for a Distribution Date subsequent to the Distribution Date immediately
succeeding the date of receipt.
(b) Notwithstanding anything in this Agreement to the contrary, the
Retained Yield will be collected by the Master Servicer and paid out on a
monthly basis to the Seller without ever becoming part of the Trust's assets.
(c) Not later than 12:00 p.m., New York City time, on the fifth Business
Day prior to each Distribution Date, based on the information set forth in the
related Distribution Date Statement to the extent that there are insufficient
funds to make the distributions required to be made to each Class of Notes as
described in Sections 5.05 and 5.06, the Master Servicer shall deliver to the
Indenture Trustee, with a copy to the Insurer, the Owner Trustee and the Fiscal
Agent, if any, by hand delivery, telex or facsimile transmission, a written
notice (a "Deficiency Notice") specifying the Note Deficiency Claim Amount, if
any, for such Distribution Date, separately identifying the amount of the
applicable Deficiency Claim Amount payable in respect of each Class of Notes.
Such Deficiency Notice shall direct the Indenture Trustee to remit such
Deficiency Claim Amount (to the extent of funds then on deposit in the Spread
Account) to the Indenture Trustee for deposit in the Note Distribution Account.
(d) Not later than 12:00 p.m., New York City time, on the fourth
Business Day prior to each Distribution Date, the Indenture Trustee shall make a
claim under the Note Policy for any Note Policy Claim Amount for such
Distribution Date, in each case by delivering to the Insurer and the Fiscal
Agent, if any, with a copy to the Master Servicer, by hand delivery, telex or
facsimile transmission, a claim for the related Note Policy Claim Amount, as the
case may be. In making any such claim, the Owner Trustee or the Indenture
Trustee, as the case may be, shall comply with all the terms and conditions of
the related Policy. The notice of such claim shall direct the Insurer to remit
such Note Policy Claim Amount, as the case may be, to the Owner Trustee or the
Indenture Trustee for deposit in the Note Distribution Account.
(e) So long as the Master Servicer is WFS, the Master Servicer shall
have the right, on a basis not more frequently than once per month (although
deposits shall be made into the Collection Account within two Business Days
pursuant to Section 4.01), to deduct from amounts received that are otherwise
required to be deposited in or credited to the Collection Account and, to the
extent such amounts are insufficient, to require that the Indenture Trustee
withdraw and deliver to it from the Collection Account, amounts due to be paid
hereunder to the Master Servicer or to the Seller after giving effect to
application of the payment priorities specified in this Article for the month
(or other applicable period), and to pay such amounts to itself as Master
Servicer or to the Seller, as the case may be. Notwithstanding the foregoing,
the Master Servicer shall maintain the records and accounts for such deposits
and credits on a gross basis.
Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third to
principal due on the Contract and fourth to administrative charges, if any. Any
excess shall be applied to prepay the principal balance of the Contract.
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Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.
(a) If, as of the end of any Due Period, one or more payments of Monthly
P&I due under any Contract (other than a Liquidated Contract) Outstanding at the
end of such Due Period shall not have been received by the Master Servicer and
deposited in or credited to the Collection Account pursuant to Section 5.02(a),
the Master Servicer shall make, concurrently with the furnishing of the related
Distribution Date Statement to the Indenture Trustee and the Owner Trustee, the
Advance for such Due Period by depositing in or crediting to the Collection
Account (i) with respect to a Rule of 78's Contract, the amount of delinquent
Monthly P&I and (ii) with respect to a Simple Interest Contract, 30 days of
interest on the Outstanding Principal Balance of such Contract at a rate equal
to the sum of (A) the Pass-Through Rate and (B) the Servicing Fee Percent for
each month that the related Monthly P&I is delinquent at the end of such Due
Period. The Master Servicer shall account for such deposit or credit in
accordance with Section 4.01. The foregoing notwithstanding, the Master Servicer
shall not make an Advance in respect of a Contract if the Master Servicer shall
have determined that any such Advance, if made, would constitute a
Nonrecoverable Advance. Any such determination shall be evidenced by an
Officers' Certificate furnished to the Indenture Trustee, the Owner Trustee and
the Insurer setting forth the basis for such determination.
(b) If the Master Servicer determines that it has made a Nonrecoverable
Advance or Advances, the Master Servicer shall reimburse itself, without
interest, from unrelated installments of Monthly P&I or Prepayment proceeds to
the extent it shall, concurrently with the withholding of any such installment
or proceeds from deposit in or credit to the Collection Account as required by
Section 5.02, furnish to the Indenture Trustee, the Owner Trustee and the
Insurer a certificate of a Servicing Officer setting forth the basis for the
Master Servicer's determination, the amount of, and Contract with respect to
which, such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken.
(c) The Master Servicer or the Seller, as the case may be, shall remit
or credit to the Collection Account the aggregate Repurchase Amount with respect
to Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts and the Master Servicer shall deposit
therein all amounts to be paid under Section 9.01.
Section 5.05. Distributions.
(a) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Master Servicer or deposit in the applicable account by 11:00 a.m. (New York
time), to the extent of the Net Collections for such Distribution Date, in the
following order of priority:
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(i) to the Master Servicer, the Servicing Fee, including any
unpaid Servicing Fees with respect to one or more prior Due Periods;
(ii) to the Indenture Trustee and the Owner Trustee from Net
Collections (after giving effect to the reduction in Net Collections
described in clause (i) above), any accrued and unpaid Trustees' fees,
in each case to the extent such fees have not been previously paid by
the Master Servicer;
(iii) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) and (ii) above), the Note Interest Distributable Amount;
(iv) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (iii) above), the Note Principal Distributable
Amount, (which amount includes, if such Distribution Date is a Note
Final Distribution Date, the remaining principal amount of the related
Class of Notes) first to the holders of the Class A-1 Notes until the
principal amount of the Class A-1 Notes has been reduced to zero, second
to the holders of the Class A-2 Notes until the principal amount of the
Class A-2 Notes has been reduced to zero and third to the holders of the
Class A-3 Notes until the principal amount of the Class A-3 Notes has
been reduced to zero; and
(v) to the Insurer, from Net Collections (after giving effect
to the reduction in Net Collections described in clauses (i) through
(vi) above), any Unreimbursed Insurer Amounts.
(b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Net Collections
after making the distributions described in Section 5.05(a) ("Excess Amounts")
to the Spread Account. On each Distribution Date, the Master Servicer shall
instruct the Indenture Trustee to distribute the Excess Spread Amount pursuant
to Section 5.06(b).
(c) To the extent that on any Distribution Date the amount on deposit in
the Note Distribution Account (after giving effect to any deposits thereto on
such Distribution Date) is less than the Note Distributable Amount, Noteholders
shall be entitled to receive distributions in respect of such deficiency first,
from amounts on deposit in the Spread Account pursuant to a Deficiency Notice;
and second, if such amounts are still insufficient, from a claim made under the
Note Policy for the Note Policy Claim Amount pursuant to Section 5.02(d).
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, the Owner Trustee, on behalf of the
Seller, shall deposit the Spread Account Initial Deposit into the Spread Account
from the net proceeds of the sale of the Notes. The Spread Account will be held
for the benefit of the Securityholders and the Insurer in order to effectuate
the subordination of the rights of the Securityholders to the extent described
above.
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(b) On each Calculation Day and Distribution Date, the Master Servicer
shall instruct the Indenture Trustee to distribute the Excess Spread Amount, (i)
first, to the Insurer, to the extent of any Unreimbursed Insurer Amounts, (ii)
second, to the Seller until the Seller has received an aggregate amount equal to
the Spread Account Initial Deposit and (iii) third, to the Certificate
Distribution Account for distribution to Certificateholders in accordance with
Section 5.02 of the Trust Agreement. Upon any such distribution to the Insurer,
neither Seller, nor the Securityholders will have further rights in, or claims
to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Upon termination of the Trust pursuant to Section 9.01, any amounts
on deposit in the Spread Account, after payments of amounts due to the
Securityholders or the Insurer (if there exists any Unreimbursed Insurer
Amounts), will be paid to the Seller.
Section 5.07. Statements to Securityholders.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder of record as of the related Record Date, a
statement, prepared by the Master Servicer, based on the information in the
Distribution Date Statement furnished pursuant to Section 4.09, setting forth
for such Distribution Date the following information as of the related Record
Date or such Distribution Date, as the case may be:
(i) the amount of such distribution allocable to principal
(stated separately for each Class of Notes);
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
(iii) the Aggregate Scheduled Balance as of the close of
business on the last day of such Due Period;
(iv) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Due Period;
(v) the amount of any Certificate Interest Carryover
Shortfall, Certificate Principal Carryover Shortfall, Note Interest
Carryover Shortfall and Note Principal Carryover Shortfall on such
Distribution Date and the change in such amounts from those with respect
to the immediately preceding Distribution Date;
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(vi) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor as of such Distribution Date, after giving
effect to payments allocated to principal reported under clause (i)
above; and
(vii) the Certificate Distributable Amount
(viii) the amount on deposit in the Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from the immediately
preceding Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 of original principal amount of a
Note.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Indenture Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of a Note a statement or statements, prepared by the Master
Servicer, which in the aggregate contain the sum of the amounts set forth in
clauses (i), (ii), (iv) and (v) above for such calendar year or, in the event
such Person shall have been a Holder of a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
Section 6.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Master Servicer from and against
any taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Basic Documents,
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Contracts to the Issuer or the issuance and original sale of the Securities,
or asserted with respect to ownership of the Contracts, or federal or other
income taxes arising out of distributions on the Certificates or the Notes) and
costs and expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Securityholders from and against
any loss, liability or expense incurred by reason of the Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are
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made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations.
(a) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer, the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer, which contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Seller under this
Agreement. The Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and will deliver to
the Insurer, the Owner Trustee and the Indenture Trustee a letter from each
Rating Agency to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of its then-current
ratings of each Class of Notes or the Certificates. The Seller and WFS shall
maintain separate corporate offices.
(b)(i) Subject to paragraph (ii) below, the purpose of the Seller shall
be to engage in any lawful activity for which a corporation may be organized
under the General Corporation Law of California and which is permitted for
operating subsidiaries of federally chartered savings associations other than
the banking business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the actual business
activities of the Seller shall be limited to those activities permitted an
operating subsidiary of a federally chartered savings association pursuant to 12
CFR Section 545.81 including the following purposes, and activities incident to
and necessary or convenient to accomplish the following purposes: (A) to
acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
otherwise deal with, retail installment sales contracts and installment loans
secured by automobiles and light duty trucks (the "Vehicle Receivables"); (B) to
authorize, issue, sell and deliver one or more series of obligations, consisting
of one or more classes of notes, certificates or other securities (the "Offered
Securities") that are collateralized by or evidence an interest in Vehicle
Receivables and are rated in the highest available category by at least one
nationally recognized statistical rating agency; and (C) to negotiate,
authorize, execute, deliver and assume the obligations of any agreement relating
to the activities set forth in clauses (A) and (B) above, including but not
limited to any pooling and servicing agreement, indenture, reimbursement
agreement, credit support agreement, receivables purchase agreement or
underwriting agreement or to engage in any lawful activity which is incidental
to the activities contemplated by any such agreement. So long as any outstanding
debt of the Seller or Offered Securities are rated by any nationally recognized
statistical rating organization, the Seller shall not issue notes or otherwise
incur debt unless (I) the Seller has made a written request to the related
nationally recognized statistical rating organization to issue notes or incur
borrowings which notes or borrowings are rated by the
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related nationally recognized statistical rating organization the same as or
higher than the rating afforded such debt or securities, or (II) such notes or
borrowings (X) are fully subordinated (and which shall provide for payment only
after payment in respect of all outstanding rated debt and/or Offered
Securities) or are nonrecourse against any assets of the Seller other than the
assets pledged to secure such notes or borrowings, (Y) do not constitute a claim
against the Seller in the event such assets are insufficient to pay such notes
or borrowings, and (Z) where such notes or borrowings are secured by the rated
debt or Offered Certificates, are fully subordinated (and which shall provide
for payment only after payment in respect of all outstanding rated debt and/or
Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set forth
in clause (b) above;
(ii) without the affirmative vote of a majority of the members
of the Board of Directors of the Seller (which must include the
affirmative vote of at least two duly appointed Independent directors)
(A) dissolve or liquidate, in whole or in part, or institute proceedings
to be adjudicated bankrupt or insolvent, (B) consent to the institution
of bankruptcy or insolvency proceedings against it, (C) file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (D) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the corporation or a substantial part of
its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally
as they become due, or (G) take any corporate action in furtherance of
the actions set forth in clauses (A) through (F) above; provided,
however, that no director may be required by any shareholder of the
Seller to consent to the institution of bankruptcy or insolvency
proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company
or entity or sell all or substantially all of its assets or acquire all
or substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Vehicle Receivables and the sale of Vehicle Receivables
to one or more trusts in accordance with the terms of clause (b)(ii)
above, which shall not be otherwise restricted by this Section 6.03(c)).
Section 6.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under
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this Agreement, and that in its opinion may involve it in any expense or
liability. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement.
Section 6.05. Seller Not to Resign. Subject to the provisions of Section
6.03, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller hereunder.
Section 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the Seller or
an Affiliate thereof, except as expressly provided herein or in any Basic
Document. Securities so owned by or pledged to the Seller or such Affiliate
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the Notes
or Certificates, as the case may be.
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ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities. Subject to
Section 8.02, the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Master Servicer
under this Agreement. Such obligations shall include the following:
(a) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the
Securityholders and the Insurer from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the Master Servicer,
any Subservicer or any of their respective Affiliates of a Financed
Vehicle.
(b) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Insurer
from and against any taxes that may at any time be asserted against the
Owner Trustee, the Indenture Trustee or the Issuer with respect to the
transactions contemplated herein, including, without limitation, any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the
Issuer or the issuance and original sale of the Securities, or asserted
with respect to ownership of the Contracts, or federal or other income
taxes arising out of distributions on the Securities) and costs and
expenses in defending against the same.
(c) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer and
the Securityholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost,
expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Master Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement.
(d) The Master Servicer shall indemnify, defend and hold harmless
the Owner Trustee, the Indenture Trustee and the Insurer from and
against any and all costs, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with the acceptance
or performance of the trusts and duties herein contained, except to the
extent that such cost, expense, loss, claim, damage or liability (i)
shall be due to the willful misfeasance, bad faith or negligence (except
for errors in judgment) of the Owner Trustee or the Indenture Trustee,
as the case may be; (ii) relates to any tax other than the taxes with
respect to which either the Seller or Master Servicer shall be required
to indemnify the Owner Trustee and the Indenture Trustee; (iii) shall
arise from the Owner Trustee's or the Indenture Trustee's breach of any
of their respective representations or warranties set forth herein, in
the Trust Agreement or in the Indenture; or (iv) shall be one as to
which the Seller is required to indemnify the Owner Trustee or the
Indenture Trustee, as the case may be.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Master Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Master Servicer, without
interest.
Section 7.02. Corporate Existence; Status as Master Servicer; Merger.
The Master Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person unless the corporation formed by such consolidation
or into which the Master Servicer has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Master
Servicer as an entirety can lawfully perform the obligations of the Master
Servicer hereunder and executes and delivers to the Indenture Trustee and the
Owner Trustee an agreement in form and substance reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance or
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Agreement. Notice shall be sent to each Rating Agency
by the Master Servicer of any consolidation, merger or succession pursuant to
this Section.
Section 7.03. Performance of Obligations.
(a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Master Servicer shall not take any action, or permit any action
to be taken by others, which would excuse any person from any of its covenants
or obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
Section 7.04. Master Servicer Not to Resign; Assignment.
(a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its Board of Directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture Trustee, to such effect. No such resignation shall become effective
unless and until (i) a new servicer acceptable to the Owner Trustee, the
Indenture Trustee and the Insurer is willing to service the Contracts and enters
into a servicing agreement with the Trust and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer and (ii) each Rating Agency confirms that
the selection of such new servicer will not result in the qualification,
reduction or withdrawal of its then-current rating of each Class of Notes and
the
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Certificates assigned by such Rating Agency. No such resignation shall affect
the obligation of the Master Servicer to repurchase Contracts pursuant to
Section 4.07.
(b) Except as specifically permitted in this Agreement, the Master
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.
(c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Trust shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.
(d) The resignation of the Master Servicer in accordance with this
Section shall not affect the rights of the Seller hereunder. If the Master
Servicer resigns pursuant to this Section, its appointment as custodian can be
terminated pursuant to Section 3.07.
Section 7.05. Limitation on Liability of Master Servicer and Others.
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.
(b) The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and
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the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the Securityholders
under the Basic Documents.
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) A claim being made under either the Note Policy or the
Certificate Policy;
(b) Any failure by the Master Servicer or the Issuer to deposit
or credit, or to deliver to the Indenture Trustee for deposit, in any of
the Trust Accounts any amount required hereunder to be as deposited,
credited or delivered or to direct the Indenture Trustee to make any
required distributions therefrom, that shall continue unremedied for a
period of three Business Days after written notice of such failure is
received from the Owner Trustee, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Master Servicer;
(c) Any failure by the Master Servicer to deliver to the Insurer,
the Indenture Trustee or the Owner Trustee a report in accordance with
Section 4.09 and/or Section 4.10 by the fourth Business Day prior to the
Distribution Date with respect to which such report is due, or the
Master Servicer shall have defaulted in the due observance of any
provision of Section 7.02 (other than failure to enter into an
assumption agreement under Section 7.02, which is a Servicer Default
only if such failure continues for ten Business Days);
(d) Failure on the part of the Seller, the Issuer or the Master
Servicer duly to observe or to perform in any material respect any other
covenants or agreements of the Master Servicer or the Seller set forth
in this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of the Insurer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or Noteholders
and (ii) continue unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Master Servicer or the Seller (as the
case may be) by the Insurer, the Owner Trustee or the Indenture Trustee
or (B) to the Master Servicer or the Seller (as the case may be), and to
the Owner Trustee and the Indenture Trustee by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes or,
if the Notes have been paid in full, by Certificateholders evidencing
not less than 25% of the aggregate Certificate Percentage Interest, or,
so long as no default under the Note Policy has occurred and is
continuing and no insolvency of the Insurer has occurred, by the
Insurer;
(e) The occurrence of an Insolvency Event with respect to the
Seller, the Issuer or the Master Servicer; or
(f) Any representation, warranty or statement of the Master
Servicer, the Issuer or the Seller made in this Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made (excluding, however, any representation or
warranty
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to which Section 3.01 or 4.06 shall be applicable so long as the Master
Servicer or the Seller shall be in compliance with Section 3.02 or 4.07,
as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders
or the Certificateholders and, within 30 days after written notice
thereof shall have been given to the Master Servicer or the Seller by
the Indenture Trustee or the Owner Trustee or by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, or
Certificateholders evidencing not less than 25% of the aggregate
Certificate Percentage Interest or, so long as no default has occurred
under either Policy and is continuing and no Insurer Insolvency has
occurred, by the Insurer, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall not
have been eliminated or otherwise cured;
then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the aggregate Certificate Percentage Interest),
by notice then given in writing to the Master Servicer (and to the Insurer, the
Indenture Trustee and the Owner Trustee if given by the Noteholders) may
terminate all the rights and obligations of the Master Servicer under this
Agreement. Upon such termination, termination of the Master Servicer as
custodian can be made pursuant to Section 3.07. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Notes, the
Certificates, the Contracts or otherwise, shall, without further action, pass to
and be vested in the Indenture Trustee or such successor Master Servicer as may
be appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to any Contract.
Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon
the Master Servicer's receipt of notice of termination pursuant to Section 8.01
or resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,
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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders (or Certificateholders) from
effecting a transfer of servicing. Notwithstanding the above, the Indenture
Trustee may, if it shall be unwilling to act, or shall, if it shall be legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established financial institution, having a net worth of not less
than $______ and whose regular business shall include the servicing of motor
vehicle retail installment sales contracts, as the successor to the Master
Servicer under this Agreement. Pending appointment of any such successor Master
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
it and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Master Servicer under this Agreement
without the consent of the Insurer. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 8.03. Repayment of Advances. If the identity of the Master
Servicer shall change, the predecessor Master Servicer shall be entitled to
receive reimbursement for outstanding Advances pursuant to Section 5.04 with
respect to all Advances made by the predecessor Master Servicer.
Section 8.04. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer
pursuant to this Article, the Owner Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register and to each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, or, if all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, Certificateholders evidencing not less than 51% of the aggregate
Certificate Percentage Interest (in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, with the consent of the Insurer, waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt
of actual knowledge thereof by a Responsible Officer, the Indenture Trustee
shall promptly notify the
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Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder, by its purchase
of Certificates or a beneficial interest therein, the Owner Trustee and the
Indenture Trustee hereby agree that, so long as neither a default under the Note
Policy nor an Insurer Insolvency has occurred and is continuing, the Insurer may
at any time during the continuation of an Insolvency Proceeding direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. The Insurer
shall be subrogated to the rights of the Indenture Trustee, the Owner Trustee
and each Securityholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
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ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On each Distribution Date as of which the Aggregate Scheduled
Balance is less than 10% of the Cut-Off Date Aggregate Scheduled Balance, the
Seller shall have the option to purchase the remaining Contracts from the Trust.
Notice of the exercise of such option shall be given by the Seller to the Owner
Trustee, the Indenture Trustee and the Insurer not later than the 25th day of
the month immediately preceding the month of such Distribution Date. To exercise
such option, the Seller shall pay to the Indenture Trustee for the benefit of
the Securityholders, by deposit in the Collection Account on the Business Day
immediately preceding the related Distribution Date, the aggregate Repurchase
Amount of all Contracts that were Outstanding at the beginning of the Due Period
ending immediately prior to such Distribution Date, and shall succeed to all
interests in and to the Trust. Such purchase shall be deemed to have occurred on
the last day of such Due Period. Notwithstanding the foregoing, the Seller shall
not be permitted to exercise such option unless the amount to be deposited in
the Collection Account pursuant to the preceding sentence is greater than or
equal to the sum of the outstanding principal amount of the Notes and the
aggregate Certificate Percentage Interest and all unpaid interest (including any
overdue interest) thereon that has accrued through the related Interest Period.
In addition, if the Master Servicer or the Seller has outstanding senior debt
and such debt is not rated "investment grade" by Moody's at the time of
exercising the option pursuant to this Section, then the Master Servicer or the
Seller shall deliver to the Owner Trustee, the Indenture Trustee and Moody's, an
Opinion of Counsel to the effect that such optional purchase is not a fraudulent
conveyance.
(b) Upon any sale of the assets of the Trust pursuant to Section 5.02(b)
of the Indenture, the Master Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the Note
Interest Distributable Amount not otherwise deposited into the Note
Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding
principal amount of the Notes (after giving effect to the reduction in
the outstanding principal amount of the Notes to result from the
deposits made in the Note Distribution Account on such Distribution Date
and on prior Distribution Dates); and
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(iii) to the Certificate Distribution Account, for
distribution in accordance with Section 5.02 of the Trust Agreement.
(c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Master Servicer to the Owner
Trustee, the Insurer and the Indenture Trustee as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Class A-3 Final Distribution Date and (ii) an amount sufficient to pay the
Class A-3 Distributable Amount on the Class A-3 Final Distribution Date has been
deposited with the Indenture Trustee by the Insurer for the benefit of the Class
A-3 Noteholders, then on the Class A-3 Final Distribution Date the Class A-3
Notes shall be deemed to be transferred by the Class A-3 Noteholders to the
Insurer or its designee as purchaser thereof at the opening of business on the
Class A-3 Final Distribution Date and the Owner Trustee, on behalf of the Trust,
shall execute, and the Owner Trustee shall authenticate and deliver to the
Insurer or its designee, in the name of the Insurer or its designee, as the case
may be, a new Class A-3 Note evidencing the entire Note Balance. Such new
Certificate shall have the same terms as the Certificates deemed transferred by
the Class A-3 Noteholders. No service charge shall be made for the issuance of
such Class A-3 Note to the Insurer or its designee, but the Owner Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith. Such transfer shall not diminish or
restrict the Insurer's rights hereunder or under the Insurance Agreement.
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ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Seller, the Master Servicer and
the Owner Trustee on behalf of the Issuer, collectively, without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
and (iii) to change any provision applicable for determining the Specified
Spread Account Balance or the manner in which the Spread Account is funded (in
each case with the approval of the Insurer); provided, however, that any such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Securityholder and provided, further, that
in connection with any amendment pursuant to clause (ii) and (iii) above, the
Master Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
the Insurer a letter from Standard & Poor's to the effect that such amendment
will not cause its then-current rating on any Class of Notes to be qualified,
reduced or withdrawn, without giving any consideration to the effect of the
guaranty under either Policy of payments owing to Noteholders, and the Master
Servicer shall provide Moody's notice of such amendment; and provided, further,
that this Agreement may not be amended to alter the rights or obligations of the
Indenture Trustee without the prior consent of the Indenture Trustee.
(b) This Agreement may also be amended from time to time by the Seller,
the Master Servicer and the Owner Trustee on behalf of the Issuer, with the
consent of the Holders of Notes evidencing not less than 51% of the Outstanding
Amount of the Notes, and the consent of Certificateholders evidencing not less
than 51% of the aggregate Certificate Percentage Interest, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay the
timing of (i)(a) collections of payments on the Contracts or distributions that
shall be required to be made on any Note or Certificate or any Interest Rate,
(b) except as otherwise provided in Section 10.01(a), the Specified Spread
Account Balance, or the manner in which the Spread Account is funded or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Holders of which are required to consent to any such amendment, without the
consent of the Insurer and the Holders of all Notes and Certificates of the
relevant Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, as prepared by the Seller, the Master Servicer and the
Owner Trustee on behalf of the Issuer, at the expense of the such party,
together with a copy thereof, to each Rating Agency and the Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the
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substance of the amendment or consent described in paragraph (c) above, at the
expense of the Seller, the Master Servicer or the Owner Trustee on behalf of the
Issuer, as the case may be, to each Certificateholder and Noteholder,
respectively. It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 10.01(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Owner
Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
(a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer, the Securityholders, the Indenture
Trustee, the Owner Trustee and the Insurer in the Contracts and in the proceeds
thereof. The Master Servicer shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the WFS, the Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) WFS, the Seller and the Master Servicer shall give the Insurer, the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of the principal executive office of WFS or the Seller and the
Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master Servicer
shall at all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with
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respect to) each Contract and the amounts from time to time deposited in or
credited to the Collection Account and the Holding Account in respect of such
Contract.
(e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.
(f) If at any time the Seller, the Master Servicer or a Subservicer
shall propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.
(g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and its agents, at any time during normal business
hours, to inspect, audit and make copies of and abstracts from the Master
Servicer's records regarding any Contract.
(h) Upon request, the Master Servicer shall furnish to the Owner
Trustee, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Estate, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
(i) The Master Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, each Rating Agency and the Insurer:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, the Indenture Trustee holds a perfected
security interest in the Contracts, that the Trust holds title to the
Contracts subject to the security interest of the Indenture Trustee and
the lien of the Insurer pursuant to the Insurance Agreement, and that
the Insurer holds a lien on the Contracts under the Insurance Agreement,
subject to applicable subordination; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the
Contracts, and reciting the details of such
72
<PAGE> 78
filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee,
the Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (a) the
Seller, at 23 Pasteur, Irvine, California 92618, (b) the Master Servicer, 23
Pasteur, Irvine, California 92618, Attention: Legal Department, (c) the Issuer
or the Owner Trustee, at the Corporate Trust Office (with, in the case of the
Issuer, a copy to the Seller), (d) the Indenture Trustee, at Four Albany Street
- - 10th Floor, New York, New York 10006, Attention: Corporate Trust Department -
Asset Backed Group, (e) Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, (f) Standard
& Poor's, to Standard & Poor's, 55 Water Street, New York, New York 10041,
Attention of Asset Backed Surveillance Department and (g) the Insurer, at 350
Park Avenue, New York, New York 10022, Attention: Surveillance Department, with
a copy to the Senior Vice President -- Surveillance; or, as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties. Any notice required or permitted to be to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Note Register or the Certificate
Register, as the case may be. Any notice so mailed within the time prescribed
herein shall be conclusively presumed to have been duly given, whether or not
such Securityholder shall receive such notice.
Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66
2/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66 2/3% of the aggregate Certificate Percentage
Interest.
Section 10.07. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party other than the Insurer shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not third
party beneficiaries of this Agreement.
73
<PAGE> 79
Section 10.08. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or a Insurer Insolvency has occurred,
any provision giving the Insurer the right to direct, appoint or consent to,
approve of, or take any action under this Agreement, shall be inoperative during
the period of such default or the period from and after such Insurer Insolvency
and such consent or approval shall be deemed to have been given for the purpose
of such provisions.
Section 10.09. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 10.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 10.11. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.12. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
74
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By:
-------------------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC., as Seller
By:
-------------------------------------------
Name:
Title:
WFS FINANCIAL INC, as Master Servicer
By:
-------------------------------------------
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:
-----------------------------------
Name:
Title:
<PAGE> 81
SCHEDULE A
SCHEDULE OF CONTRACTS
[Omitted--Schedule of Contracts on file at the offices of the Seller,
the Master Servicer, the Owner Trustee and the Indenture Trustee.]
SA-1
<PAGE> 82
SCHEDULE B
LOCATION OF CONTRACT FILES
WFS Financial Inc WFS Financial Inc
23 Pasteur Rd. 6061 N. State Highway 161
Irvine, CA 92618 Irving, TX 75038
714-727-1000 972-870-8060
WFS Financial Inc WFS Financial Inc
201 Boston Post Road, Suite 101 1883 NE 7th Street, Suite H
Marlboro, MA 01752 Grants Pass, OR 97526
503-222-8855 503-955-1402
WFS Financial Inc WFS Financial Inc
8548 SW Apple Way Suite 100 3872 Center Street N.E.
Portland, OR 97225 Salem, OR 97301
503-291-0010 503-581-9977
SB-1
<PAGE> 83
EXHIBIT A
[FORM OF INSURANCE AGREEMENT]
A-1
<PAGE> 84
EXHIBIT B
[FORM OF NOTE POLICY]
B-1
<PAGE> 85
EXHIBIT C
[FORM OF RIC]
C-1
<PAGE> 86
EXHIBIT D
[FORM OF SUBSERVICING AGREEMENT]
D-1
<PAGE> 87
EXHIBIT E
[FORM OF DISTRIBUTION DATE STATEMENT]
E-1
<PAGE> 1
================================================================================
EXHIBIT 10.2.2
SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 2000-A OWNER TRUST,
as Issuer,
and
WFS FINANCIAL AUTO LOANS, INC.
and
WFS RECEIVABLES CORPORATION,
as Sellers,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of ________ 1, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE
DEFINITIONS
<S> <C> <C>
Section 1.01. Definitions................................................................ 1
Section 1.02. Usage of Terms............................................................. 23
Section 1.03. Section References......................................................... 23
Section 1.04. Calculations............................................................... 23
Section 1.05. Accounting Terms........................................................... 23
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.................................................... 24
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Sellers.............................. 26
Section 3.02. Purchase of Certain Contracts.............................................. 31
Section 3.03. Custody of Contract Files.................................................. 31
Section 3.04. Duties of Master Servicer as Custodian..................................... 32
Section 3.05. Instructions; Authority to Act............................................. 33
Section 3.06. Indemnification............................................................ 33
Section 3.07. Effective Period and Termination........................................... 34
Section 3.08. Nonpetition Covenant....................................................... 34
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date............... 35
Section 3.10. Optional Repurchase of Contracts by WFSRC.................................. 35
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer.................................................. 36
Section 4.02. Collection of Contract Payments............................................ 40
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts.............. 40
Section 4.04. Insurance.................................................................. 41
Section 4.05. Maintenance of Security Interests in Financed Vehicles..................... 41
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.06. Covenants, Representations and Warranties of Master Servicer............... 41
Section 4.07. Repurchase of Contracts upon Breach of Covenant............................ 43
Section 4.08. Servicing Compensation..................................................... 43
Section 4.09. Reporting by the Master Servicer........................................... 43
Section 4.10. Annual Statement as to Compliance.......................................... 46
Section 4.11. Annual Independent Certified Public Accountants' Report.................... 47
Section 4.12. Access to Certain Documentation and Information Regarding Contracts........ 47
Section 4.13. Fidelity Bond.............................................................. 47
Section 4.14. Indemnification; Third Party Claims........................................ 47
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts............................................ 49
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.................... 51
Section 5.03. Application of Collections................................................. 52
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts................... 53
Section 5.05. Distributions.............................................................. 53
Section 5.06. Spread Account............................................................. 55
Section 5.07. Statements to Securityholders.............................................. 55
ARTICLE SIX
THE SELLERS
Section 6.01. Corporate Existence........................................................ 57
Section 6.02. Liability of Seller; Indemnities........................................... 57
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of, a
Seller; Certain Limitations............................................. 58
Section 6.04. Limitation on Liability of Sellers and Others.............................. 59
Section 6.05. Sellers Not to Resign...................................................... 60
Section 6.06. Sellers May Own Securities................................................. 60
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities.................................. 61
Section 7.02. Corporate Existence; Status as Master Servicer; Merger..................... 62
Section 7.03. Performance of Obligations................................................. 62
Section 7.04. Master Servicer Not to Resign; Assignment.................................. 62
Section 7.05. Limitation on Liability of Master Servicer and Others...................... 63
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE EIGHT
DEFAULT
<S> <C> <C>
Section 8.01. Servicer Default........................................................... 65
Section 8.02. Indenture Trustee to Act; Appointment of Successor......................... 66
Section 8.03. Repayment of Advances...................................................... 67
Section 8.04. Notification to Noteholders and Certificateholders......................... 67
Section 8.05. Waiver of Past Defaults.................................................... 67
Section 8.06. Insurer Direction of Insolvency Proceedings................................ 67
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts......................................... 69
Section 9.02. Transfer to the Insurer.................................................... 70
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment................................................................. 71
Section 10.02. Protection of Title to Trust.............................................. 72
Section 10.03. Governing Law............................................................. 74
Section 10.04. Notices................................................................... 74
Section 10.05. Severability of Provisions................................................ 74
Section 10.06. Assignment................................................................ 74
Section 10.07. Third Party Beneficiaries................................................. 74
Section 10.08. Insurer Default or Insolvency............................................. 75
Section 10.09. Counterparts.............................................................. 75
Section 10.10. Headings.................................................................. 75
Section 10.11. Assignment by Issuer...................................................... 75
Section 10.12. Limitation of Liability of Owner Trustee.................................. 75
SCHEDULES
Schedule A Schedule of Contracts................................................... SA-1
Schedule B Location of Contract Files.............................................. SB-1
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
Exhibit A Form of Insurance Agreement............................................. A-1
Exhibit B Form of Note Policy..................................................... B-1
Exhibit C Form of RIC............................................................. C-1
Exhibit D Form of Subservicing Agreement.......................................... D-1
Exhibit E Form of Distribution Date Statement..................................... E-1
</TABLE>
iv
<PAGE> 6
This SALE AND SERVICING AGREEMENT, dated as of _________ 1, 2000, is
among WFS Financial 2000-A Owner Trust, as issuer (the "Issuer"), WFS Financial
Auto Loans, Inc. and WFS Receivables Corporation, as sellers (the "Sellers"),
and WFS Financial Inc. ("WFS"), as master servicer (the "Master Servicer").
WHEREAS, the Issuer desires to purchase from the Sellers 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 Sellers;
WHEREAS, the Sellers are willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
Article ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accelerated Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the sum of one-twelfth
of 0% of the Aggregate Scheduled Balance as of the first day of each month of
the Due Period relating to such Distribution Date and (ii) amounts remaining on
deposit in the Collection Account for such Distribution Date after giving effect
to the distributions pursuant to Section 5.05(a) without regard to the inclusion
of such amount as part of the Note Principal Distributable Amount. The
Accelerated Principal Distributable Amount shall be allocated and distributed on
each Distribution Date to the Note Distribution Account.
"Advance" means the aggregate amount, as of a Master Servicer Report
Date, that the Master Servicer is required to advance in respect of the
Contracts pursuant to Section 5.04(a).
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Net Liquidation Losses" means, with respect to any Due
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated
1
<PAGE> 7
Contract pursuant to clause (ii) or (iv) of the definition of the term
"Liquidated Contract" during such Due Period plus accrued and unpaid interest
thereon (adjusted to the Net Contract Rate) to the last Due Date in such Due
Period exceeds (ii) the Net Liquidation Proceeds for such Contract.
"Aggregate Scheduled Balance" means, with respect to any Distribution
Date and the Outstanding Contracts, the aggregate of the Scheduled Balances of
such Contracts as of the end of the Due Period immediately preceding such
Distribution Date.
"Aggregate Scheduled Balance Decline" means, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period (or the Cut-Off Date Aggregate Scheduled
Balance in the case of the first Distribution Date) exceeds the Aggregate
Scheduled Balance at the end of such Due Period.
"Amount Financed" means, with respect to a Contract, the amount advanced
under the Contract toward the purchase price of the related Financed Vehicle and
any related costs, exclusive of any amount allocable to the premium of
force-placed physical damage insurance covering such Financed Vehicle.
"APR" of a Contract means annual percentage rate and is the annual rate
of finance charges specified in such Contract.
"Assignments" means, collectively, (i) the original instrument of
assignment of a Contract and all other documents securing such Contract made by
the related Seller to the Owner Trustee (or in the case of any Contract acquired
by a Seller from another Person, from such other Person to the Seller and from
the Seller to the Owner Trustee), and (ii) the original instrument granting a
security interest in such Contract and other documents made by the Owner Trustee
to the Insurer, which, in the case of clause (i) above, is in a form sufficient
under the laws of the jurisdiction under which the security interest in the
related Financed Vehicle arises to permit the assignee to exercise all rights
granted by the Obligor under such Contract and such other documents and all
rights available under applicable law to the Obligee under such Contract and
such other documents and, in the case of clause (ii) above, is in a form
sufficient under the laws of the jurisdiction under which the security interest
in the related Financed Vehicle arises to permit the Insurer, as a secured
party, to exercise, upon default, all rights granted by the Obligor under such
Contract and such other documents and all rights available under applicable law
to the Obligee under such Contract and which, in the case of either clause (i)
or (ii) above, may, to the extent permitted by the laws of such jurisdiction, be
a blanket instrument of assignment covering other Contracts as well and which
may also, to the extent permitted by the laws of the jurisdiction governing such
Contract, be an instrument of assignment running directly from the related
Seller to the Owner Trustee and the Insurer.
"Bank" means Western Financial Bank, and its successors.
"Base Price" means the WFSRC Aggregate Scheduled Balance on the
Repurchase Distribution Date.
"Basic Documents" shall have the meaning specified in the Indenture.
2
<PAGE> 8
"Business Day" means any day that is not a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
government decree to remain closed.
"Calculation Day" means the last day of each calendar month.
"Certificate Distributable Amount" means the aggregate amount of the
Excess Spread Amount distributed to Certificateholders pursuant to Section
5.05(b).
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Trust.
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Charge-Off Percentage" means, with respect to any three calendar month
period, the annualized percentage equivalent of the average of the percentages
of charged-off Contracts for each month in such period. For each month, the
percentage of charged-off Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the aggregate Scheduled Balance for such
month of all Contracts that became Liquidated Contracts pursuant to clauses (ii)
or (iv) of the definition of the term "Liquidated Contract" during such month,
less any Net Liquidation Proceeds received during such month (and not reflected
in prior periods) with respect to such Contracts or from any Contracts
charged-off in prior periods, and the denominator of which is the aggregate
Scheduled Balances of all Outstanding Contracts as of the end of the immediately
preceding month.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the ____, ____ Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"Class A-1 Rate" means ____ per annum.
"Class A-2 Final Distribution Date" means the ______, ____ Distribution
Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
3
<PAGE> 9
"Class A-2 Rate" means _____% per annum.
"Class A-3 Final Distribution Date" means the _________, _____
Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Rate" means _____% per annum.
"Class A-4 Final Distribution Date" means the _________, _____
Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-4 Rate" means _____% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means ________, 2000.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent for the Insurer under the Insurance Agreement, and each
successor thereto.
"Collection Account" means the account established and maintained as
such pursuant to Section 5.01.
"Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Trust pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for);
4
<PAGE> 10
(iii) the related Assignments; (iv) any agreement(s) modifying the Contract
(including, without limitation, any extension agreement(s)); and (v) documents
evidencing the existence of physical damage insurance covering such Financed
Vehicle.
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.
"Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.
"Contract Rate" means, with respect to a Contract that is a (i) Simple
Interest Contract, the interest rate borne by such Contract as determined by the
terms thereof, and (ii) Rule of 78's Contract, the discount rate used in
accordance with the definition of the term "Scheduled Balance" to derive the
Scheduled Balance of such Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four Albany Street - 10th Floor, New York, New York 10006, Attention:
Corporate Trust Department - Asset Backed Group; or at such other address as the
Indenture Trustee may designate from time to time by notice to the
Certificateholders, the Insurer, the Master Servicer and each Seller.
"Cut-Off Date" means ________, 2000.
"Cut-Off Date Aggregate Scheduled Balance" means $__________ , the
aggregate of the Scheduled Balances of the Contracts as of the Cut-Off Date.
"Cut-Off Date WFSRC Aggregate Scheduled Balance" means $__________,
the aggregate of the Scheduled Balances of the WFSRC Contracts as of the
Cut-Off Date.
"Dealer" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract, including the Bank.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(i) which is, at the end of such Due Period, delinquent in the amount of at
least two monthly payments or (ii) with respect to which the related Financed
Vehicle has been repossessed or repossession efforts have been commenced.
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 5.02(c) by the Master Servicer to the
Indenture Trustee, with a copy to the Insurer and the Owner Trustee.
"Delinquency Percentage" means, with respect to any three calendar month
period, the average of the percentages of delinquent Contracts for each month in
such period. For each month the percentage of delinquent Contracts shall be the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Scheduled Balance of all Outstanding
5
<PAGE> 11
Contracts 61 days or more delinquent (after taking into account permitted
extensions), plus (ii) the aggregate Scheduled Balance of all Contracts in
respect of which the related Financed Vehicles have been repossessed but have
not been liquidated (to the extent the related Contract is not otherwise
reflected in clause (i) above), and the denominator of which is the aggregate
Scheduled Balance of all outstanding Contracts, in each case, on the last day of
such calendar month.
"Delivery" means, when used with respect to Trust Account Property:
(i) with respect to certificated securities, bankers'
acceptances, commercial paper, negotiable certificates of deposit and
any other obligations which evidence a right to the payment of money and
is not itself a security agreement or lease and is of a type which is in
ordinary course of business transferred by delivery with necessary
endorsement or assignment (collectively, "Physical Property"): (A) the
Indenture Trustee or the Owner Trustee, as the case may be, or its
Financial Intermediary acquires possession of the Physical Property, and
evidence that any such Physical Property that is in registerable form
has been registered in the name of the Trustee, its Financial
Intermediary, its custodian or its nominee; (B) the Financial
Intermediary, not a clearing corporation, sends the Indenture Trustee or
the Owner Trustee, as the case may be, confirmation of the transfer and
also by book entry or otherwise identifies as belonging to the Indenture
Trustee or the Owner Trustee, as the case may be, the Physical Property
in the Financial Intermediary's possession; or (C) with respect to a
clearing corporation, appropriate entries to the account of the
Indenture Trustee or the Owner Trustee, as the case may be, or a Person
designated by him or her and, if certificated, it is both, in the
custody of the clearing corporation or another clearing corporation, a
custodian bank or a nominee of any of them and, in bearer form or
endorsed in blank by the appropriate person or registered in the name of
the clearing corporation, custodian bank, or a nominee of any of them;
(ii) with respect to any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable Federal regulations
and Articles 8 and 9 of the UCC: (A) book-entry registration of such
property to an appropriate book-entry account maintained with a Federal
Reserve Bank by the Indenture Trustee or the Owner Trustee, as the case
may be, of a deposit advice or other written confirmation of such
book-entry registration, (B) the making by any such custodian of entries
in its books and records identifying such book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Indenture Trustee or the Owner Trustee,
as the case may be, and indicating that such custodian holds such Trust
Account Property solely as agent for the Indenture Trustee or the Owner
Trustee, as the case may be, and the making by the Indenture Trustee or
the Owner Trustee, as the case may be, of entries in its books and
records establishing that it holds such Trust Account Property solely as
trustee pursuant to Section 5.01, and (C) such additional or alternative
procedures as may hereafter become necessary to effect complete transfer
of ownership of any such Trust Account Property to the Indenture Trustee
or the Owner Trustee, as the case may be, consistent with changes in
applicable law or regulations or the interpretation thereof; and
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(iii) with respect to any Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Trust Account Property by, the Indenture Trustee or
the Owner Trustee, as the case may be, its custodian or its nominee by
the issuer of such Trust Account Property.
"Depositors" means the Sellers in their capacity as Depositors under the
Trust Agreement, and its successors.
"Distribution Date" means each _______ 20, _______ 20, _______ 20 and
_______ 20, or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing _______ 20, 2000.
"Distribution Date Outstanding Principal Balance" means, with respect to
any Contract which has been the subject of a Partial Prepayment and under which
payments are applied on the basis of the Rule of 78's, the amount equal to the
total of all Monthly P&I due after the Distribution Date next succeeding the Due
Period during which such Partial Prepayment was received, less any unearned
finance charge as of the Due Date next preceding such Distribution Date computed
in accordance with the Rule of 78's.
"Distribution Date Statement" shall have the meaning specified in
Section 4.09(a).
"DTC" means The Depository Trust Company, and its successors.
"Due Date" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.
"Due Period" means, with respect to any Distribution Date, the three
month period commencing on the first day of the third month preceding the month
in which such Distribution Date occurs (or from ______ 1, 2000 in the case of
the first Distribution Date) to the last day of the month immediately preceding
the month in which such Distribution Date occurs.
"Eligible Account" means (i) a segregated trust account in the corporate
trust department that is maintained with a depository institution or trust
company the commercial paper or other short-term debt obligations of which have
credit ratings from Standard & Poor's at least equal to "A-1" and from Moody's
equal to "P-1", which account is fully insured up to applicable limits by the
FDIC or (ii) a general ledger account or deposit account that is (a) guaranteed
by an entity the long-term unsecured debt obligations of which are rated "Aa2"
by Moody's and "AAA" by Standard & Poor's or the commercial paper or other
short-term debt obligations of which have credit ratings from Standard & Poor's
at least equal to "A-1+" and from Moody's equal to "P-1" or (b) that otherwise
will not result in the qualification, reduction or withdrawal by any Rating
Agency of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders). If any Eligible Account falls below the ratings specified in (i)
or (ii) above, all monies in such Eligible Account will be moved within 15 days
to an account meeting the requirements of an Eligible Account.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
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(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality of the United States the obligations of which
are backed by the full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed as to
timely payment of principal and interest by FNMA, FHLMC or any state of
the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the
Owner Trustee) incorporated under the laws of the United States or any
state and subject to supervision and examination by federal and/or state
banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment either (a) the
long-term, unsecured debt obligations of such depository institution or
trust company have credit ratings from Moody's at least equal to "Aa2"
and shall have commercial paper or other short-term debt obligations
rated at least "A-1+" by Standard & Poor's and "P-1" by Moody's or (b)
the investment is guaranteed by an entity the long-term, unsecured debt
obligations of which have been rated "AAA" by Standard & Poor's and at
least "Aa2" by Moody's or otherwise will not result in the
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders); if the investments in this paragraph (iii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments as soon as the investment matures; however, no new monies
may be invested in any instrument that is not currently an Eligible
Investment;
(iv) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed as to timely payment of principal and interest by an agency
or instrumentality of the United States, in either case entered into
with a depository institution or trust company (including the Indenture
Trustee or the Owner Trustee), acting as principal and the counterparty,
the long-term unsecured debt obligations of which are rated "AAA" by
Standard & Poor's and at least "Aa2" by Moody's and commercial paper or
other short-term debt obligations are rated at least "A-1+" by Standard
& Poor's and "P-1" by Moody's;
(v) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
state thereof which at the time of such investment or contractual
commitment providing for such investment have long-term, unsecured debt
obligations rated "AAA" by Standard & Poor's and at least "Aa2" by
Moody's or better and shall have commercial paper or other short-term
debt obligations rated at least "A-1+" by Standard & Poor's and "P-1" by
Moody's; provided, however, that securities issued by any corporation
will not be Eligible Investments to the extent that investment therein
will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust to exceed 10% of the
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sum of the aggregate Outstanding Principal Balances of the Contracts and
all Eligible Investments held as part of the Trust;
(vi) commercial paper given the highest rating by each Rating
Agency at the time of such investment; provided that the issuer of such
commercial paper must have a long-term unsecured debt rating of at least
A1 from Moody's and AAA from Standard & Poor's;
(vii) the RIC, if investment in such RIC will not result in a
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders); if the investments in this paragraph (vii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments on the fifth Business Day preceding the next succeeding
Distribution Date; however, no new monies may be invested in the RIC
until the RIC once again becomes an Eligible Investment; and
(viii) any other investments which meet the criteria of each
Rating Agency as being consistent with their then-current rating of each
Class of Notes.
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"Excess Spread Amount" means, with respect to a Distribution Date or
Calculation Day, the excess of the Spread Account Balance over the Specified
Spread Account Balance (after giving effect to all deposits to, and withdrawals
(other than withdrawals pursuant to Section 5.06(b)) from, the Spread Account on
such Distribution Date or Calculation Day).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Distribution Date" means the Class A-1 Final Distribution Date,
the Class A-2 Final Distribution Date, Class A-3 Final Distribution Date or the
Class A-4 Final Distribution Date, as the case may be.
"Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.
"Fiscal Agent" shall have the meaning set forth in the Note Policy.
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"Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract," together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Sellers 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, 3.10 or
4.07 or payment by the Sellers of the purchase price of a Contract in connection
with the purchase of all Contracts pursuant to Section 9.01.
"Holder" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"Holding Account" means the account established and maintained as such
pursuant to Section 5.01.
"Indenture" means the Indenture, dated as of the date hereof, among the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Sellers or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Sellers or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Sellers, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of
Issuer, the Sellers, WFS or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Sellers or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment for the benefit of
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creditors or the failure by such Person generally to pay its debts as such debts
become due or the taking of corporate action by such Person in furtherance of
any the foregoing.
"Insolvency Proceeding" shall have the meaning specified in Section
8.06.
"Insolvency Proceeds" shall have the meaning specified in Section
9.01(b).
"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Sellers, the Master Servicer and the Indenture Trustee, the form of which is
attached hereto as Exhibit A.
"Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.
"Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.
"Insurer" means Financial Security Assurance Inc., and its successors.
"Insurer Insolvency" means (i) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the Insurer
in an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bankruptcy, insolvency,
rehabilitation or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Insurer or of
any substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Insurer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days, or (ii) the
commencement by the Insurer of a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any other present or future federal or
state bankruptcy, insolvency, rehabilitation or similar law, or the consent by
the Insurer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Insurer or of any substantial part of its property or the making by the
Insurer of an assignment for the benefit of creditors or the failure by the
Insurer generally to pay its debts as such debts become due or the taking of
corporate action by the Insurer in furtherance of any of the foregoing.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including _____, 2000) to but excluding such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, Class A-3
Rate or the Class A-4 Rate, as the case may be.
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"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Holding Account, to be deposited
into the Collection Account on such Distribution Date pursuant to Section
5.01(b).
"Issuer" means the WFS Financial 2000-A Owner Trust.
"LDI Policy" means the limited dual interest policy providing coverage
for physical damage to, or loss of, a Financed Vehicle.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidated Contract" means a Contract which (i) has been the subject of
a Full Prepayment; (ii) was a Defaulted Contract and with respect to which the
related Financed Vehicle was repossessed and, after any cure period required by
law has expired, the Master Servicer has charged-off any losses prior to the end
of the four-month period referred to in clause (iv); (iii) has been paid in full
on or after its Maturity Date; or (iv) has become delinquent as to all or part
of four or more payments of Monthly P&I.
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination) as
such date may be extended pursuant to Section 4.02.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with
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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 Moody's Investors Service, Inc., and its successors.
"Net Collections" means, with respect to any Distribution Date and the
related Due Period, the sum of (i) all amounts of principal and interest
collected on or in respect of the Contracts during such Due Period (in the case
of principal and interest that are part of any Liquidation Proceeds or Insurance
Proceeds, only to the extent of the related Net Liquidation Proceeds or Net
Insurance Proceeds), less (a) the Retained Yield, if any, (b) any late payments
of interest retained by the Master Servicer as reimbursement for Advances
pursuant to Section 5.04 and (c) any installments of Monthly P&I or Prepayments
retained by the Master Servicer as reimbursement for Nonrecoverable Advances
pursuant to Section 5.04; (ii) the Advance for such Due Period to the extent
actually made; (iii) the investment earnings on funds in the Collection Account
for such Distribution Date (which, except as otherwise provided in Section 5.01,
shall be the RIC Reinvestment Earnings); (iv) amounts withdrawn from the Holding
Account and deposited in the Collection Account in such Due Period pursuant to
Section 5.02; (v) the aggregate Repurchase Amount for Repurchased Contracts
deposited in or credited to the Collection Account pursuant to Section 5.04(c)
on the related Master Servicer Report Date; and (vi) the Base Price for WFSRC
Contracts repurchased by WFSRC pursuant to Section 3.10(a).
"Net Contract Rate" means, with respect to any Contract, its Contract
Rate less the sum of the Servicing Fee Percent and the Retained Yield Percent.
"Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds net of any such amount applied to the repair of the related Financed
Vehicle, released to the related Obligor in accordance with the normal servicing
procedures of the Master Servicer or representing expenses incurred by the
Master Servicer and recoverable hereunder.
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.
"Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes, in each case as of the immediately
preceding Distribution Date (after giving effect to any distributions of
principal made on such preceding Distribution Date). Notwithstanding the
foregoing, any payments of the Repurchase Premium shall not reduce the Note
Balance.
"Note Deficiency Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the amount of Net Collections actually deposited in
the Note Distribution Account on such Distribution Date in accordance with
Section 5.05.
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"Note Distributable Amount" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"Note Distribution Account" means the account established and maintained
as such pursuant to Section 5.01.
"Note Final Distribution Date" means the Class A-1 Final Distribution
Date, the Class A-2 Final Distribution Date and the Class A-3 Final Distribution
Date, as the case may be.
"Note Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
such Class on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account with
respect to such Class on such preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the amount of interest due but not paid
to Noteholders of such Class on the preceding Distribution Date at the related
Interest Rate for the related Interest Period.
"Note Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount for such Class of Notes for such Distribution Date and the
Note Interest Carryover Shortfall for such Class of Notes for such Distribution
Date. For all purposes of this Agreement and the other Basic Documents, interest
with respect to the (i) Class A-1 Notes shall be computed on the basis of a
360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date (or, with respect to the first Distribution Date,
since ______ 1, 2000) and (ii) Class A-2 Notes and Class A-3 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Note Percentage" means, (i) for each Distribution Date prior to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, (A) 100% until the
principal amount of the Class A-3 Notes has been reduced to zero and (B) with
respect to any remaining portion of the Principal Distributable Amount, zero;
and (iii) for any Distribution Date thereafter, zero.
"Note Policy" means the financial guaranty insurance policy issued by
the Insurer to the Indenture Trustee on behalf of the Noteholders, the form of
which is attached as Exhibit N hereto.
"Note Policy Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the sum of (i) the amount of Net Collections actually
deposited in the Note Distribution Account on such Distribution Date in
accordance with Section 5.05 and (ii) the amount of the Note Deficiency Claim
Amount, if any, paid to the Note Distribution Account from the Spread Account
pursuant to a Deficiency Notice delivered for such Distribution Date.
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"Note Pool Factor" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after giving effect to any reductions thereof to
be made on such Distribution Date) divided by the original outstanding principal
amount of such Class of Notes.
"Note Principal Carryover Shortfall" means, as of any Distribution Date,
the excess of the sum of the Note Quarterly Principal Distributable Amount and
any outstanding Note Principal Carryover Shortfall for the immediately preceding
Distribution Date over the amount in respect of principal that is actually
deposited in the Note Distribution Account on such Distribution Date.
"Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
and the Accelerated Principal Distributable Amount, if any, for such
Distribution Date and any outstanding Note Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the Note
Principal Distributable Amount with respect to a Class of Notes shall not exceed
the outstanding principal amount of such Class of Notes; and provided, further,
that the Note Principal Distributable Amount on each Note Final Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Quarterly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Interest Period on each
Class of Notes at the related Interest Rate for such Class on the outstanding
principal amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to the
Noteholders of such Class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of such Class
of Notes).
"Note Quarterly Principal Distributable Amount" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
"Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.
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"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Optional Repurchase Payment" means, with respect to the repurchase by
WFSRC of all WFSRC Contracts pursuant to Section 3.10, an amount equal to the
sum of Base Price and the Repurchase Premium.
"Original Class A-1 Note Balance" means $____________.
"Original Class A-2 Note Balance" means $____________.
"Original Class A-3 Note Balance" means $____________.
"Original Pool Balance" means $____________.
"Outstanding" means, with respect
(i) to a Contract and as of time of reference thereto, a Contract
that has not reached its Maturity Date, has not been fully prepaid, has
not become a Liquidated Contract and has not been repurchased pursuant
to Section 3.02, 3.10, 4.07 or 9.01; and
(ii) Securities, as of the date of determination, all Notes of
one Class or of all Classes, all Certificates or all Notes and
Certificates, as the case may be, theretofore authenticated and
delivered except:
(a) Securities theretofore cancelled by the applicable
Registrar or delivered to the applicable Registrar for
cancellation;
(b) Securities or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the applicable Trustee or any Paying Agent, as the case may be,
in trust for the Holders of such Securities (provided, however,
that if such Securities are to be redeemed or repurchased, notice
of such redemption or repurchase has been duly given or provision
for such notice has been made, satisfactory to the applicable
Trustee); and
(c) Securities in exchange for or in lieu of other
Securities which have been authenticated and delivered unless
proof satisfactory to the applicable Trustee is presented that
any such Securities are held by a bona fide purchaser;
provided, however, that Securities which have been paid with proceeds of the
Note Policy shall continue to remain Outstanding until the Insurer has been paid
as subrogee hereunder or reimbursed pursuant to the Insurance Agreement as
evidenced by a written notice from the Insurer delivered to the applicable
Trustee, and the Insurer shall be deemed to be the Holder thereof to the extent
of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of a specified Outstanding Amount of Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any other Basic Document, Securities owned by the
Issuer, any other obligor upon the Securities,
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either Seller, WFS or any of their respective Affiliates shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
applicable Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
applicable Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the applicable Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Issuer, any other obligor upon the Securities, any 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.
"Outstanding Principal Balance" means, with respect to a Contract that
is a (i) Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all Monthly P&I due on or after _______ 1, 2000 less any
unearned interest as of the Due Date for such Contract next preceding _______ 1,
2000, computed in accordance with the Rule of 78's, less all amounts received on
or in respect of such Contract on or after _______ 1, 2000 that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
"Partial Prepayment" means, as to any Rule of 78's Contract, any partial
prepayment received by the Master Servicer that (i) is not accompanied by an
amount specified by the related Obligor to be interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of such prepayment and (ii) is required by the terms of such Contract to be
applied to the payment of principal thereunder on or prior to the Due Date next
succeeding the date of receipt.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Property" shall have the meaning specified in the definition
of the term "Delivery".
"Pool Balance" as of the time of determination means the Aggregate
Scheduled Balance, exclusive of the Scheduled Balances of all Contracts that are
not Outstanding at the end of the Due Period ending immediately prior to such
time of determination.
"Preference Claim" shall have the meaning specified in Section 8.06.
"Preferential Transfer" shall have the meaning specified for the term
"Preference" in the Insurance Agreement.
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<PAGE> 23
"Prepayment" means a Full Prepayment or a Partial Prepayment.
"Principal Distributable Amount" means, with respect to any Distribution
Date, the Aggregate Scheduled Balance Decline for such Distribution Date.
"Proprietary Fund" means money market funds having a rating from each
Rating Agency in the highest investment category granted by each Rating Agency,
including funds for which the Indenture Trustee or the Owner Trustee or any of
their respective Affiliates is investment manager or advisor.
"Rating Agency" means Moody's and Standard & Poor's.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, in the case of the Notes, in the event that
Definitive Notes are issued, the 15th day of the month preceding the month in
which such Distribution Date occurs.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"Related Contracts" means, with respect to a particular Seller, the
Contracts sold to the Trust by such Seller.
"Repurchase Amount" means, with respect to any Contract, the amount, as
of the date of repurchase, required to prepay in full the principal of and
accrued interest on such Contract to the last Due Date in the Due Period in
which such repurchase occurs.
"Repurchase Distribution Date" has the meaning set forth in the Trust
Agreement.
"Repurchase Premium" means an amount equal to:
(i) the product of Base Price and __% if the Base Price is more
than 15% of the Cut-Off Date WFSRC Aggregate Scheduled Balance;
(ii) the product of Base Price and __% if the Base Price is less
than or equal to 15% of the Cut-Off Date Aggregate Scheduled Balance but
more than 10% of the Cut-Off Date WFSRC Aggregate Scheduled Balance; and
(iii) zero if the Base Price is less than or equal to 10% of the
Cut-Off Date WFSRC Aggregate Scheduled Balance.
"Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07, by
WFSRC pursuant to Section 3.10 or by the Sellers 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,
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respectively, or to whom any corporate trust matter is referred at the
Indenture Trustee's Corporate Trust Office because of his knowledge of and
familiarity with the particular subject.
"Retained Yield" shall mean the amount, if any, stripped off from the
interest portion of Monthly P&I by the Servicer and paid to the Seller on a
monthly basis. Such monthly payment shall be equal to (i) with respect to each
Rule of 78's Contract, an amount equal to the product of the Retained Yield
Percent and the Scheduled Balance of such Contract (as specified in the Schedule
of Contracts) for such month, but only to the extent that the Monthly P&I for
such Contract for such month has been collected and (ii) with respect to each
Simple Interest Contract, out of each payment of Monthly P&I collected on such
Contract, an amount equal to interest at the Retained Yield Percent of the
Scheduled Balance of such Contract on which, and for the period for which, the
interest portion of such payment of Monthly P&I was calculated.
"Retained Yield Percent" means, with respect to any Contract, the lesser
of (i) 0% per annum or (ii) a percent per annum equal to the APR of such
Contract less the sum of (A) 1% and (B) the Class A-3 Rate.
"RIC" means the reinvestment contract provided by the Bank and WFAL2 or,
with the prior written consent of the Insurer, a subsidiary thereof,
substantially in the form of Exhibit C hereto, in consideration of the right to
direct the investment of the funds on deposit in all Trust Accounts other than
the Holding Account.
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Due Period and the Contracts that were Outstanding at the
beginning of such Due Period, the amount by which the sum of the Note Quarterly
Interest Distributable Amount for such Distribution Date exceeds the sum of (i)
the aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Class A-3 Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each delinquent Contract).
"Rule of 78's Contract" means a Contract as to which payments thereunder
are applied on the basis of the Rule of 78's.
"Schedule of Contracts" means the list or lists of Contracts attached as
Schedule A to this Agreement, which Contracts are being transferred to the Owner
Trustee as part of the Trust Estate, which list or lists shall set forth the
following information with respect to each such Contract in numbered columns:
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<PAGE> 25
<TABLE>
<CAPTION>
Information Column Number
<S> <C>
Contract Number ("ACCT NBR").............................. 2
Date of Origination ("ORG DT")............................ 9
Maturity Date ("MAT DT").................................. 15
Monthly P&I ("P&I")....................................... 10
Original Principal Balance ("ORIG AMT")................... 16 Top
Outstanding Principal Balance ("PRIN BAL")................ 16 Bottom
Discount Rate ("APR")..................................... 7
</TABLE>
In addition, the Scheduled Balance of each Rule of 78's Contract for each Due
Date on or after the Cut-Off Date, computed in accordance with the definition of
the term "Scheduled Balance," shall be contained on a computer disk or tape (the
"Disk") that shall be delivered by WFAL to the Master Servicer not later than
the fifth Business Day following the Closing Date. The Disk shall be a part of
the Schedule of Contracts and shall be made available by the Master Servicer to
the Indenture Trustee and the Owner Trustee upon reasonable request. In
calculating the Outstanding Principal Balance of each Rule of 78's Contract to
be set forth in Column 16 Bottom, it shall be assumed that all payments of
principal and interest due on or before the Cut-Off Date were received and
applied. The Schedule of Contracts or the Disk shall also set forth the Original
Pool Balance and the Retained Yield Percent (if the Retained Yield Percent is
not the same for all the Contracts).
"Scheduled Balance" means, with respect to any Rule of 78's Contract for
each month and as of the Cut-Off Date, the amount set forth as the "Scheduled
Balance" of such Contract for such month or as of the Cut-Off Date on the
Schedule of Contracts. Each such amount shall be the present value (determined
as provided below) for the applicable month of all payments of Monthly P&I on
the Contract due after such month (due during or after the first Due Period in
the case of a Scheduled Balance at the Cut-Off Date). Such present value as of a
Distribution Date shall be determined by discounting, on a monthly basis, each
such payment of Monthly P&I from the last day of the month in which such payment
of Monthly P&I is due back to the first day of the month during which such
Distribution Date occurs, using the applicable discount rate specified below.
Such present value as of the Cut-Off Date shall be determined by discounting, on
a monthly basis, each such payment of Monthly P&I back from the last day of the
month in which such payment of Monthly P&I is due to the Cut-Off Date, using the
applicable discount rate specified below. The applicable discount rate (the
"Discount Rate") shall be the discount rate that will produce a present value at
the Cut-Off Date equal to the Outstanding Principal Balance of the Contract. The
Scheduled Balance of a Rule of 78's Contract that becomes a Liquidated Contract
or a Repurchased Contract shall be reduced to zero as of the end of the Due
Period in which such Contract became a Liquidated Contract. In the case of a
Simple Interest Contract, the Scheduled Balance thereof is its actual principal
balance. The principal balance of a Simple Interest Contract that becomes a
Repurchased Contract shall be deemed to be reduced to zero upon the related
repurchase thereof and the principal balance of a Simple Interest Contract that
becomes a Liquidated Contract shall be deemed to be reduced to zero as of the
date on which such Contract becomes a Liquidated Contract. If a Partial
Prepayment is received on any Rule of 78's Contract at any time after the
Cut-Off Date, the Schedule of Contracts shall be revised to reflect the new
Scheduled Balance of such Contract for each Due Date after the date of such
Partial Prepayment, any such recalculations being made in the manner described
above,
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<PAGE> 26
except that "Outstanding Principal Balance" shall be read to mean "Distribution
Date Outstanding Principal Balance" and "Cut-Off Date" shall be read to mean the
Due Date next succeeding the Due Date after which such Partial Prepayment was
received. As used herein, reference to the Scheduled Balance of a Contract for a
Distribution Date shall mean (i) in the case of a Rule of 78's Contract, the
Scheduled Balance of such Contract on the last day for such Contract in the Due
Period ending immediately prior to such Distribution Date, and (ii) in the case
of a Simple Interest Contract, the Scheduled Balance of such Contract at the
close of business of the last day in such Due Period, and reference to the
Scheduled Balance of a Contract in a month shall mean (i) in the case of a Rule
of 78's Contract, the Scheduled Balance of such Contract for the last day of
such month and (ii) in the case of a Simple Interest Contract, the Scheduled
Balance of such Contract at the close of business on the last day of such month.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Holders of the Notes and the Certificates.
"Sellers" means WFAL and WFSRC, each in its capacity as the Seller of
Contracts under this Agreement, and each successor thereto (in the same
capacity) pursuant to Section 6.03.
"Servicer Default" means an event specified in Section 8.01.
"Servicing Fee" means, as to any Distribution Date, the fee payable to
the Master Servicer for services rendered during the related Due Period, which
shall equal with respect to each Contract that is a (i) Rule of 78's Contract,
the amount equal to, for each month in such Due Period, the product of the
Servicing Fee Percent and the Scheduled Balance of such Contract (as specified
in the Schedule of Contracts) for such month in the related Due Period, but only
to the extent that the Monthly P&I for such Contract for such month has been
collected or advanced by the Master Servicer pursuant to Section 5.04 and (ii)
Simple Interest Contract, out of each payment of Monthly P&I collected or
advanced on such Contract an amount equal to interest at the Servicing Fee
Percent on the Scheduled Balance of such Contract on which, and for the period
for which, the interest portion of such payment of Monthly P&I was calculated.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
"Specified Spread Account Balance" means, with respect to any
Calculation Day or Distribution Date, ___% of the Aggregate Scheduled Balance on
such date of calculation, except that if on any date of calculation (i) the
Charge-Off Percentage for the three calendar month period ending on such date of
calculation exceeds ___% or (ii) the Delinquency Percentage for the three
calendar month period ending on such date of calculation exceeds ___%, then the
Specified Spread Account Balance shall equal ___% of the Aggregate Scheduled
Balance on
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<PAGE> 27
such date of calculation (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent date
of calculation). Notwithstanding the foregoing, in no event shall the Specified
Spread Account Balance be greater than $__________ or less than $__________;
provided, however, the Specified Spread Account Balance shall not be greater
than the Outstanding Amount of the Securities if such amount is less than
$________.
"Spread Account" means the account established and maintained as such
pursuant to Section 5.01.
"Spread Account Balance" means the amount on deposit in the Spread
Account.
"Spread Account Initial Deposit" means $________, 100% of which will be
cash.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
"Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.
"Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts,
substantially in the form of Exhibit E hereto.
"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), including the Spread Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Trust Agreement, dated _____, 2000, as
amended and restated as of _______, 2000, among the Depositors, the Insurer and
the Owner Trustee.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"United States" means the United States of America.
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<PAGE> 28
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Note Policy for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"WFAL" means WFS Financial Auto Loans, Inc., a wholly owned subsidiary
of WFS, and its successors and assigns.
"WFAL Certificates" means the Certificates issued to WFAL on the Closing
Date as consideration in part for its conveyance of the WFAL Contracts to the
Trust pursuant to Section 2.01.
"WFAL Contracts" mean the Contracts sold to the Trust by WFAL.
"WFAL2" means WFS Financial Auto Loans 2, Inc., a wholly owned
subsidiary of WFS, and its successors and assigns.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.
"WFSRC" means WFS Receivables Corporation, a wholly-owned subsidiary of
WFS, and its successors and assigns.
"WFSRC Aggregate Scheduled Balance" means with respect to any
Distribution Date and the Outstanding WFSRC Contracts, the aggregate of the
Scheduled Balances of such WFSRC Contracts as of the end of the Due Period
immediately preceding such Distribution Date.
"WFSRC Certificate" means the Certificate issued to WFSRC on the Closing
Date as consideration in part for its conveyance of the WFSRC Contracts to the
Trust pursuant to Section 2.01.
"WFSRC Contracts" mean the Contracts sold to the Trust by WFSRC.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day
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<PAGE> 29
months (or, in the case of the Class A-1 Notes, on the basis of a 360-day year
and the actual number of days elapsed since the immediately preceding
Distribution Date or ______ 1, 2000, in the case of the first Distribution Date)
and will be carried out to at least six decimal places. Collections of interest
on Rule of 78's Contracts shall be calculated as if such Contracts were
actuarial contracts the scheduled principal balances of which are the Scheduled
Balances thereof, and collections of interest on Simple Interest Contracts will
be calculated in accordance with the terms thereof.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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<PAGE> 30
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
WFAL of the WFAL Certificates and $________, which amount equals the Outstanding
Principal Balance of WFAL Contracts less the Spread Account Initial Deposit
effective upon the Closing Date, WFAL hereby sells, grants, transfers, assigns
and otherwise conveys to the Issuer, without recourse (subject to the
obligations herein), all of its right, title and interest (exclusive of (i) the
Retained Yield in respect of the WFAL Contracts, and (ii) the amount, if any,
allocable to any rebatable insurance premium financed by any WFAL Contract) in,
to and under the WFAL Contracts (which Contracts shall be listed in the Schedule
of Contracts), including, without limitation, all payments of Monthly P&I
(exclusive of the Retained Yield, which shall be paid directly to WFAL as
provided in Section 5.02(b)) due on or after ______ 1, 2000 (excluding the
amount allocable to principal and interest due prior to ______ 1, 2000); all Net
Liquidation Proceeds and Net Insurance Proceeds with respect to any Financed
Vehicle to which a Contract relates received on or after ______ 1, 2000 and all
other proceeds received on or in respect of such Contracts (other than payments
of Monthly P&I due prior to ______ 1, 2000), and any and all security interests
in the Financed Vehicles; the Contract Documents relating to the Contracts
(except the Contract Documents for Contracts which have been the subject of a
Full Prepayment received on or after ______ 1, 2000 but no later than one
Business Day prior to the Closing Date, in lieu of which WFAL shall have
deposited in or credited to the Collection Account on or prior to the Closing
Date an amount equal to such Full Prepayment); and all proceeds in any way
delivered with respect to the foregoing, all rights to payments with respect to
the foregoing and all rights to enforce the foregoing, provided that $ _______
of the principal amount of Contract number __________ is retained by WFAL.
In consideration of the Issuer's delivery to or upon the order of WFSRC
of the WFSRC Certificate and $________, which amount equals Outstanding
Principal Balance of WFSRC Contracts, effective upon the Closing Date, WFSRC
hereby respectively transfers and assigns to the Issuer, without recourse
(subject to the obligations herein), all of its right, title and interest
(exclusive of (i) the Retained Yield in respect of the WFSRC Contracts, and (ii)
the amount, if any, allocable to any rebatable insurance premium financed by any
WFSRC Contract) in, to and under the WFAL Contracts (which Contracts shall be
listed in the Schedule of Contracts), including, without limitation, all
payments of Monthly P&I (exclusive of the Retained Yield, which shall be paid
directly to WFSRC as provided in Section 5.02(b)) due on or after ______ 1, 2000
(excluding the amount allocable to principal and interest due prior to ______ 1,
2000); all Net Liquidation Proceeds and Net Insurance Proceeds with respect to
any Financed Vehicle to which a Contract relates received on or after ______ 1,
2000 and all other proceeds received on or in respect of such Contracts (other
than payments of Monthly P&I due prior to ______ 1, 2000), and any and all
security interests in the Financed Vehicles; the Contract Documents relating to
the Contracts (except the Contract Documents for Contracts which have been the
subject of a Full Prepayment received on or after ______ 1, 2000 but no later
than one Business Day prior to the Closing Date, in lieu of which WFSRC shall
have deposited in or credited to the Collection Account on or prior to the
Closing Date an amount equal to such Full Prepayment);
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<PAGE> 31
and all proceeds in any way delivered with respect to the foregoing, all rights
to payments with respect to the foregoing and all rights to enforce the
foregoing, provided that $ _______ of the principal amount of Contract number
__________ is retained by WFSRC.
(b) The Bank has filed or caused to be filed UCC-1 financing statements,
executed by the Bank as debtor, naming WFS as secured party and describing the
Contracts originated by the Bank and transferred to WFS on or prior to the
Closing Date as collateral with the Office of the Secretary of State of the
State of California. WFS has filed or caused to be filed with the office of the
Secretary of State of the State of California UCC-1 financing statements
executed by WFS as debtor, naming WFAL as secured party and describing the
Contracts as collateral. WFAL has filed or caused to be filed with the office of
the Secretary of State of the State of California UCC-1 financing statements
executed by WFAL as debtor, naming WFSRC as secured party and describing the
WFSRC Contracts as collateral. WFAL has caused to be filed UCC-1 financing
statements, executed by it as debtor, naming the Collateral Agent, on behalf of
the Insurer, as secured party and describing the WFAL Contracts as collateral,
with the Office of the Secretary of State of the State of California. WFSRC has
caused to be filed UCC-1 financing statements, executed by it as debtor, naming
the Collateral Agent, on behalf of the Insurer, as secured party and describing
the WFSRC Contracts as collateral, with the Office of the Secretary of State of
the State of Nevada. The grant of a security interest to the Collateral Agent on
behalf of the Insurer and the rights of the Collateral Agent and the Insurer in
respect of such security interest shall be governed by the Insurance Agreement.
WFAL has filed or caused to be filed UCC-1 financing statements, executed by
WFAL as debtor, naming the Owner Trust as secured party and describing the WFAL
Contracts being sold by it to the Owner Trust as collateral, with the Office of
the Secretary of State of the State of California. WFSRC has filed or caused to
be filed UCC-1 financing statements, executed by WFSRC as debtor, naming the
Owner Trust as secured party and describing the WFSRC Contracts being sold by it
to the Owner Trust as collateral, with the Office of the Secretary of State of
the State of Nevada. The Owner Trust has filed or caused to be filed UCC-1
financing statements, executed by the Owner Trust as debtor, naming the
Indenture Trustee, on behalf of the Noteholders, as secured party and describing
the Contracts as collateral, with the office of the Secretary of State of the
States of Delaware and California. The grant of a security interest to the
Indenture Trustee and the rights of the Indenture Trustee in the Contracts shall
be governed by the Indenture. From time to time, the Master Servicer shall cause
to be taken such actions as are necessary to continue the perfection of the
respective interests of the Indenture Trustee, the Owner Trust and the
Collateral Agent on behalf of the Insurer in the Contracts and to continue the
first priority security interest of the Indenture Trustee (subject to the
security interest of the Insurer pursuant to the Insurance Agreement) in the
Financed Vehicles and their proceeds (other than, as to such priority, any
statutory lien arising by operation of law after the Closing Date which is prior
to such interest), including, without limitation, the filing of financing
statements, amendments thereto or continuation statements and the making of
notations on records or documents of title.
If any change in the name, identity or corporate structure of a Seller
or WFS or the relocation of the chief executive office of any of them would make
any financing or continuation statement or notice of lien filed under this
Agreement or the other Basic Documents seriously misleading within the meaning
of applicable provisions of the UCC or any title statute, the Master Servicer,
within the time period required by applicable law, shall file such financing
statements or amendments as may be required to preserve and protect the
interests of the
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Indenture Trustee, the Owner Trustee, the Securityholders and the Insurer in the
Contracts, Financed Vehicles and the proceeds thereof. Promptly thereafter, the
Master Servicer shall deliver to the Indenture Trustee, the Owner Trustee and
the Insurer an Opinion of Counsel stating that, in the opinion of such counsel,
all financing statements or amendments necessary fully to preserve and protect
the interests of the Indenture Trustee, the Owner Trustee, Securityholders and
the Insurer in the Contracts, Financed Vehicles and the proceeds thereof have
been filed, and reciting the details of such filings.
During the term of this Agreement, each Seller and WFS shall each
maintain its chief executive office in one of the states of the United States,
other than Louisiana or Tennessee.
The Master Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
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<PAGE> 33
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Sellers. Each Seller
hereby jointly and severally makes the following representations and warranties
on which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Note Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) As to each Seller:
(i) Organization and Good Standing. The Seller is duly organized
and validly existing as a corporation in good standing under the laws of
the State of California, with power and authority to own its properties
and to conduct its business, and has the corporate power, authority and
legal right to acquire and own the Contracts.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications.
(iii) Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer, and
has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes (A) a valid
sale, transfer and assignment of the Contracts, enforceable against
creditors of and purchasers from the Seller and (B) a legal, valid and
binding obligation of the Seller enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of
equity, regardless of whether such enforceability shall be considered in
a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or bylaws of the Seller, or
any indenture, agreement or other instrument to which the Seller is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents to which the Seller is a party); nor violate any law or,
to
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<PAGE> 34
the best of the Seller's knowledge, any order, rule or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(A) asserting the invalidity of this Agreement or any of the other Basic
Documents, the Notes or the Certificates, (B) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of
the transactions contemplated by this Agreement or any of the other
Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement,
any of the other Basic Documents, the Notes or the Certificates or (D)
which might adversely affect the federal or state income tax attributes
of the Notes or the Certificates.
(b) As to each Contract or all of the Contracts, as the case may be:
(i) Schedule of Contracts. The information pertaining to such
Contract set forth in the related Schedule of Contracts was true and
correct in all material respects at the Closing Date and the
calculations of the Scheduled Balances appearing in such Schedule of
Contracts for each such Contract at the Closing Date and at each
Distribution Date thereafter prior to the related Maturity Date have
been performed in accordance with this Agreement and are accurate.
(ii) Security Interests. As of the Closing Date, such Contract
granted a valid and enforceable first priority security interest in
favor of WFS (or to the Bank, a Dealer or a Third Party Lender, which
security interest has been assigned to WFS) in the related Financed
Vehicle, and such security interest has been duly perfected and is prior
to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to
priority, for any lien for unpaid taxes or unpaid storage or repair
charges which may arise after the Closing Date).
(iii) Title Documents. (A) If the related Financed Vehicle was
originated in a state in which notation of a security interest on the
Title Document is required or permitted to perfect such security
interest, the Title Document for such Financed Vehicle shows, or if a
new or replacement Title Document is being applied for with respect to
such Financed Vehicle the Title Document will be received within 180
days of the Closing Date and will show WFS named as the original secured
party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show WFS named as the original secured party under the related
Contract, and in either case, the Indenture Trustee and the Owner
Trustee have the same rights as such secured party has or would have (if
such secured party were still the owner of the Contract) against all
parties claiming an interest in such Financed Vehicle. With respect to
each Contract for which the Title
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Document has not yet been returned from the Registrar of Titles, WFS has
received written evidence from the related Dealer that such Title
Document showing WFS as first lienholder has been applied for.
(iv) Title to the Contracts. Immediately prior to the issuance of
the Notes and the Certificates, the Seller had good and indefeasible
title to and was the sole owner of each Contract to be transferred to
the Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and indefeasible
title to and will be the sole owner of such Contract free of liens,
encumbrances and rights of others, except for the Lien of the Indenture
Trustee under the Indenture and the security interest granted to the
Insurer under the Insurance Agreement.
(v) Current in Payment. As of the Cut-Off Date, such Contract is
no more than 30 days delinquent in payment as to all or any portion of
any installment of Monthly P&I.
(vi) Tax Liens. As of the Closing Date, there is no lien against
the related Financed Vehicle for delinquent taxes.
(vii) Rescission, Offset, Etc. As of the Closing Date, there is
no right of rescission, offset, defense or counterclaim to the
obligation of the Obligor to pay the unpaid principal or interest due
under such Contract; the operation of the terms of such Contract or the
exercise of any right thereunder will not render such Contract
unenforceable in whole or in part or subject to any right of rescission,
offset, defense or counterclaim, and no such right of rescission,
offset, defense or counterclaim has been asserted.
(viii) Mechanics' Liens. As of the Closing Date, there are no
liens or claims for work, labor, material or storage affecting the
related Financed Vehicle which are or may become a lien prior to or
equal with the security interest granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the sale of the
Financed Vehicle sold thereunder, complied, at the time it was made, in
all material respects with all applicable state and federal laws (and
regulations thereunder), including without limitation usury, equal
credit opportunity, fair credit reporting, truth-in-lending or other
similar laws, the Federal Trade Commission Act, and applicable state
laws regulating retail installment sales contracts and loans in general
and motor vehicle retail installment contracts and loans in particular;
and the consummation of the transactions herein contemplated, including,
without limitation, the transfer of ownership of the Contracts to the
Issuer and the receipt of interest by the Securityholders, will not
involve the violation of any applicable state or federal law.
(x) Valid and Binding. Such Contract is the legal, valid and
binding obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; all parties to such Contract had full legal
capacity to execute and deliver such Contract and all other documents
related thereto and
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to grant the security interest purported to be granted thereby; and the
terms of such Contract have not been waived or modified in any respect,
except by instruments that are part of the Contract Documents.
(xi) Enforceability. Such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder or assignee thereof adequate for the realization against the
collateral of the benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
(xii) No Default. As of the Cut-Off Date, there was no default,
breach, violation or event permitting acceleration existing under such
Contract (except payment delinquencies permitted by subparagraph (v)
above) and no event which, with notice and the expiration of any grace
or cure period, would constitute such a default, breach, violation or
event permitting acceleration under such Contract, and the Seller has
not waived any such default, breach, violation or event permitting
acceleration except payment delinquencies permitted by subparagraph (v)
above.
(xiii) Insurance. At the Closing Date, the related Financed
Vehicle will be covered by (A) a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) its actual
cash value or (b) the principal amount due from the Obligor under the
related Contract, (ii) naming WFS as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision
coverage or (B) an LDI Policy; provided, however, that if such Financed
Vehicle has an unpaid principal balance of less than $4,000.00 or the
related Contract has six or fewer months remaining before its Maturity
Date, it will not be required to be covered by the insurance described
in this subparagraph. Each of the Sellers, WFS and the Master Servicer
shall at all times comply with all of the provisions of such insurance
policies and the LDI Policy applicable to such Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was either acquired
by WFS (or its predecessor in interest) from a Dealer or a Third Party
Lender with which it ordinarily does business or the Bank or originated
directly by WFS in the ordinary course of its business, and no adverse
selection procedures have been utilized in selecting such Contract from
all other similar contracts purchased by the Seller.
(xv) Scheduled Payments. As of the Cut-Off Date, scheduled
payments under such Contract are applied in accordance with the Rule of
78's method or the simple interest method and are due monthly in level
payments through its Maturity Date sufficient to fully amortize the
principal balance of such Contract by its Maturity Date, assuming timely
payment by Obligors on Simple Interest Contracts, except that the
payment in the first or last month in the life of the Contract may be
minimally different from the level payment.
(xvi) One Original. There is only one original of such Contract
and such original, together with all other Contract Documents, is being
held by the Master Servicer
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pursuant to Section 3.04. Each original Contract has been segregated and
marked to show the Issuer as owner thereof, unless the Insurer has
waived the requirement for such segregation and marking by notice in
writing to the Owner Trustee, the Indenture Trustee and the Master
Servicer.
(xvii) Characteristics. With respect to each WFAL Contract, at
the Cut-Off Date such Contract had (i) an Outstanding Principal Balance
of not less than $_____ nor more than $_______, (ii) an original term
not less than _ months nor greater than __ months, (iii) a remaining
maturity of not less than _ months nor greater than __ months, and (iv)
an APR of not less than ____%.
(xviii) Characteristics. With respect to each WFSRC Contract, at
the Cut-Off Date such Contract had (i) an Outstanding Principal Balance
of not less than $_____ nor more than $_______, (ii) an original term
not less than _ months nor greater than __ months, (iii) a remaining
maturity of not less than _ months nor greater than __ months, and (iv)
an APR of not less than ____%.
(xix) Identification. The Master Servicer and WFS have clearly
marked their electronic records to indicate that such Contract is owned
by the Issuer.
(xx) Maturity. At the Cut-Off Date such Contract did not have a
Maturity Date later than the 90th day prior to the end of the Due Period
immediately preceding the Certificate Final Distribution Date.
(xxi) Scheduled Balance. At the Cut-Off Date the initial
Scheduled Balance of such Contract was not greater than the purchase
price of the related vehicle.
(xxii) Location of Contract Files. The Contract Files are kept at
one or more of the locations listed in Schedule B hereto.
(xxiii) Finance Charge. With respect to each WFAL Contract, such
Contract provides for the payment of a finance charge calculated at its
APR based on the Rule of 78's or the simple interest method and such APR
shall be equal to or greater than ___% for Rule of 78's Contracts and
equal to or greater than ____% for Simple Interest Contracts.
(xxiv) Finance Charge. With respect to each WFSRC Contract, such
Contract provides for the payment of a finance charge calculated at its
APR based on the Rule of 78's or the simple interest method and such APR
shall be equal to or greater than ___% for Rule of 78's Contracts and
equal to or greater than ____% for Simple Interest Contracts.
(xxv) Bank and Third Party Lender Originations. With respect to
WFAL Contracts, the aggregate Scheduled Balance as of the Cut-Off Date
of such Contracts purchased or originated by the Bank and Third Party
Lenders is not more than approximately ____% of the aggregate Scheduled
Balance of all WFAL Contracts as of such date.
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(xxvi) Bank and Third Party Lender Originations. With respect to
WFSRC Contracts, the aggregate Scheduled Balance as of the Cut-Off Date
of such Contracts purchased or originated by the Bank and Third Party
Lenders is not more than approximately ____% of the aggregate Scheduled
Balance of all WFSRC Contracts as of such date.
(xxvii) Simple Interest Contracts. As of the Cut-Off Date,
approximately _____% of the aggregate Scheduled Balances of the WFAL
Contracts shall be Simple Interest Contracts and approximately ____% of
the aggregate Scheduled Balances of the Contracts shall be Rule of 78's
Contracts.
(xxviii) Simple Interest Contracts. As of the Cut-Off Date,
approximately _____% of the aggregate Scheduled Balances of the WFSRC
Contracts shall be Simple Interest Contracts and approximately ____% of
the aggregate Scheduled Balances of the Contracts shall be Rule of 78's
Contracts.
(xxix) New or Used Vehicles. Approximately _____% of the WFAL
Contracts by Cut-Off Date Aggregate Scheduled Balance shall be new
vehicles and approximately _____% shall be used vehicles.
(xxx) New or Used Vehicles. Approximately _____% of the WFSRC
Contracts by Cut-Off Date Aggregate Scheduled Balance shall be new
vehicles and approximately _____% shall be used vehicles.
(xxxi) States of Origination. Approximately _____% of the WFAL
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated by
WFS or the Bank in California and approximately ____% of the WFAL
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated in
states other than California.
(xxxii) States of Origination. Approximately _____% of the WFSRC
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated by
WFS or the Bank in California and approximately ____% of the WFSRC
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated in
states other than California.
(xxxiii) No Government Entity Obligors. Each Contract shall have
an Obligor that is not a local, state or federal governmental entity.
(xxxiv) Transfer of Contracts. On the Closing Date, WFSRC will
transfer to the Trust Contracts comprising __% of the Cut-Off Date
Aggregate Principal Balance of Contracts and WFAL will sell to the Trust
Contracts comprising __% of the Cut-Off Date Aggregate Principal Balance
of Contracts.
Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Sellers 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 a 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
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or has not been received by the Owner Trustee, such Person making such discovery
shall give prompt notice to the other such Persons. If any such defect,
incorrectness or omission materially and adversely affects the interest of the
Noteholders, the Certificateholders, the Indenture Trustee, the Owner Trustee,
the Issuer or the Insurer, the related 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 such Seller is
unable to do so, the Seller 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 related 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 a Seller's
representations and warranties pursuant to Section 3.01 shall be to require such
Seller to enforce the Master Servicer's obligation to repurchase Contracts
pursuant to Section 4.07; provided, however, that the Sellers shall jointly and
severally indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the
Issuer and the Securityholders against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel, which
may be asserted against or incurred by any of them as a result of third-party
claims arising out of the events or facts giving rise to such breach.
Section 3.03. Custody of Contract Files. Subject to Sections 3.07, 7.04
and 8.01, the Owner Trustee hereby irrevocably appoints the Master Servicer, and
the Master Servicer hereby accepts such appointment, to act as the agent of the
Owner Trustee as custodian of the Contract Documents and any and all other
documents that the Master Servicer shall keep on file, in accordance with its
customary procedures, relating to a Contract, Obligor or Financed Vehicle, which
are hereby constructively delivered to the Owner Trustee with respect to each
Contract:
(i) the original of the Contract;
(ii) documents evidencing the existence of physical damage
insurance covering the Financed Vehicles;
(iii) the original credit application fully executed by the
Obligor; and
(iv) the original certificate of title or such documents that the
Master Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Master Servicer in
the Financed Vehicle.
(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 Trust as the owner of, and the security interest of the
Indenture Trustee and the Insurer in, the Contract Documents and shall mark the
Contracts in the same manner; except that if the Indenture Trustee and the
Insurer have waived the requirement for such segregation and marking by notice
in writing to the Owner Trustee, the Indenture Trustee and the Master Servicer,
such file area may contain contract documents for other motor
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vehicle retail installment sales contracts and installment loans owned or
serviced by the Master Servicer.
The Master Servicer shall cause the electronic record of the Contracts
maintained by it to be clearly marked to indicate that the Contracts have been
sold to the Trust and shall not in any way assert or claim an ownership interest
in the Contracts. It is intended by the Master Servicer's and the Sellers'
agreement pursuant to this Section that the Owner Trustee shall be deemed to
have possession of the Contract Documents for purposes of Section 9-305 of the
UCC of the state in which the Contract Documents are located.
Section 3.04. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the use
and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall be specified to the Owner Trustee, the
Indenture Trustee and the Insurer by 30 days' prior written notice. The Master
Servicer shall permit the Owner Trustee, the Indenture Trustee and the Insurer
or their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Master Servicer at such times as such Persons may
request.
(c) Release of Documents. Upon instruction from the Indenture Trustee (a
copy of which shall be furnished to the Owner Trustee and the Insurer), the
Master Servicer shall release any Contract File to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
(d) Monthly Reports. On the tenth Business Day of each month, other than
a month in which a Distribution Date occurs, commencing with the month next
succeeding the month of the Closing Date, the Master Servicer shall mail to the
Indenture Trustee and the Owner Trustee, by first class mail, a certificate of a
Servicing Officer stating (i) the Contract Number and outstanding principal
balance of each Contract that has become a Liquidated Contract since the
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Business Day next preceding the date of the last certificate delivered pursuant
to this subsection (or since the Closing Date in the case of the first such
certificate); (ii) that all proceeds received in respect of such Contract have
been deposited in or credited to the Collection Account or Holding Account as
required by Section 5.02; (iii) that, if such Contract has been the subject of a
Full Prepayment pursuant to clause (i) of the definition of the term "Full
Prepayment" or is a Liquidated Contract pursuant to clause (iii) of the
definition of the term "Liquidated Contract," all proceeds received in respect
thereof have been deposited in or credited to the Collection Account or Holding
Account in accordance with Section 5.02; (iv) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (ii) of the definition of
the term "Full Prepayment," the correct Repurchase Amount has been deposited in
or credited to the Collection Account in accordance with Section 4.07 or 5.04;
(v) that, if such Contract is a Liquidated Contract pursuant to clause (ii) of
the definition of the term "Liquidated Contract," there have been deposited in
or credited to the Collection Account or Holding Account the related Net
Liquidation Proceeds in accordance with Section 5.02; (vi) the current Aggregate
Scheduled Balance; (vii) the total dollar amount of charged-off Contracts;
(viii) the total dollar amount of delinquent Contracts; (ix) the total dollar
amount of all Contracts in respect of which the related Financed Vehicles have
been repossessed but have not been liquidated; (x) the current Charge-off
Percentage; and (xi) the current Delinquency Percentage. The information called
for in clauses (vi) through (xi) above shall be presented as of the Business Day
next preceding the date of the last certificate so delivered.
(e) Title Documents. The Master Servicer shall deliver to the Indenture
Trustee, the Owner Trustee and the Insurer (i) within 120 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date did not show the Master Servicer as first lienholder and (ii)
within 180 days of the Closing Date, a schedule of Title Documents for Financed
Vehicles which as of the date prior to such delivery do not show the Master
Servicer as first lienholder and as to which the Seller is obligated to
repurchase pursuant to the provisions hereof.
Section 3.05. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions (a copy of which shall be
furnished to the Owner Trustee and the Insurer) with respect to the Contract
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee.
Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Trust, the Owner Trustee, the Indenture Trustee,
the Insurer and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Trust, the Owner Trustee, the Indenture
Trustee, the Insurer, the Noteholders or the Certificateholders as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Master Servicer of the Contract Files, or the failure of the Master
Servicer to perform its duties and service the 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
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Servicer shall also indemnify and hold harmless the Trust, the Trust Estate and
the Securityholders against any taxes that may be asserted at any time against
any of them with respect to the Contracts, including any sales, gross receipts,
general corporation, personal property, privilege or license taxes (but
exclusive of federal or other income taxes arising out of payments on the
Contracts) and the costs and expenses in defending against such taxes. The
Master Servicer shall immediately notify the Owner Trustee and the Indenture
Trustee if a claim is made by a third party with respect to the Contracts, shall
assume, with the consent of the Owner Trustee and the Indenture Trustee, the
defense of any such claim, pay all expenses in connection therewith, including
counsel fees, and shall promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or the Trust.
Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under to this Section or
until the Class A-3 Final Distribution Date. If the Master Servicer shall resign
in accordance with the provisions of this Agreement or if all of the rights and
obligations of the Master Servicer shall have been terminated pursuant to
Section 8.01, the appointment of the Master Servicer as custodian shall be
terminated by the Indenture Trustee, by the Holders of Notes evidencing not less
than 51% of the Outstanding Amount of the Notes, by the Owner Trustee, by
Certificateholders evidencing not less than 51% of the aggregate Certificate
Percentage Interest, or by the Insurer, in the same manner as the Indenture
Trustee, the Owner Trustee, the Insurer or such Holders may terminate the rights
and obligations of the Master Servicer pursuant to Section 8.01. As soon as
practicable after any termination of such appointment, the Master Servicer
shall, at its own expense, deliver the Contract Files to the Owner Trustee or
its agent at such place or places as the Owner Trustee may reasonably designate
and shall cooperate in good faith to effect such delivery.
Section 3.08. Nonpetition Covenant.
(a) Neither the Sellers nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust.
(b) The Master Servicer shall not, nor cause a Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its
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best efforts to collect such Title Document from the Registrar of Titles as
promptly as possible. If such Title Document showing the Master Servicer as
first lienholder is not received by the Master Servicer or the related
Subservicer within 180 days after the Closing Date, then the representation and
warranty in Section 3.01(b)(iii) in respect of such Contract shall be deemed to
have been incorrect in a manner that materially and adversely affects the
Certificateholders.
Section 3.10. Optional Repurchase of Contracts by the Holder of the
WFSRC Certificate.
(a) On each Distribution Date as of which the WFSRC Aggregate Scheduled
Balance is equal to or less than 20% of the Cut-Off Date WFSRC Aggregate
Scheduled Balance, the Holder of the WFSRC Certificate shall have the option to
purchase the remaining WFSRC Contracts. Notice of the exercise of such option
shall be given by the Holder of the WFSRC Certificate to the Owner Trustee, the
Indenture Trustee and the Insurer not later than the 5th day of the month in
which such Distribution Date occurs. To exercise such option, the Holder of the
WFSRC Certificate shall, on the Business Day immediately preceding the related
Distribution Date, pay to the Indenture Trustee for the benefit of the
Securityholders, by deposit in the Collection Account, the Optional Repurchase
Payment. Upon such deposit of the Optional Repurchase Payment, the Owner Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in the Holder of the WFSRC
Certificate title to any Contract purchased hereunder.
(b) Upon the exercise of the Holder of the WFSRC Certificate of its
right to repurchase the WFSRC Contracts pursuant to Section 3.10(a), the
Optional Repurchase Payment will be distributed pursuant to Section 5.05.
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting alone
and/or through one or more Subservicers as provided in this Section, shall, as
agent for the Indenture Trustee, the Owner Trustee and the Insurer, manage,
service, administer and make collections on the Contracts. The Master Servicer
agrees that its servicing of the Contracts shall be carried out in accordance
with customary and usual procedures of financial institutions which service
motor vehicle retail installment sales contracts and installment loans and, to
the extent more exacting, the procedures used by the Master Servicer in respect
of such contracts serviced by it for its own account. In accordance with the
foregoing, the Master Servicer may, whenever an Obligor has become delinquent or
the Master Servicer believes an Obligor may become delinquent, in order to
preserve the ultimate collectability of amounts due on a Contract, modify the
payment schedule on any Contract by reducing the APR on such Contract without
the consent of the Insurer or any Rating Agency; provided, however, that the new
APR shall not be less than the sum of (i) the Class A-4 Rate, (ii) the Servicing
Fee Percent and (iii) the Retained Yield Percent. In addition, in order to
preserve the Trust Estate, the Master Servicer may, without the consent of any
Rating Agency or the Insurer, reduce the principal amount of a Contract (i.e.,
write-down a portion of the principal amount due on such Contract and,
accordingly, lower the Monthly P&I on such Contract) to the extent funds are
available in the Spread Account to cover such reduction; provided, however, the
total amount of such modifications pursuant to the immediately preceding
sentence and this sentence and reductions (i) may not affect more than 1% of the
Original Pool Balance through the Class A-4 Final Distribution Date and (ii)
during each three-month period between Distribution Dates (or in the case of the
first Distribution Date, from the Cut-Off Date to such Distribution Date) shall
not affect Contracts having an aggregate Scheduled Balance greater than 10/100
of one percent of the Pool Balance at the beginning of such period. Any such
modifications or reductions exceeding such limits may be made only with the
consent of the Insurer and each Rating Agency. The Master Servicer may also
extend the Maturity Date on a Contract in accordance with Section 4.02. The
Master Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee, the Owner Trustee and the Insurer with respect to
distributions and filing applicable U.S. tax returns for the Trust on an annual
basis, based on a tax year for the Trust that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Insurer, the Noteholders, the Certificateholders, the Indenture Trustee, the
Owner Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Owner Trustee shall furnish the Master
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Servicer all documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit D
hereto is merely provided for information and shall not be deemed to limit in
any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement or materially adversely affect the rights of Noteholders,
Certificateholders or the Insurer hereunder.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Insurer
which will be bound by the terms of the related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into an agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
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Master Servicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer or such other Affiliate, as the case may be, and
the Master Servicer alone, and none of the Indenture Trustee, the Owner Trustee,
the Noteholders nor the Certificateholders shall be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer except as set forth in the immediately succeeding paragraph;
provided that the Insurer may rely upon the representations and warranties of
the Subservicer contained therein.
In the event the Master Servicer shall for any reason no longer be a
servicer (including, but not limited to, by reason of an Event of Default), the
Indenture Trustee or its designee may, at the sole discretion of the Indenture
Trustee, thereupon assume all of the rights and obligations of such Master
Servicer under each Subservicing Agreement selected by the Indenture Trustee in
its sole discretion. In such event, the Indenture Trustee, its designee or the
successor servicer for the Indenture Trustee shall be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each such Subservicing Agreement to the same extent as if
such Subservicing Agreement had been assigned to the assuming party except that
the Master Servicer shall not thereby be relieved of any liability or
obligations under the Subservicing Agreement. The Master Servicer shall, upon
request of the Indenture Trustee but at the expense of the Master Servicer,
deliver to the assuming party all documents and records relating to each such
Subservicing Agreement and the Contracts then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreement to the assuming
party.
On the Closing Date, the Master Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after the Cut-Off Date and
received by the Master Servicer at least two Business Days prior to the Closing
Date; (ii) the proceeds of each Prepayment (excluding any portion allocable to
principal and interest due before the Cut-Off Date) of any such Contract
received by the Master Servicer on or after the Cut-Off Date) but no later than
two Business Days prior to the Closing Date; and (iii) all Net Liquidation
Proceeds and Net Insurance Proceeds realized in respect of a Financed Vehicle at
least two Business Days prior to the Closing Date.
Subject to Section 5.02 respecting deposits in the Holding Account, the
Master Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after the
Cut-Off Date received by it on or in respect of the Contracts together with the
proceeds of all Prepayments and any accompanying interest; provided, however,
that, to the extent any such installment of Monthly P&I or any such Prepayment
proceeds are received in respect of a Contract as to which there is an
outstanding and unreimbursed Advance or Advances, such installment or proceeds
shall, to the extent of any such unreimbursed Advance or Advances, be retained
by the Master Servicer in reimbursement of itself. The Master Servicer shall
likewise deposit in the Collection Account within two Business Days of receipt
all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
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Account as required above, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees or collections allocable to payments to be made by the Master Servicer on
behalf of Obligors for payment of insurance premiums or similar items need not
be deposited in the Collection Account and may be retained by the Master
Servicer as additional servicing compensation or for application on behalf of
Obligors, as the case may be.
Amounts otherwise required to be deposited in the Collection Account
pursuant to the immediately preceding paragraph shall instead be deposited by
the Master Servicer in the Holding Account to the extent such amounts are
payments of Monthly P&I due in one or more months subsequent to the end of the
Due Period during which such payments are received.
With respect to payments of Monthly P&I made by Obligors to the Master
Servicer's lock box, the Master Servicer shall direct the Person maintaining the
lock box to deposit the amount collected on or in respect of the Contracts to
the Collection Account.
In those cases where a Subservicer is servicing a Contract pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer to remit
to the Master Servicer for deposit in the Collection Account, on a daily basis,
within two Business Days after receipt by the Subservicer, all proceeds of
Contracts and all Net Liquidation Proceeds and Net Insurance Proceeds received
by the Subservicer.
In order to facilitate the servicing of the Contracts by the Master
Servicer, the Master Servicer shall retain, subject to and only to the extent
permitted by the provisions of this Agreement, all collections on or in respect
of the Contracts prior to the time they are remitted or credited, in accordance
with such provisions, to the Collection Account or the Holding Account, as the
case may be. The Master Servicer acknowledges that the unremitted collections on
the Contracts are part of the Trust Estate and the Master Servicer agrees to act
as custodian and bailee of the Indenture Trustee, the Owner Trustee and the
Insurer in holding such monies and collections. The Master Servicer agrees, for
the benefit of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer, to act as such custodian and bailee, and to hold and deal with such
monies and such collections, as custodian and bailee for the Indenture Trustee,
the Owner Trustee and the Insurer, in accordance with the provisions of this
Agreement.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Contracts at the address of the Master
Servicer set forth as Schedule B to this Agreement, at the office of any
Subservicer or, upon 15 days' notice to the Insurer, the Indenture Trustee and
the Owner Trustee, at such other place where the servicing offices of the Master
Servicer are located, and shall give the Indenture Trustee, the Owner Trustee
and the Insurer access to all data at all reasonable times. While a Servicer
Default shall be continuing, the Master Servicer shall, on demand of the
Indenture Trustee, the Owner Trustee or the Insurer, deliver or cause to be
delivered to the Indenture Trustee, the Owner Trustee or the Insurer, as the
case may be, all data (including,
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without limitation, computerized records and,
to the extent transferable, related operating software) necessary for the
servicing of the Contracts and all monies collected by it and required to be
deposited in or credited to the Collection Account or the Holding Account, as
the case may be.
Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided that in the case of any extension granted pursuant to
clause (ii) the Master Servicer makes an Advance in respect of such extension
and in no event can the last payment on such Contract be extended beyond the
last day of the Due Period ending immediately prior to the Class A-4 Final
Distribution Date. The Master Servicer shall not extend the Maturity Date of a
Contract except as provided in clause (ii) of the preceding sentence and shall
not modify any Contracts except in accordance with the criteria and limitations
specified in Section 4.01.
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Trust. The Master Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
defaulted Contract; provided,
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however, that it shall be entitled to reimbursement of such costs and expenses
to the extent they constitute Liquidation Expenses or expenses recoverable under
an applicable Insurance Policy. All Net Liquidation Proceeds, Net Insurance
Proceeds and proceeds of the sale of Contracts hereunder shall be deposited
directly in or credited to the Collection Account (without deposit in any
intervening account) to the extent required by Section 5.02.
Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $4,000 or the related
Contract has six or fewer months remaining before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Contracts. The Owner Trustee and the Indenture Trustee each hereby authorizes
the Master Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Trust in the event of the relocation of a
Financed Vehicle or for any other reason.
Section 4.06. Covenants, Representations and Warranties of Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which (i) the Issuer is deemed to have relied
in acquiring the Contracts and (ii) the Insurer is deemed to have relied in
issuing the Note Policy. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Master Servicer covenants as to the Contracts:
(i) Lien in Force. The Financed Vehicle securing each Contract
shall not be released from the lien granted by the Contract in whole or
in part, except as contemplated herein.
(ii) Impairment. The Master Servicer shall not impair the rights
of the Noteholders and Certificateholders in the Contracts.
(iii) Amendments. The Master Servicer shall not amend the terms
of any Contract, except that extensions or modifications may be granted
in accordance with Section 4.02.
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(iv) Transfers. The Master Servicer may consent to the sale or
transfer by an Obligor of any Financed Vehicle if the original Obligor
under the related Contract remains liable under such Contract and the
transferee assumes all of the Obligor's obligations thereunder.
(b) The Master Servicer represents, warrants, and covenants:
(i) Organization and Good Standing. The Master Servicer (A) has
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, (B) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (C) has full power,
authority and legal right to own its property, to carry on its business
as presently conducted and to enter into and perform its obligations
under this Agreement.
(ii) Power and Authority. The execution and delivery by the
Master Servicer of this Agreement are within the corporate power of the
Master Servicer and have been duly authorized by all necessary corporate
action on the part of the Master Servicer. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
herein contemplated, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default under,
any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Master Servicer or its
properties or the articles of incorporation or bylaws of the Master
Servicer, or any of the provisions of any indenture, mortgage, contract
or other instrument to which the Master Servicer is a party or by which
it is bound or result in the creation or imposition of any lien, charge
or encumbrance upon any of its property pursuant to the terms of any
such indenture, mortgage, contract or other instrument.
(iii) Governmental Consents. The Master Servicer is not required
to obtain the consent of any other party or consent, license, approval
or authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except (in
each case) such as have been obtained and are in full force and effect.
(iv) Binding Obligation. This Agreement has been duly executed
and delivered by the Master Servicer and, assuming the due
authorization, execution and delivery thereof by the Owner Trustee and
the Indenture Trustee, constitutes a legal, valid and binding instrument
enforceable against the Master Servicer in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights generally).
(v) No Proceedings. There are no actions, suits or proceedings
pending or, to the knowledge of the Master Servicer, threatened against
or affecting the Master Servicer, before or by any court, administrative
agency, arbitrator or governmental body with respect to any of the
transactions contemplated by this Agreement, or which will, if
determined adversely to the Master Servicer, materially and adversely
affect it or its business, assets, operations or condition, financial or
otherwise, or adversely affect the Master
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Servicer's ability to perform its obligations hereunder. The Master
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by the
above-mentioned documents.
(vi) Other Consents. The Master Servicer has obtained or made all
necessary consents, approvals, waivers and notifications of creditors,
lessors and other nongovernmental persons, in each case in connection
with the execution and delivery of, and the consummation of the
transactions contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have
been cured within 30 days following such discovery, the Master Servicer shall
purchase any Contract materially and adversely affected by such breach. In
consideration of the purchase of such Contract, the Master Servicer shall remit
the Repurchase Amount in the manner specified in Section 5.04. The sole remedy
of the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
or the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or
4.06 shall be to require the Master Servicer to purchase Contracts pursuant to
this Section; provided, however, that the Master Servicer shall indemnify the
Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach. The Owner Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Contract pursuant to this
Section.
Section 4.08. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement and subject to the terms of
this Section, the Master Servicer shall be entitled to receive on each
Distribution Date the Servicing Fee in respect of each Contract that was
Outstanding at the beginning of the Due Period ending immediately prior to such
Distribution Date, to the extent the related payment of Monthly P&I has been
collected or advanced pursuant to Section 5.04. As servicing compensation in
addition to the Servicing Fee, the Master Servicer shall be entitled (i) to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts, and (ii) to receive, in respect of each Rule of 78's
Contract that is prepaid in full prior to its Maturity Date, the amount by which
the outstanding principal balance of such Contract exceeds the Scheduled Balance
of such Contract at the time of such prepayment; provided, however, that the
Master Servicer agrees that each amount payable to it pursuant to clause (ii)
above shall be deposited in the Spread Account and applied in accordance with
Article Five and the Insurance Agreement. The Master Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement of such expenses except to the extent
provided in Section 4.03.
Section 4.09. Reporting by the Master Servicer.
(a)On each Master Servicer Report Date, the Master Servicer shall
transmit to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a statement, substantially in
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the form of Exhibit F hereto (the "Distribution Date Statement"), setting forth
with respect to the next succeeding Distribution Date:
(i) the Note Interest Distributable Amount for such Distribution
Date;
(ii) the Note Principal Distributable Amount for such
Distribution Date and the portion thereof constituting the Accelerated
Principal Distributable Amount;
(iii) the Net Collections and the Note Percentage for such
Distribution Date;
(iv) the amount otherwise distributable to each Class of
Noteholders that will be distributed to a different Class of Noteholders
on such Distribution Date;
(v) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto
and withdrawals therefrom to be made in respect of such Distribution
Date;
(vi) the Servicing Fee with respect to the related Due Period;
(vii) the amount of any Note Interest Carryover Shortfall and
Note Principal Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(viii) the aggregate amount of Monthly P&I which was due on the
Contracts during the related Due Period and was delinquent as of the end
of the related Due Period (any such payment of Monthly P&I being
presumed to be delinquent to the extent that it was not deposited in or
credited to the Collection Account during such Due Period);
(ix) the amount set forth in clause (viii) above which is being
advanced concurrently with such Distribution Date Statement by the
Master Servicer pursuant to Section 5.04, the amount of any such Advance
being deposited in or credited to the Collection Account on such Master
Servicer Report Date;
(x) the aggregate amount of any Nonrecoverable Advances deducted
by the Master Servicer from amounts otherwise required to be deposited
by the Master Servicer in the Collection Account during the related Due
Period;
(xi) the aggregate amount of Retained Yield for the related Due
Period;
(xii) the Aggregate Net Liquidation Losses for the related Due
Period;
(xiii) the Delinquency Percentage and the Charge-Off Percentage
for the most recent Calculation Day;
(xiv) the amount of Contracts which have had their APR or
principal amount modified pursuant to Section 4.01 and the percentage
that amount constitutes of the Original Principal Balance on a
cumulative basis; in addition the aggregate Scheduled
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Balance of Contracts so modified as a percentage of the Pool Balance for
the most recent Distribution Date;
(xv) the Note Deficiency Claim Amount, if any, for such
Distribution Date, separately setting forth the amount thereof payable
in respect of each Class of Notes;
(xvi) the Note Policy Claim Amount, if any, for such Distribution
Date, separately setting forth the amount thereof payable in respect of
each Class of Notes;
(xvii) the Certificate Distributable Amount;
(xviii) the Base Price and the Repurchase Premium paid for WFSRC
Contracts repurchased pursuant to Section 3.10; and
(xix) if the data becomes available, the principal amount of
Contracts originated by WFS in respect of clauses (viii) and (xii)
above.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.
(b) On each Master Servicer Report Date, the Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a report, in respect of the immediately preceding Due Period, setting
forth the following:
(i) the aggregate amount, if any, paid by or due from it for the
purchase of Contracts which the Sellers or the Master Servicer has
become obligated to purchase pursuant to Section 3.02 or 4.07, the
Sellers have elected to purchase pursuant to Section 9.01 or the Holder
of the WFSRC Certificate has elected to purchase pursuant to Section
3.10;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account or the Holding Account in respect of
such Due Period (including amounts, if any, collected during the
immediately preceding Due Period and deposited in the Holding Account
pursuant to Section 5.02) after giving effect to all permitted
deductions therefrom pursuant to Section 5.02;
(iii) with respect to each Contract that became a Liquidated
Contract during such Due Period, the following information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
(C) its Monthly P&I and Scheduled Balance as of the
immediately preceding Distribution Date (or as of the Cut-Off
Date in the case of the first Distribution Date); and
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(D) if less than 100% of the outstanding principal balance
of and accrued and unpaid interest was recovered on such
Liquidated Contract, the amount of the Net Liquidation Proceeds
or Net Insurance Proceeds;
(iv) with respect to each Contract which was the subject of a
Partial Prepayment during such Due Period, the following information:
(A) its Contract Number;
(B) the date of such Partial Prepayment;
(C) its new Maturity Date;
(D) the total amount received with respect to such Partial
Prepayment; and
(E) its Scheduled Balance as of the prior Distribution
Date (or as of the Cut-Off Date in the case of the first
Distribution Date) and its Scheduled Balance for each
Distribution Date having a Due Period prior to the Due Period of
its Maturity Date, computed on the basis set forth under the
definition of the term "Scheduled Balance";
(v) the Contract Numbers, Monthly P&I, Scheduled Balances and
Maturity Dates of all Contracts which became Defaulted Contracts during
such Due Period;
(vi) any other information relating to the Contracts reasonably
requested by the Owner Trustee, the Indenture Trustee, each Rating
Agency or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account or the Holding Account in respect of the Due Period ending
immediately prior to such Master Servicer Report Date and the cumulative
amount of Net Liquidation Proceeds and Net Insurance Proceeds deposited
in or credited to the Collection Account or the Holding Account during
the preceding Due Periods.
Section 4.10. Annual Statement as to Compliance. The Master Servicer
shall deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency
and the Insurer, on or before 90 days after the end of each fiscal year of the
Master Servicer, beginning with the fiscal year ended December 31, 2000, an
Officers' Certificate of the Master Servicer stating that (i) a review of the
activities of the Master Servicer during the preceding fiscal year (or since the
Closing Date in the case of the first such Officers' Certificate) and of its
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement
throughout such year and that no default under this Agreement has occurred and
is continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder, Certificate Owner,
Noteholder or Note Owner by a request in writing to the Owner Trustee addressed
to the
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Owner Trustee Corporate Trust Office. Upon the telephone request of the Owner
Trustee, the Indenture Trustee will promptly furnish the Owner Trustee a list of
Noteholders as of the date specified by the Owner Trustee.
Section 4.11. Annual Independent Certified Public Accountants' Report.
On or before 90 days after the end of the first fiscal year of the Master
Servicer which ends more than three months after the Closing Date and each
fiscal year thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee, each Rating Agency and the Insurer to the
effect that (i) they have audited the balance sheet of the Master Servicer as of
the last day of said fiscal year and the related statements of operations,
retained earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as they considered
necessary in the circumstances, and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Notes and Certificates in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth such exceptions which, in their opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Insurer, the Indenture
Trustee and the Securityholders access to the Contract Files in such cases where
the Certificateholders or Noteholders shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a
fidelity bond in such form and amount as is customary for banks acting as
custodian of funds and documents in respect of mortgage loans or consumer
contracts on behalf of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the
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Owner Trustee, the defense of any such claim and pay all expenses in connection
therewith, including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it or Indenture Trustee, the
Owner Trustee, the Noteholders or the Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at a
depository institution (which may be the Indenture Trustee, the Bank or the
Master Servicer), the following accounts (the "Trust Accounts"):
(i) an account in the name of the Indenture Trustee (the
"Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(ii) an account in the name of the Indenture Trustee (the
"Holding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iii) an account in the name of the Indenture Trustee (the
"Spread Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iv) an account in the name of the Indenture Trustee (the "Note
Distribution Account") bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Noteholders; and
(v) an account in the name of the Owner Trustee (the "Certificate
Distribution Account") bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the
Certificateholders.
The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee, the Owner Trustee and the Insurer at least
five Business Days' written notice of any change in the location of any Trust
Account and any related account identification information. All monies
(exclusive of the Retained Yield) deposited in or credited to, from time to
time, the Trust Accounts shall be part of the Trust Estate and all monies
deposited in or credited to, from time to time, the Collection Account, the
Spread Account, the Certificate Distribution Account and the Note Distribution
Account shall be invested by the Indenture Trustee in Eligible Investments
pursuant to Section 5.01(b). On the Business Day following each Distribution
Date, all amounts, if any, on deposit in or credited to the Holding Account
(excluding any installments of Monthly P&I that are due in one or more Due
Periods ending subsequent to the Distribution Date immediately succeeding such
Distribution Date) shall be transferred to the Collection Account.
(b) All funds in the Collection Account, the Spread Account, the Note
Distribution Account and the Certificate Distribution Account shall be invested
by the Indenture Trustee in Eligible Investments and/or Proprietary Funds.
Unless and until the RIC is no longer an Eligible Investment, all funds in such
Trust Accounts, in each case that are available for investment in
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Eligible Investments or in Proprietary Funds, shall be invested in the RIC or in
Proprietary Funds. If the RIC is no longer an Eligible Investment then, subject
to the limitations set forth herein, the Master Servicer may direct the
Indenture Trustee in writing to invest funds in the foregoing Trust Accounts in
Eligible Investments or Proprietary Funds other than the RIC; provided that in
the absence of such directions from the Master Servicer, the Insurer may so
direct the Indenture Trustee. All such investments shall be in the name of the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders,
as applicable. All income or other gain from investment of monies deposited in
or credited to the Collection Account (including without limitation the RIC
Reinvestment Earnings) shall be deposited in or credited to the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Collection Account. All income or other gain from
investment of monies deposited in or credited to the Spread Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Spread Account immediately upon receipt, and any loss resulting
from such investment shall be charged to the Spread Account. All income or other
gain from investment of monies deposited in or credited to the Note Distribution
Account (including without limitation the RIC Reinvestment Earnings) shall be
deposited in or credited to the Note Distribution Account immediately upon
receipt, and any loss resulting from such investment shall be charged to the
Note Distribution Account. All income or other gain from investment of monies
deposited in or credited to the Certificate Distribution Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Certificate Distribution Account immediately upon receipt, and
any loss resulting from such investment shall be charged to the Certificate
Distribution Account. The maximum permissible maturities of any investments of
funds in the Collection Account, the Spread Account, the Note Distribution
Account and the Certificate Distribution Account on any date shall not be later
than the fifth Business Day immediately preceding the Distribution Date next
succeeding the date of such investment; provided, however, that such funds may
be invested by the Indenture Trustee in Eligible Investments (other than the
RIC) that mature on the Business Day before the Distribution Date or in
Proprietary Funds for a period not to exceed one Business Day. No investment in
Eligible Investments may be sold prior to its maturity and all investments in
Proprietary Funds shall be for a period not to exceed one Business Day.
(c) Funds in the Holding Account shall not be invested.
(d) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
(exclusive of Retained Yield, if any) and in all proceeds thereof (including all
income thereon) and all such funds, investments, proceeds and income shall be
part of the Trust Estate. The Trust Accounts, other than the Certificate
Distribution Account, shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders,
as the case may be. The Certificate Distribution Account shall be in the name of
the Owner Trustee for the benefit of the Certificateholders. If, at any time,
any of the Trust Accounts ceases to be an Eligible Account, the Indenture
Trustee (or the Master Servicer on its behalf) shall within ten Business Days
(or such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Trust Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Trust Account.
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(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject
to the last sentence of Section 5.01(d)(i); and each such
Eligible Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall
have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in
accordance with paragraph (i) of the definition of the term
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a Financial Intermediary
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance
with paragraph (ii) of the definition of the term "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article Eight of the UCC and that is not governed
by clause (C) above shall be delivered to the Indenture Trustee
in accordance with paragraph (iii) of the definition of the term
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued registration
of the Indenture Trustee's (or its nominee's) ownership of such
security.
(iii) The Master Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts for the purpose of permitting the
Master Servicer or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.
(a) Subject to Section 5.03 and subsections (b) and (e) hereof, the
Master Servicer shall remit or credit all payments by the Obligors on the
Contracts, all payments on behalf of Obligors on the Contracts, and all Net
Liquidation Proceeds and Net Insurance Proceeds to the Collection Account
(within two Business Days as specified in Section 4.01); provided that the
Master Servicer shall retain from collection of late payments and Net
Liquidation Proceeds or Net Insurance Proceeds in respect of a Contract an
amount equal to previously unreimbursed Advances in respect of such Contract
made pursuant to Section 5.04. Amounts otherwise required to be deposited in or
credited to the Collection Account pursuant to the immediately preceding
sentence shall instead be deposited in or credited to the Holding Account to the
extent
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that such amounts are installments of Monthly P&I which are due in a Due Period
for a Distribution Date subsequent to the Distribution Date immediately
succeeding the date of receipt.
(b) Notwithstanding anything in this Agreement to the contrary, the
Retained Yield will be collected by the Master Servicer and paid out on a
monthly basis to the Seller without ever becoming part of the Trust's assets.
(c) Not later than 12:00 p.m., New York City time, on the fifth Business
Day prior to each Distribution Date, based on the information set forth in the
related Distribution Date Statement to the extent that there are insufficient
funds to make the distributions required to be made to each Class of Notes as
described in Sections 5.05 and 5.06, the Master Servicer shall deliver to the
Indenture Trustee, with a copy to the Insurer, the Owner Trustee and the Fiscal
Agent, if any, by hand delivery, telex or facsimile transmission, a written
notice (a "Deficiency Notice") specifying the Note Deficiency Claim Amount, if
any, for such Distribution Date, separately identifying the amount of the
applicable Deficiency Claim Amount payable in respect of each Class of Notes.
Such Deficiency Notice shall direct the Indenture Trustee to remit such
Deficiency Claim Amount (to the extent of funds then on deposit in the Spread
Account) to the Indenture Trustee for deposit in the Note Distribution Account.
(d) Not later than 12:00 p.m., New York City time, on the fourth
Business Day prior to each Distribution Date, the Indenture Trustee shall make a
claim under the Note Policy for any Note Policy Claim Amount for such
Distribution Date by delivering to the Insurer and the Fiscal Agent, if any,
with a copy to the Master Servicer, by hand delivery, telex or facsimile
transmission, a claim for the related Note Policy Claim Amount, as the case may
be. In making any such claim, the Owner Trustee or the Indenture Trustee shall
comply with all the terms and conditions of the related Policy. The notice of
such claim shall direct the Insurer to remit such Note Policy Claim Amount to
the Owner Trustee or the Indenture Trustee for deposit in the Note Distribution
Account.
(e) So long as the Master Servicer is WFS, the Master Servicer shall
have the right, on a basis not more frequently than once per month (although
deposits shall be made into the Collection Account within two Business Days
pursuant to Section 4.01), to deduct from amounts received that are otherwise
required to be deposited in or credited to the Collection Account and, to the
extent such amounts are insufficient, to require that the Indenture Trustee
withdraw and deliver to it from the Collection Account, amounts due to be paid
hereunder to the Master Servicer or to the Seller after giving effect to
application of the payment priorities specified in this Article for the month
(or other applicable period), and to pay such amounts to itself as Master
Servicer or to the Seller, as the case may be. Notwithstanding the foregoing,
the Master Servicer shall maintain the records and accounts for such deposits
and credits on a gross basis.
Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third to
principal due on the Contract and fourth to administrative charges, if any. Any
excess shall be applied to prepay the principal balance of the Contract.
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Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.
(a) If, as of the end of any Due Period, one or more payments of Monthly
P&I due under any Contract (other than a Liquidated Contract) Outstanding at the
end of such Due Period shall not have been received by the Master Servicer and
deposited in or credited to the Collection Account pursuant to Section 5.02(a),
the Master Servicer shall make, concurrently with the furnishing of the related
Distribution Date Statement to the Indenture Trustee and the Owner Trustee, the
Advance for such Due Period by depositing in or crediting to the Collection
Account (i) with respect to a Rule of 78's Contract, the amount of delinquent
Monthly P&I and (ii) with respect to a Simple Interest Contract, 30 days of
interest on the Outstanding Principal Balance of such Contract at a rate equal
to the sum of (A) the Class A-4 Rate and (B) the Servicing Fee Percent for each
month that the related Monthly P&I is delinquent at the end of such Due Period.
The Master Servicer shall account for such deposit or credit in accordance with
Section 4.01. The foregoing notwithstanding, the Master Servicer shall not make
an Advance in respect of a Contract if the Master Servicer shall have determined
that any such Advance, if made, would constitute a Nonrecoverable Advance. Any
such determination shall be evidenced by an Officers' Certificate furnished to
the Indenture Trustee, the Owner Trustee and the Insurer setting forth the basis
for such determination.
(b) If the Master Servicer determines that it has made a Nonrecoverable
Advance or Advances, the Master Servicer shall reimburse itself, without
interest, from unrelated installments of Monthly P&I or Prepayment proceeds to
the extent it shall, concurrently with the withholding of any such installment
or proceeds from deposit in or credit to the Collection Account as required by
Section 5.02, furnish to the Indenture Trustee, the Owner Trustee and the
Insurer a certificate of a Servicing Officer setting forth the basis for the
Master Servicer's determination, the amount of, and Contract with respect to
which, such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken.
(c) The Master Servicer or the Seller, as the case may be, shall remit
or credit to the Collection Account the aggregate Repurchase Amount with respect
to Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts and the Master Servicer shall deposit
therein all amounts to be paid under Section 9.01.
(d) WFSRC shall remit or credit to the Collection Account the Optional
Repurchase Payment for WFSRC Contracts repurchased pursuant to Section 3.10.
Section 5.05. Distributions.
(a) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Master Servicer or deposit in the applicable account by 11:00 a.m. (New York
time),
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(i) to the extent of the Net Collections for such Distribution
Date, in the following order of priority:
(A) to the Master Servicer, the Servicing Fee, including
any unpaid Servicing Fees with respect to one or more prior Due
Periods;
(B) to the Indenture Trustee and the Owner Trustee from
Net Collections (after giving effect to the reduction in Net
Collections described in clause (A) above), any accrued and
unpaid Trustees' fees, in each case to the extent such fees have
not been previously paid by the Master Servicer;
(C) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections
described in clauses (A) and (B) above), the Note Interest
Distributable Amount;
(D) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections
described in clauses (A) through (C) above), the Note Principal
Distributable Amount, (which amount includes, if such
Distribution Date is a Note Final Distribution Date, the
remaining principal amount of the related Class of Notes) first
to the holders of the Class A-1 Notes until the principal amount
of the Class A-1 Notes has been reduced to zero, second to the
holders of the Class A-2 Notes until the principal amount of the
Class A-2 Notes has been reduced to zero, third to the holders of
the Class A-3 Notes until the principal amount of the Class A-3
Notes has been reduced to zero; fourth to the holders of the
Class A-4 Notes until the principal amount of the Class A-4 Notes
has been reduced to zero and
(E) to the Insurer, from Net Collections (after giving
effect to the reduction in Net Collections described in clauses
(A) through (D) above), any Unreimbursed Insurer Amounts.
(ii) if WFSRC has deposited the Optional Repurchase Amount in
respect of the WFSRC Contracts that have been repurchased as of such
Distribution Date, to the Note Distribution Account, the Repurchase
Premium, for distribution pursuant to Section 8.02(d) of the Indenture.
(b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Net Collections
after making the distributions described in Section 5.05(a) ("Excess Amounts")
to the Spread Account. On each Distribution Date, the Master Servicer shall
instruct the Indenture Trustee to distribute the Excess Spread Amount pursuant
to Section 5.06(b).
(c) To the extent that on any Distribution Date the amount on deposit in
the Note Distribution Account (after giving effect to any deposits thereto on
such Distribution Date) is less than the Note Distributable Amount, Noteholders
shall be entitled to receive distributions in respect of such deficiency first,
from amounts on deposit in the Spread Account pursuant to a
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Deficiency Notice; and second, if such amounts are still insufficient, from a
claim made under the Note Policy for the Note Policy Claim Amount pursuant to
Section 5.02(d).
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, the Owner Trustee, on behalf of the
Seller, shall deposit the Spread Account Initial Deposit into the Spread Account
from the net proceeds of the sale of the Notes. The Spread Account will be held
for the benefit of the Securityholders and the Insurer in order to effectuate
the subordination of the rights of the Securityholders to the extent described
above.
(b) On each Calculation Day and Distribution Date, the Master Servicer
shall instruct the Indenture Trustee to distribute the Excess Spread Amount, (i)
first, to the Insurer, to the extent of any Unreimbursed Insurer Amounts, (ii)
second, to WFAL until WFAL has received an aggregate amount equal to the Spread
Account Initial Deposit and (iii) third, to the Certificate Distribution Account
for distribution to Certificateholders in accordance with Section 5.02 of the
Trust Agreement. Upon any such distribution to the Insurer, neither Seller, nor
the Securityholders will have further rights in, or claims to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Upon termination of the Trust pursuant to Section 9.01, any amounts
on deposit in the Spread Account, after payments of amounts due to the
Securityholders or the Insurer (if there exists any Unreimbursed Insurer
Amounts), will be distributed first, to WFAL until WFAL has received an
aggregate amount equal to 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, the Indenture Trustee shall include with
each distribution to each Noteholder of record as of the related Record Date a
statement, prepared by the Master Servicer, based on the information in the
Distribution Date Statement furnished pursuant to Section 4.09, setting forth
for such Distribution Date the following information as of the related Record
Date or such Distribution Date, as the case may be:
(i) the amount of such distribution allocable to principal
(stated separately for each Class of Notes);
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
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(iii) the Aggregate Scheduled Balance as of the close of business
on the last day of such Due Period;
(iv) the amount of the Servicing Fee paid to the Master Servicer
with respect to the related Due Period;
(v) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Distribution Date and the change
in such amounts from those with respect to the immediately preceding
Distribution Date;
(vi) the Note Pool Factor for each Class of Notes as of such
Distribution Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(vii) the Certificate Distributable Amount;
(viii) the amount on deposit in the Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from the immediately
preceding Distribution Date; and
(ix) the amount of any Base Price and Repurchase Premium payable
on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 of original principal amount of a
Note.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Indenture Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of a Note a statement or statements, prepared by the Master
Servicer, which in the aggregate contain the sum of the amounts set forth in
clauses (i), (ii), (iv) and (v) above for such calendar year or, in the event
such Person shall have been a Holder of a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE SIX
THE SELLERS
Section 6.01. Corporate Existence. During the term of this Agreement,
each 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 each Seller and its
Affiliates will be conducted on an arm's-length basis.
Section 6.02. Liability of Seller; Indemnities. Each Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by such Seller under this Agreement.
Each Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Master Servicer from and against
any taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Basic Documents,
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Contracts to the Issuer or the issuance and original sale of the Securities,
or asserted with respect to ownership of the Contracts, or federal or other
income taxes arising out of distributions on the Certificates or the Notes) and
costs and expenses in defending against the same.
Each Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Securityholders from and against
any loss, liability or expense incurred by reason of such Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
Each Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If a Seller
shall have made any indemnity payments pursuant to this Section and the Person
to or on behalf of whom such payments are
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made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to such Seller, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, a Seller; Certain Limitations.
(a) Neither Seller shall consolidate with nor merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which such Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer, the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer, which contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Seller under this
Agreement. Each Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and will deliver to
the Insurer, the Owner Trustee and the Indenture Trustee a letter from each
Rating Agency to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of its then-current
ratings of each Class of Notes. Each Seller and WFS shall maintain separate
corporate offices.
(b) (i) Subject to paragraph (ii) below, the purpose of each Seller
shall be to engage in any lawful activity for which a corporation may be
organized under the General Corporation Law of California and which is permitted
for operating subsidiaries of federally chartered savings associations other
than the banking business, the trust company business or the practice of a
profession permitted to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the actual business
activities of (A) WFAL shall be limited to those activities permitted an
operating subsidiary of a federally chartered savings association pursuant to 12
CFR Section 559.3(e)(1) and (B) WFSRC shall be limited to those activities
permitted a service corporation of a federally chartered savings association
pursuant to 12 CFR Section 559.4 and, in each case, shall include the following
purposes and the activities incident to and necessary or convenient to
accomplish the such purposes: (1) 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"); (2) 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 (3) to negotiate, authorize, execute, deliver and
assume the obligations of any agreement relating to the activities set forth in
clauses (1) and (2) above, including but not limited to any pooling and
servicing agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement or underwriting agreement or to engage
in any lawful activity which is incidental to the activities contemplated by any
such agreement. So long as any outstanding debt of a Seller or Offered
Securities are rated by any nationally recognized statistical rating
organization, such Seller shall not issue notes or otherwise incur debt unless
(I) such Seller has made a written request to the related nationally recognized
statistical
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rating organization to issue notes or incur borrowings which notes or borrowings
are rated by the related nationally recognized statistical rating organization
the same as or higher than the rating afforded such debt or securities, or (II)
such notes or borrowings (X) are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt and/or
Offered Securities) or are nonrecourse against any assets of the Seller other
than the assets pledged to secure such notes or borrowings, (Y) do not
constitute a claim against the Seller in the event such assets are insufficient
to pay such notes or borrowings, and (Z) where such notes or borrowings are
secured by the rated debt or Offered Securities, are fully subordinated (and
which shall provide for payment only after payment in respect of all outstanding
rated debt and/or Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, neither Seller shall do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii) without the affirmative vote of a majority of the members of
the Board of Directors of the Seller (which must include the affirmative
vote of at least two duly appointed Independent directors) (A) dissolve
or liquidate, in whole or in part, or institute proceedings to be
adjudicated bankrupt or insolvent, (B) consent to the institution of
bankruptcy or insolvency proceedings against it, (C) file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (D) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the corporation or a substantial part of
its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally
as they become due, or (G) take any corporate action in furtherance of
the actions set forth in clauses (A) through (F) above; provided,
however, that no director may be required by any shareholder of the
Seller to consent to the institution of bankruptcy or insolvency
proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Vehicle Receivables and the sale of Vehicle Receivables
to one or more trusts in accordance with the terms of clause (b)(ii)
above, which shall not be otherwise restricted by this Section 6.03(c)).
Section 6.04. Limitation on Liability of Sellers and Others. The Sellers
and any director or officer or employee or agent of the Sellers 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 Sellers and any
director or officer or employee or agent of the Sellers 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 Sellers shall not be under any
obligation
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to appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion may involve it
in any expense or liability. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement.
Section 6.05. Sellers Not to Resign. Subject to the provisions of
Section 6.03, the Sellers shall not resign from the obligations and duties
hereby imposed on them as Sellers hereunder.
Section 6.06. Sellers May Own Securities. Each 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 a Seller or an Affiliate thereof
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the
Notes.
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ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities. Subject to
Section 8.02, the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Master Servicer
under this Agreement. Such obligations shall include the following:
(a) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the
Securityholders and the Insurer from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the Master Servicer,
any Subservicer or any of their respective Affiliates of a Financed
Vehicle.
(b) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Insurer
from and against any taxes that may at any time be asserted against the
Owner Trustee, the Indenture Trustee or the Issuer with respect to the
transactions contemplated herein, including, without limitation, any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the
Issuer or the issuance and original sale of the Securities, or asserted
with respect to ownership of the Contracts, or federal or other income
taxes arising out of distributions on the Securities) and costs and
expenses in defending against the same.
(c) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer and
the Securityholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost,
expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Master Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement.
(d) The Master Servicer shall indemnify, defend and hold harmless
the Owner Trustee, the Indenture Trustee and the Insurer from and
against any and all costs, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with the acceptance
or performance of the trusts and duties herein contained, except to the
extent that such cost, expense, loss, claim, damage or liability (i)
shall be due to the willful misfeasance, bad faith or negligence (except
for errors in judgment) of the Owner Trustee or the Indenture Trustee,
as the case may be; (ii) relates to any tax other than the taxes with
respect to which either a Seller or Master Servicer shall be required to
indemnify the Owner Trustee and the Indenture Trustee; (iii) shall arise
from the Owner Trustee's or the Indenture Trustee's breach of any of
their respective representations or warranties set forth herein, in the
Trust Agreement or in the Indenture; or (iv) shall be one as to which a
Seller is required to indemnify the Owner Trustee or the Indenture
Trustee, as the case may be.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Master Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Master Servicer, without
interest.
Section 7.02. Corporate Existence; Status as Master Servicer; Merger.
The Master Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person unless the corporation formed by such consolidation
or into which the Master Servicer has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Master
Servicer as an entirety can lawfully perform the obligations of the Master
Servicer hereunder and executes and delivers to the Indenture Trustee and the
Owner Trustee an agreement in form and substance reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance or
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Agreement. Notice shall be sent to each Rating Agency
by the Master Servicer of any consolidation, merger or succession pursuant to
this Section.
Section 7.03. Performance of Obligations.
(a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Master Servicer shall not take any action, or permit any action
to be taken by others, which would excuse any person from any of its covenants
or obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
Section 7.04. Master Servicer Not to Resign; Assignment.
(a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its Board of Directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture Trustee, to such effect. No such resignation shall become effective
unless and until (i) a new servicer acceptable to the Owner Trustee, the
Indenture Trustee and the Insurer is willing to service the Contracts and enters
into a servicing agreement with the Trust and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer and (ii) each Rating Agency confirms that
the selection of such new servicer will not result in the qualification,
reduction or withdrawal of its then-current rating of each Class of
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Notes assigned by such Rating Agency. No such resignation shall affect the
obligation of the Master Servicer to repurchase Contracts pursuant to Section
4.07.
(b) Except as specifically permitted in this Agreement, the Master
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.
(c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Trust shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.
(d) The resignation of the Master Servicer in accordance with this
Section shall not affect the rights of the Sellers hereunder. If the Master
Servicer resigns pursuant to this Section, its appointment as custodian can be
terminated pursuant to Section 3.07.
Section 7.05. Limitation on Liability of Master Servicer and Others.
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.
(b) The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and
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the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the Securityholders
under the Basic Documents.
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) a claim being made under the Note Policy;
(b) any failure by the Master Servicer or the Issuer, to deposit
or credit, or to deliver to the Indenture Trustee for deposit, in any of
the Trust Accounts any amount required hereunder to be as deposited,
credited or delivered or to direct the Indenture Trustee to make any
required distributions therefrom, that shall continue unremedied for a
period of three Business Days after written notice of such failure is
received from the Owner Trustee, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Master Servicer;
(c) any failure by the Master Servicer to deliver to the Insurer,
the Indenture Trustee or the Owner Trustee a report in accordance with
Section 4.09 and/or Section 4.10 by the fourth Business Day prior to the
Distribution Date with respect to which such report is due, or the
Master Servicer shall have defaulted in the due observance of any
provision of Section 7.02 (other than failure to enter into an
assumption agreement under Section 7.02, which is a Servicer Default
only if such failure continues for ten Business Days);
(d) failure on the part of a 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 Sellers set forth
in this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of the Insurer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or Noteholders
and (ii) continue unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Master Servicer or the Seller (as the
case may be) by the Insurer, the Owner Trustee or the Indenture Trustee
or (B) to the Master Servicer or a Seller (as the case may be), and to
the Owner Trustee and the Indenture Trustee by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, or,
if the Notes have been paid in full, by Certificateholders evidencing
not less than 25% of the aggregate Certificate Percentage Interest, or
so long as no default under the Note Policy has occurred and is
continuing and no insolvency of the Insurer has occurred, by the
Insurer;
(e) the occurrence of an Insolvency Event with respect to a
Seller, the Issuer or the Master Servicer; or
(f) any representation, warranty or statement of the Master
Servicer, the Issuer or a Seller made in this Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made (excluding, however, any representation or
warranty
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to which Section 3.01 or 4.06 shall be applicable so long as the Master
Servicer or the Sellers shall be in compliance with Section 3.02 or
4.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders
or the Certificateholders and, within 30 days after written notice
thereof shall have been given to the Master Servicer or the Seller by
the Indenture Trustee or the Owner Trustee or by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, or
Certificateholders evidencing not less than 25% of the aggregate
Certificate Percentage Interest or, so long as no default has occurred
under the Note Policy and is continuing and no Insurer Insolvency has
occurred, by the Insurer, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall not
have been eliminated or otherwise cured;
then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the aggregate Certificate Percentage Interest),
by notice then given in writing to the Master Servicer (and to the Insurer, the
Indenture Trustee and the Owner Trustee if given by the Noteholders or the
Certificateholders) may terminate all the rights and obligations of the Master
Servicer under this Agreement. Upon such termination, termination of the Master
Servicer as custodian can be made pursuant to Section 3.07. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the Notes,
the Certificates, the Contracts or otherwise, shall, without further action,
pass to and be vested in the Indenture Trustee or such successor Master Servicer
as may be appointed under Section 8.02; and, without limitation, the Indenture
Trustee and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to any Contract.
Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon
the Master Servicer's receipt of notice of termination pursuant to Section 8.01
or resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,
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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders from effecting a transfer of
servicing. Notwithstanding the above, the Indenture Trustee may, if it shall be
unwilling to act, or shall, if it shall be legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of motor vehicle retail installment sales
contracts, as the successor to the Master Servicer under this Agreement. Pending
appointment of any such successor Master Servicer, the Indenture Trustee shall
act in such capacity as provided above. In connection with such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor out of payments on Contracts it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer under this Agreement without the consent of the
Insurer. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 8.03. Repayment of Advances. If the identity of the Master
Servicer shall change, the predecessor Master Servicer shall be entitled to
receive reimbursement for outstanding Advances pursuant to Section 5.04 with
respect to all Advances made by the predecessor Master Servicer.
Section 8.04. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer
pursuant to this Article, the Owner Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register and to each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, or, if all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, Certificateholders evidencing not less than 51% of the aggregate
Certificate Percentage Interest (in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, with the consent of the Insurer, waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt
of actual knowledge thereof by a Responsible Officer, the Indenture Trustee
shall promptly notify the
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Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder, by its purchase
of Certificates or a beneficial interest therein, the Owner Trustee and the
Indenture Trustee hereby agree that, so long as neither a default under the Note
Policy nor an Insurer Insolvency has occurred and is continuing, the Insurer may
at any time during the continuation of an Insolvency Proceeding direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. The Insurer
shall be subrogated to the rights of the Indenture Trustee, the Owner Trustee
and each Securityholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
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ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On each Distribution Date as of which the Aggregate Scheduled
Balance is less than 10% of the Cut-Off Date Aggregate Scheduled Balance, the
Sellers shall have the option to purchase the remaining Contracts from the
Trust. Such option, if exercised by any Seller, shall be deemed to be exercised
by such Seller on behalf of all Sellers. Notice of the exercise of such option
shall be given by a Seller to the Owner Trustee, the Indenture Trustee and the
Insurer not later than the 25th day of the month immediately preceding the month
of the related Distribution Date. To exercise such option, each Seller shall pay
to the Indenture Trustee for the benefit of the Securityholders, by deposit in
the Collection Account on the Business Day immediately preceding the related
Distribution Date, the aggregate Repurchase Amount of all Related Contracts of
such Seller that were Outstanding at the beginning of the Due Period ending
immediately prior to such Distribution Date, and shall succeed to all interests
in and to the Trust. Such purchase shall be deemed to have occurred on the last
day of such Due Period. Notwithstanding the foregoing, the Sellers shall not be
permitted to exercise such option unless the amount to be deposited in the
Collection Account pursuant to the preceding sentence is greater than or equal
to the sum of the outstanding principal amount of the Notes and the aggregate
Certificate Percentage Interest and all unpaid interest (including any overdue
interest) thereon that has accrued through the related Interest Period. In
addition, if the Master Servicer or a Seller has outstanding senior debt and
such debt is not rated "investment grade" by Moody's at the time of exercising
the option pursuant to this Section, then the Master Servicer or such Seller
shall deliver to the Owner Trustee, the Indenture Trustee and Moody's, an
Opinion of Counsel to the effect that such optional purchase is not a fraudulent
conveyance.
(b) Upon any sale of the assets of the Trust pursuant to Section 5.02(b)
of the Indenture, the Master Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the Note
Interest Distributable Amount not otherwise deposited into the Note
Distribution Account on such Distribution Date and
(ii) to the Note Distribution Account, the outstanding principal
amount of the Notes (after giving effect to the reduction in the
outstanding principal amount of the
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Notes to result from the deposits made in the Note Distribution Account
on such Distribution Date and on prior Distribution Dates);
(iii) to the Insurer, to the extent of any Unreimbursed Insurer
Amounts;
(iv) to WFAL until WFAL has received an aggregate amount equal to
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.
(c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Master Servicer to the Owner
Trustee, the Insurer and the Indenture Trustee as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Class A-4 Final Distribution Date and (ii) an amount sufficient to pay the
Note Distributable Amount on the Class A-4 Final Distribution Date has been
deposited with the Indenture Trustee by the Insurer for the benefit of the Class
A-4 Noteholders, then on the Class A-4 Final Distribution Date the Class A-4
Notes shall be deemed to be transferred by the Class A-4 Noteholders to the
Insurer or its designee as purchaser thereof at the opening of business on the
Class A-4 Final Distribution Date and the Owner Trustee, on behalf of the Trust,
shall execute, and the Indenture Trustee shall authenticate and deliver to the
Insurer or its designee, in the name of the Insurer or its designee, as the case
may be, a new Class A-4 Note evidencing the entire Note Balance. Such new Class
A-4 Note shall have the same terms as the Class A-4 Notes deemed transferred by
the Class A-4 Noteholders. No service charge shall be made for the issuance of
such Class A-4 Note to the Insurer or its designee, but the Owner Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith. Such transfer shall not diminish or
restrict the Insurer's rights hereunder or under the Insurance Agreement.
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ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Sellers, the Master Servicer
and the Owner Trustee on behalf of the Issuer, collectively, without the consent
of any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
and (iii) to change any provision applicable for determining the Specified
Spread Account Balance or the manner in which the Spread Account is funded (in
each case with the approval of the Insurer); provided, however, that any such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Securityholder and provided, further, that
in connection with any amendment pursuant to clause (ii) and (iii) above, the
Master Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
the Insurer a letter from Standard & Poor's to the effect that such amendment
will not cause its then-current rating on any Class of Notes to be qualified,
reduced or withdrawn, without giving any consideration to the effect of the
guaranty under the Note Policy of payments owing to Noteholders, and the Master
Servicer shall provide Moody's notice of such amendment; and provided, further,
that this Agreement may not be amended to alter the rights or obligations of the
Indenture Trustee without the prior consent of the Indenture Trustee.
(b) This Agreement may also be amended from time to time by the Seller,
the Master Servicer and the Owner Trustee on behalf of the Issuer, with the
consent of the Holders of Notes evidencing not less than 51% of the Outstanding
Amount of the Notes, and the consent of Certificateholders evidencing not less
than 51% of the Certificate Percentage Interest, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no such amendment shall increase
or reduce in any manner the amount of, or accelerate or delay the timing of
(i)(a) collections of payments on the Contracts or distributions that shall be
required to be made on any Note or Certificate or any Interest Rate, (b) except
as otherwise provided in Section 10.01(a), the Specified Spread Account Balance,
or the manner in which the Spread Account is funded or (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Notes, the Holders of which are
required to consent to any such amendment, without the consent of the Insurer
and the Holders of all Notes and Certificates of the relevant Class then
outstanding.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, as prepared by the Seller, the Master Servicer and the
Owner Trustee on behalf of the Issuer, at the expense of the such party,
together with a copy thereof, to each Rating Agency and the Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the
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substance of the amendment or consent described in Section 10.01(c) above, at
the expense of the Seller, the Master Servicer or the Owner Trustee on behalf of
the Issuer, as the case may be, to each Certificateholder and Noteholder,
respectively. It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 10.01(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Owner
Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
(a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer, the Securityholders, the Indenture
Trustee, the Owner Trustee and the Insurer in the Contracts and in the proceeds
thereof. The Master Servicer shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither WFS, either Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) WFS, the Sellers and the Master Servicer shall give the Insurer, the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of the principal executive office of WFS or each Seller and
the Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master Servicer
shall at all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries
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on (or with respect to) each Contract and the amounts from time to time
deposited in or credited to the Collection Account and the Holding Account in
respect of such Contract.
(e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.
(f) If at any time any Seller, the Master Servicer or a Subservicer
shall propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.
(g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and its agents, at any time during normal business
hours, to inspect, audit and make copies of and abstracts from the Master
Servicer's records regarding any Contract.
(h) Upon request, the Master Servicer shall furnish to the Owner
Trustee, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Estate, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
(i)The Master Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, each Rating Agency and the Insurer:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, the Indenture Trustee holds a perfected
security interest in the Contracts, that the Trust holds title to the
Contracts subject to the security interest of the Indenture Trustee and
the lien of the Insurer pursuant to the Insurance Agreement, and that
the Insurer holds a lien on the Contracts under the Insurance Agreement,
subject to applicable subordination; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the
Contracts, and reciting the details of such
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filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee,
the Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (a) WFAL, at
23 Pasteur Road, Irvine, California 92618, Attention: Legal Department, (b)
WFSRC, at 23 Pasteur, Irvine, California 92618, Attention: Legal Department, (c)
the Master Servicer, 23 Pasteur, Irvine, California 92618, Attention: Legal
Department, (d) the Issuer or the Owner Trustee, at the Corporate Trust Office
(with, in the case of the Issuer, a copy to the Seller), (e) the Indenture
Trustee, at Four Albany Street - 10th Floor, New York, New York 10006,
Attention: Corporate Trust Department - Asset Backed Group, (f) Moody's, to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007, (g) Standard & Poor's, to Standard & Poor's, 55 Water
Street, New York, New York 10041, Attention of Asset Backed Surveillance
Department and (i) the Insurer, at 350 Park Avenue, New York, New York 10022,
Attention: Surveillance Department, with a copy to the Senior Vice President
- -Surveillance; or, as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties. Any notice required or
permitted to be to be mailed to a Securityholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Note
Register or the Certificate Register, as the case may be. Any notice so mailed
within the time prescribed herein shall be conclusively presumed to have been
duly given, whether or not such Securityholder shall receive such notice.
Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66
2/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66 2/3% of the aggregate Certificate Percentage
Interest.
Section 10.07. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party other than the Insurer
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shall be deemed a third party beneficiary of this Agreement, and specifically
that the Obligors are not third party beneficiaries of this Agreement.
Section 10.08. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or a Insurer Insolvency has occurred,
any provision giving the Insurer the right to direct, appoint or consent to,
approve of, or take any action under this Agreement, shall be inoperative during
the period of such default or the period from and after such Insurer Insolvency
and such consent or approval shall be deemed to have been given for the purpose
of such provisions.
Section 10.09. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 10.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 10.11. Assignment by Issuer. The Sellers hereby acknowledge and
consent to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.12. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust
By:
------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC.,
as Seller
By:
------------------------------
Name:
Title:
WFS RECEIVABLES CORPORATION,
as Seller
By:
------------------------------
Name:
Title:
WFS FINANCIAL INC,
as Master Servicer
By:
------------------------------
Name:
Title:
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<PAGE> 85
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:
------------------------------
Name:
Title:
80
<PAGE> 86
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
<PAGE> 87
SCHEDULE B
LOCATION OF CONTRACT FILES
WFS Financial Inc WFS Financial Inc
23 Pasteur Rd. 6061 N. State Highway 161
Irvine, CA 92618 Irving, TX 75038
714-727-1000 972-870-8060
WFS Financial Inc WFS Financial Inc
201 Boston Post Road, Suite 101 1883 NE 7th Street, Suite H
Marlboro, MA 01752 Grants Pass, OR 97526
503-222-8855 503-955-1402
WFS Financial Inc WFS Financial Inc
8548 SW Apple Way Suite 100 3872 Center Street N.E.
Portland, OR 97225 Salem, OR 97301
503-291-0010 503-581-9977
SB-1
<PAGE> 88
EXHIBIT A
[FORM OF INSURANCE AGREEMENT]
A-1
<PAGE> 89
EXHIBIT B
[FORM OF NOTE POLICY]
B-1
<PAGE> 90
EXHIBIT C
[FORM OF RIC]
C-1
<PAGE> 91
EXHIBIT D
[FORM OF SUBSERVICING AGREEMENT]
D-1
<PAGE> 92
EXHIBIT E
[FORM OF DISTRIBUTION DATE STATEMENT]
E-1
<PAGE> 1
EXHIBIT 10.3.1
INSURANCE, INDEMNITY AND PLEDGE AGREEMENT
Dated as of ________________
among
WFS FINANCIAL _________ OWNER TRUST,
WFS FINANCIAL AUTO LOANS, INC.,
WFS FINANCIAL INC,
WFS INVESTMENTS, INC.,
FINANCIAL SECURITY ASSURANCE INC.,
and
BANKERS TRUST COMPANY,
as Collateral Agent, Proceeds Agent and Indenture Trustee
WFS FINANCIAL _________ OWNER TRUST
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION................................................................................1
AGREEMENTS..................................................................................2
ARTICLE I DEFINITIONS.......................................................................2
Section 1.01. Definitions...........................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS........................................5
Section 2.01. Representations and Warranties of the Trust...........................5
Section 2.02. Affirmative Covenants of the Trust....................................7
Section 2.03. Negative Covenants of the Trust.......................................9
Section 2.04. Representations and Warranties of WII................................10
Section 2.05. Affirmative Covenants of WII.........................................11
Section 2.06. Negative Covenants of WII............................................12
Section 2.07. Representations and Warranties of the Seller.........................14
Section 2.08. Representations and Warranties of WFS................................17
Section 2.09. Affirmative Covenants of the Seller..................................18
Section 2.10. Negative Covenants of the Seller.....................................20
Section 2.11. Affirmative Covenants of WFS.........................................21
ARTICLE III THE POLICIES; INDEMNIFICATION..................................................22
Section 3.01. Agreement to Issue Policy............................................22
Section 3.02. Conditions Precedent to Issuance of Policy...........................22
Section 3.03. Premium..............................................................25
Section 3.04. Reimbursement Obligation.............................................26
Section 3.05. Non-Recourse Obligation..............................................27
Section 3.06. Indemnification......................................................28
Section 3.07. Liability Absolute...................................................31
Section 3.08. Liability of Financial Security......................................31
Section 3.09. Payment of Costs, Fees and Expenses..................................32
Section 3.10. Payment Procedure....................................................33
Section 3.11. Business Days........................................................33
Section 3.12. Waivers and Consents by Seller and WFS...............................33
ARTICLE IV PLEDGE OF COLLATERAL............................................................34
Section 4.01. Obligations Secured Hereby...........................................34
Section 4.02. Granting Clause......................................................34
</TABLE>
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<TABLE>
<S> <C>
Section 4.03. Release of Collateral................................................35
ARTICLE V INTERCREDITOR PROVISIONS.........................................................35
Section 5.01. Financial Security's Direction Upon Servicer Default.................35
Section 5.02. Financial Security's Direction of Insolvency Proceedings.............36
ARTICLE VI THE COLLATERAL AGENT; REMEDIES..................................................36
Section 6.01. Appointment and Powers of Collateral Agent...........................36
Section 6.02. Successor Collateral Agent...........................................36
Section 6.03. Remedies Available to Collateral Agent...............................37
Section 6.04. Waiver of Stay or Extension Laws; Marshalling of Assets..............38
Section 6.05. Restoration of Rights and Remedies...................................38
Section 6.06. Remedies Cumulative..................................................39
Section 6.07. Control by Financial Security........................................39
Section 6.08. Proceeds Agent as Custodian and Bailee of Collateral Agent...........39
Section 6.09. Indemnification of Collateral Agent..................................39
Section 6.10. Compensation Payable to Collateral Agent.............................40
Section 6.11. Protection of Financial Security's Security Interest.................40
Section 6.12. Representations and Warranties of Indenture Trustee..................41
Section 6.13. Certain Guaranties...................................................41
ARTICLE VII EVENTS OF DEFAULT..............................................................41
Section 7.01. Events of Default....................................................41
Section 7.02. Remedies; Waivers....................................................42
ARTICLE VIII MISCELLANEOUS.................................................................43
Section 8.01. Amendments, Changes and Modifications................................43
Section 8.02. Notices..............................................................43
Section 8.03. Method of Payment....................................................43
Section 8.04. Further Assurances and Corrective Instruments........................43
Section 8.05. Term of Agreement....................................................43
Section 8.06. Assignments; Third-Party Rights; Reinsurance.........................44
Section 8.07. Consent of Financial Security........................................44
Section 8.08. Right to Enforce Sale and Servicing Agreement........................44
Section 8.09. WFS and WII as Parties Only for Certain Provisions...................44
Section 8.10. Severability.........................................................45
Section 8.11. Reports..............................................................45
Section 8.12. Counterparts.........................................................45
Section 8.13. GOVERNING LAW........................................................45
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.14. Headings.............................................................45
Section 8.15. Trial by Jury Waived.................................................45
Section 8.16. Limited Liability....................................................45
Section 8.17. Limited Liability of Chase Manhattan Bank Delaware...................46
Section 8.18. Entire Agreement.....................................................46
</TABLE>
iii
<PAGE> 5
EXHIBITS
EXHIBIT A Forms of WFS Assignment and Collateral Assignment
EXHIBIT B Form of Financial Guaranty Insurance Policy with respect to
the Notes, together with form of Endorsement No. 1 thereto
EXHIBIT C Form of Opinion of Counsel to the Seller, WFSRC and WFS
EXHIBIT D Form of Opinion of Special Tax Counsel to WFS
EXHIBIT E Form of Certificate of the Indenture Trustee and the
Collateral Agent
EXHIBIT F Form of Opinion of Counsel to the Indenture Trustee and the
Collateral Agent
EXHIBIT G Form of Opinion of Counsel to the Trust and the Owner Trustee
EXHIBIT H Form of Letter of Independent Accountants
i
<PAGE> 6
INSURANCE, INDEMNITY AND PLEDGE AGREEMENT
THIS INSURANCE, INDEMNITY AND PLEDGE AGREEMENT is made as of
____________ 1, 20__, by and among WFS FINANCIAL 20____-___ OWNER TRUST, a
Delaware business trust (the "Trust"), WFS FINANCIAL AUTO LOANS, INC., a
California corporation (the "Seller"), WFS FINANCIAL INC, a California
corporation ("WFS"), WFS INVESTMENTS, INC., a California corporation ("WII"),
FINANCIAL SECURITY ASSURANCE INC., a New York financial guaranty insurance
company ("Financial Security"), and BANKERS TRUST COMPANY, a New York banking
corporation, in its capacities as Collateral Agent and Proceeds Agent (each as
defined below), and in its capacity as Indenture Trustee under the Indenture
referred to below (the "Indenture Trustee").
INTRODUCTION
The Seller is the owner of the Contracts. The Seller proposes to
sell and assign to the Trust all of its right, title and interest in and to the
Contracts and certain other property pursuant to the Sale and Servicing
Agreement. The Trust will issue Certificates pursuant to the Trust Agreement and
Notes pursuant to the Indenture.
Each Certificate will represent a fractional undivided interest
in the Trust. Each Note will be secured by the Indenture Property.
The Seller has agreed to convey a security interest in the
Collateral and all the property conveyed by it to the Trust (with the exception
of the Policy) pursuant to the Sale and Servicing Agreement in favor of
Financial Security prior in right to all liens, claims, rights or interests
other than those of the Trust.
The Trust has requested that Financial Security issue the Note
Policy to the Indenture Trustee to guarantee payment of the Scheduled Payments
(as defined in such Note Policy) on each Distribution Date in respect of the
Notes.
Financial Security is willing to issue the Policy for the purpose
stated above if the Trust, the Seller, WFS, WII and the Indenture Trustee enter
into this Agreement and, in order to secure its obligations hereunder, the
Seller pledges the Collateral to the Collateral Agent for the benefit of
Financial Security, subject to the provisions hereof.
The parties hereto desire to specify the indemnity and
reimbursement obligations to be provided in respect of amounts paid by Financial
Security under the Policy, the security to be provided in respect of such
indemnity and reimbursement obligations, and certain other matters.
<PAGE> 7
AGREEMENTS
In consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the parties hereto agree
to as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All words and phrases defined in the
Trust Agreement and the Sale and Servicing Agreement shall have the same
meanings in this Agreement unless a different meaning is set forth in this
Agreement. In addition, the following words and phrases shall have the following
respective meanings:
"Administration Agreement" means the Administration Agreement
dated as of the date hereof, among the Trust, WFS Financial Inc, as
Administrator, the Seller and the Indenture Trustee.
"Agreement" means this Insurance, Indemnity and Pledge Agreement,
as the same may be amended, modified or supplemented from time to time.
"Authorized Officer" means, with respect to WFS, WII, the Seller
or any corporation, the president, the chief financial officer or any vice
president.
"Bank" means, Western Financial Bank, a federally-chartered
savings association.
"Collateral" means all of the Contracts listed in the Schedule of
Contracts attached to the Sale and Servicing Agreement, including, without
limitation, all payments of Monthly P&I (exclusive of Retained Yield, if any)
due on or after the Cut-Off Date (excluding the amount allocable to principal
and interest due prior to the Cut-Off Date), all Net Liquidation Proceeds and
Net Insurance Proceeds with respect to any Financed Vehicle to which a Contract
relates received on or after the Cut-Off Date and all other proceeds received in
respect of such Contracts (other than payments of Monthly P&I due prior to the
Cut-Off Date), and any and all security interests in the Financed Vehicles; the
Contract Documents relating to the Contracts (except the Contract Documents for
Contracts which have been the subject of a Full Prepayment received on or after
the Cut-Off Date but no later than one Business Day prior to the Closing Date,
in lieu of which the Seller shall have deposited in or credited to the
Collection Account on or prior to the Closing Date an amount equal to such Full
Prepayment); all Spread Account Collateral; 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.
"Collateral Agent" means, initially, Bankers Trust Company, as
collateral agent for Financial Security pursuant to this Agreement and,
thereafter, any successor Collateral Agent named pursuant to this Agreement.
"Collateral Assignment" means, with respect to any Contracts, the
original instrument of collateral assignment of such Contracts by the Seller to
the Collateral Agent, substantially in the form included in Exhibit A hereto.
"Controlling Party" means Financial Security so long as no
Financial Security Insolvency shall have occurred and no Financial Security
Default shall have occurred and be continuing and, at any other time, the
Indenture Trustee.
"Event of Default" has the meaning set forth in Section 7.01
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Financial Security's Authorized Agent" means each Authorized
Officer of Financial Security and each other Person that Financial Security
designates as its authorized agent with notice to the Seller.
"Indemnification Agreement" means the Indemnification Agreement,
dated as of the date hereof, among the Seller, WFS, Financial Security and the
Representative.
"Indenture Property" means the property pledged to the Indenture
Trustee on behalf of the Noteholders pursuant to the Indenture.
"Independent Accountant" means an independent accountant within
the meaning of the Securities Act and the Exchange Act.
"Late Payment Rate" means the greater of a per annum rate equal
to 3% in excess of (i) Financial Security's cost of funds, determined on a
monthly basis, or (ii) the arithmetic average of the prime or base lending rates
publicly announced by The Chase Manhattan Bank, N.A. (New York, New York) and
Citibank, N.A. (New York, New York), as in effect on the last day of the month
for which interest is being computed, but in no event greater than the maximum
rate permitted by law.
"Note Policy" means the financial guaranty insurance policy,
including and endorsements thereto, issued by Financial Security with respect to
the Notes, substantially in the form attached as Exhibit B hereto.
"Notice Address" means
(a) as to the Seller:
23 Pasteur
Irvine, California 92618
Attention: Thomas A. Wolfe
(b) as to WFS:
23 Pasteur
Irvine, California 92618
Attention: Joy Schaefer
(c) as to WII:
23 Pasteur
Irvine, California 92618
Attention: Mark Olson
(d) as to the Trust:
WFS Financial ______ Owner Trust
c/o Chase Manhattan Bank Delaware
as Owner Trustee
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
Department
(e) as to Financial Security:
350 Park Avenue
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New York, New York 10022
Attention: Surveillance Department
Telecopier Nos.: (212) 339-3518
(212) 339-3529
(in each case in which the notice or other communication
to Financial Security refers to an Event of Default or a
claim under the Policy or is a notice or other
communication as to which a failure on the part of
Financial Security to respond shall be deemed to
constitute consent or acceptance, then with a copy to the
attention of the Senior Vice President - Surveillance)
(f) as to the Collateral Agent:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
(g) as to the Proceeds Agent:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
(h) as to the Indenture Trustee:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
"Obligations" has the meaning set forth in Section 4.01 hereof.
"Owner Trustee" means Chase Manhattan Bank Delaware or its
successors in interest, acting not individually but solely on owner trustee
under the Trust Agreement.
"Policy" means the Note Policy.
"Premium" means the premium payable to Financial Security by the
Sellers as consideration for the issuance of the Policy, as set forth in a
letter agreement between the Seller and Financial Security.
"Proceeds Agent" means, initially, Bankers Trust Company, as
proceeds agent for Financial Security and, thereafter, any successor appointed
by the Indenture Trustee and Financial Security.
"Prospectus" has the meaning set forth in Section 2.07(g) of this
Agreement.
"Registration Statement" has the meaning set forth in Section
2.07(g) of this Agreement.
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"Representative" means ___________________, as representative of
the several Underwriters.
"Rules and Regulations" has the meaning set forth in Section
2.07(g) of this Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of the date hereof, among the Seller, WFS and the Trust, as
the same may be amended or modified from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means WFAL.
"Seller Assignments" means the Assignments, as such term is
defined in the Sale and Servicing Agreement.
"Spread Account" means the Spread Account established pursuant to
the Sale and Servicing Agreement, in favor of the Indenture Trustee on behalf of
the Holders of Notes and as Collateral Agent for Financial Security.
"Spread Account Collateral" means (i) the Spread Account Initial
Deposit, (ii) all other amounts deposited in or credited to the Spread Account
from time to time under the Sale and Servicing Agreement, (iii) all Eligible
Investments made with amounts on deposit in such Account, and (iv) all earnings
and distributions on, and proceeds of, any and all of the foregoing.
"Transaction Agreements" means this Agreement, the WFS
Assignments, the Seller Assignments, the Collateral Assignment, the Sale and
Servicing Agreement, the Trust Agreement, the Certificate of Trust, the
Indenture, the Administration Agreement, the Underwriting Agreement, the
Subservicing Agreement, the Indemnification Agreement and the RIC.
"Trust Agreement" means the Trust Agreement, dated as of
___________, 2000 among the Seller, WFS, WII, Financial Security and Chase
Manhattan Bank Delaware, as Owner Trustee.
"Underwriter Information" has the meaning set forth in Section
3.06(a)(i) of this Agreement.
"Underwriters" means ______________________ and each other
institution, if any, named as an underwriter in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
_____________, 2000 among the Seller, WFS and the Representative.
"Western Entities" means the Seller, WFS and WII.
"WFAL2" means Western Financial Auto Loans 2, Inc., a California
corporation.
"WFS Assignments" means, with respect to the Contracts, the
original instrument or instruments of assignment of such Contracts by WFS, as
seller, to the Seller, substantially in the form included in Exhibit A hereto.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Trust. The
Trust represents and warrants to Financial Security as follows:
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<PAGE> 11
(a) Due Organization and Qualification. The Trust is duly formed
and validly existing as a Delaware statutory business trust and is in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business and had at all relevant times,
and has, power, authority, and legal right to acquire the Contracts; the Trust
is duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as described in the
Prospectus and the performance of its obligations under the Transaction
Agreements, in each jurisdiction in which the failure to be so qualified or to
obtain such approvals would render the Contracts in such jurisdiction or any
Transaction Agreement unenforceable in any respect or would otherwise have a
material adverse effect upon the Trust; the Trust holds all material licenses,
certificates and permits from all governmental authorities necessary for the
conduct of its business as presently conducted.
(b) Power and Authority. The Trust has all necessary trust power
and authority to conduct its business as presently conducted; the Trust has the
power and authority to execute and deliver this Agreement and each other
Transaction Agreement to which the Trust is a party and to carry out the terms
of each such agreement, and has full power and authority to issue the Notes and
the Certificates and pledge and assign its assets pursuant to the Indenture and
has duly authorized the issuance of the Notes and Certificates and the
assignment of its assets by all necessary trust proceedings, and the execution,
delivery and performance of this Agreement and each other Transaction Agreement
to which the Trust is a party has been duly authorized by all necessary action
on the part of the Trust.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which the Trust is a party constitutes a legal, valid and binding
obligation of the Trust enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general equitable principles, regardless of whether
such enforceability shall be considered a proceeding in equity or at law. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits of
the Indenture and will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transaction
contemplated by this Agreement and by each other Transaction Agreement to which
the Trust is a party, and the fulfillment of the terms hereof and thereof shall
not conflict with, result in any breach of any of the terms and provisions of,
nor constitute a default (nor an event which, with the giving of notice or
passage of time, or both, would constitute a default) under the Certificate of
Trust or the Trust Agreement, or any indenture, agreement or other instrument to
which the Trust is a party or by which it shall be 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 this
Agreement and the Collateral Assignment); nor violate any law or any order,
rule, or regulation applicable to the Trust of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trust or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration, or declaration with, any governmental authority, bureau
or agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by the Trust of this Agreement or of any
other Transaction Agreement to which the Trust is a party, except (in each case)
such as have been obtained and are in full force and effect.
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<PAGE> 12
(f) Pending Litigation or Other Proceeding. To the Trust's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trust or its properties: (A)
asserting the invalidity of this Agreement or any other Transaction Agreement to
which the Trust is a party; (B) seeking to prevent the issuance of the Notes or
the Certificates, or the consummation of the transactions contemplated by any of
the Transaction Agreements to which the Trust is a party; (C) seeking any
determination or ruling that might materially and adversely affect the validity
or enforceability of, this Agreement or any other Transaction Agreement to which
the Trust is a party, or (D) involving the Trust and which might adversely
affect the federal or state tax attributes of the Notes, the Certificates or the
Trust.
(g) Incorporation of Representations and Warranties. The
representations and warranties of the Trust set forth in each Transaction
Document are (in each case) true and correct as if set forth herein.
(h) Security Interest in Contracts. This Agreement, together with
possession of the Collateral by the Master Servicer pursuant to the Sale and
Servicing Agreement and the filing referred to below, creates as security for
the Seller's obligations under this Agreement a security interest in favor of
the Collateral Agent, as collateral agent for Financial Security, in each item
of the Collateral, as constituted as of the Closing Date; such security interest
has been perfected and is a valid, binding and enforceable first priority
security interest, subject only, to the extent set forth in Section 5.01(d)
hereof, to the interest of the Indenture Trustee with respect to the Indenture
Property and the Securityholders; a financing statement with respect to the
Contracts has been filed with the California Secretary of State pursuant to the
California UCC, and the marking required by Section 3.01(b)(xvi) of the Sale and
Servicing Agreement has been made on each Contract, except to the extent (if
any) that Financial Security has waived in writing compliance with such
requirement; no other filings in any jurisdiction or any other actions are
necessary to perfect the security interest of the Collateral Agent, as
collateral agent for Financial Security, in the Collateral, as constituted as of
the Closing Date, as against any third parties.
(i) Security Interest in Other Collateral. Assuming the
acquisition of Eligible Investments in accordance with the Sale and Servicing
Agreement, such Eligible Investments will be subject to a valid, binding and
enforceable first priority security interest in favor of the Collateral Agent,
as collateral agent for Financial Security, subject only, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; assuming deposit of
each check constituting proceeds of the Contracts in the Collection Account or
Holding Account, as applicable, within ten days of receipt of such check by the
Master Servicer, such check will be subject to a valid, first priority perfected
security interest in favor of the Collateral Agent, subject, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; at such time as it is
received by the Master Servicer and until deposited in the Collection Account or
Holding Account, as applicable; the proceeds of such deposited check that remain
in the Collection Account or the Holding Account will be subject to a valid,
first priority security interest in favor of the Collateral Agent, subject, to
the extent set forth in Section 5.01(d) hereof, to the interest of the Trust
under the Sale and Servicing Agreement.
Section 2.02. Affirmative Covenants of the Trust. The Trust
hereby covenants and agrees with Financial Security that, at all times during
the term of this Agreement:
(a) Compliance with Agreements. The Trust will comply with all
terms and conditions of this Agreement and each other Transaction Agreement to
which it is a party. The Trust will not cause or permit to become effective any
amendment to or modification of any of the Transaction Agreements unless
Financial Security shall have previously approved in writing the form of such
amendment or modification.
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<PAGE> 13
(b) Financial Statements; Accountants' Reports; Other
Information. The Trust shall keep or cause to be kept proper books and records
in which full and correct entries shall be made of financial transactions and
the assets and business of the Trust in accordance with generally accepted
accounting principles consistently applied. The Trust shall furnish to Financial
Security, simultaneously with the delivery of such documents to the Indenture
Trustee, the Noteholders or the Certificateholders, as the case may be, copies
of all reports, certificates, statements, financial statements or notices
furnished to the Indenture Trustee, the Noteholders or the Certificateholders,
as the case may be, pursuant to the Transaction Agreements.
(c) Certificate of Compliance. The Trust shall deliver to
Financial Security concurrently with the delivery of the financial statements
required pursuant to paragraph (b) above, a certificate signed by an Authorized
Officer of the Administrator stating that:
(i) a review of the Trust's performance under this Agreement
and the other Transaction Agreements to which the Trust is a party
during such period has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge based upon such
review, the Trust has fulfilled all its obligations under this Agreement
and the other Transaction Agreements to which the Trust is a party
during such period, or, if there has been a default of any such
obligation, specifying each such default known to such officer and the
nature and status thereof.
(d) Access to Records; Discussions with Officers and Accountants.
The Trust shall, upon the reasonable request of Financial Security, permit
Financial Security's Authorized Agent at reasonable times (i) to inspect such
books and records of the Trust as they may relate to the Notes, the Certificates
and the obligations of the Trust under this Agreement and the other Transaction
Agreements to which the Trust is a party; and (ii) to discuss the affairs,
finances and accounts of the Trust with any of its respective officers,
directors and representatives, including its Independent Accountants.
(e) Financing Statements and Further Assurances. The Trust will
file all necessary financing statements, assignments or other instruments, and
any amendments or continuation statements relating thereto, necessary to be kept
and filed in such manner and in such places as may be required by law to
preserve and protect fully the lien and security interest in, and all rights of
the Collateral Agent with respect to the Collateral, and the Trust shall, upon
the request of Financial Security, from time to time, execute and deliver and,
if necessary, file such further instruments and take such further action as may
be reasonably necessary to effectuate the provisions of this Agreement or to
protect the security interest of the Collateral Agent in the Collateral.
(f) Retirement of Notes. The Trust shall, upon retirement of the
Notes furnish to Financial Security a notice of such retirement, and, upon such
retirement and the expiration of the term of the Policy, to surrender the Policy
to Financial Security for cancellation.
(g) Maintenance of Separate Existence. The Trust shall at all
times hold itself out to the public, including the Seller, WFS and the Bank,
under the Trust's own name and as a separate and distinct entity from the
Seller, WFS and the Bank. The Trust shall maintain trust records and books of
account separate from those of the Seller, WFS and the Bank, shall not commingle
its assets with any other Person (except to the limited extent (if any)
permitted by the approval of Financial Security) and shall obtain proper
authorization from its equity owners of all trust action in accordance with
applicable law. The Trust shall maintain an arm's-length relationship with the
Bank, the Seller and WFS and each Affiliate of any of them.
(h) Compliance with Article 76 of New York Insurance Law. The
Trust shall ensure that the Prospectus, and any supplements or amendments
thereto, and every preliminary prospectus delivered
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<PAGE> 14
with respect to the Notes, clearly disclose that the Policy is not covered by
the property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.
(i) Tax Matters. The Trust will take all actions necessary to
ensure that the Trust is taxable as a partnership for federal and state income
tax purposes and not as an association (or publicly traded partnership), taxable
as a corporation.
Section 2.03. Negative Covenants of the Trust. The Trust agrees
and covenants with Financial Security that at all times during the term of this
Agreement:
(a) Amendments to Organizational Documents. The Trust shall not
amend, supplement or otherwise modify or cause to permit any amendment,
supplement or other modification of, any of the provisions of the Certificate of
Trust or the Trust Agreement without the prior written consent of Financial
Security.
(b) No Liens. Without the prior written consent of Financial
Security, the Trust shall not create, incur, assume or suffer to exist any
mortgage, deed of trust, security interest, assignment, deposit arrangement or
other preferential arrangement, charge or encumbrance (including without
limitation any conditional sale or other title retention agreement or finance
lease) of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names the Trust as debtor,
or sign any security agreement authorizing any secured party thereunder to file
such a financing statement, except as contemplated in the Transaction
Agreements.
(c) Creation of Indebtedness. Without the prior written consent
of Financial Security, the Trust shall not create, incur, assume or suffer to
exist any indebtedness other than indebtedness guaranteed or approved in writing
by Financial Security, except as contemplated in the Transaction Agreements.
(d) Guarantees, Etc. Without the prior written consent of
Financial Security, the Trust shall not assume, guarantee, endorse or otherwise
be or become directly or contingently liable for the obligations of any Person
by, among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, the Trust shall not form, or cause to be formed, any Subsidiaries.
(f) Insolvency. The Trust shall not commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, consolidation or other relief with respect to it or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets or make a general assignment
for the benefit of its creditors. The Trust shall not take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above. The Trust shall not admit in writing its
inability to pay its debts.
(g) Impairment of Rights. The Trust shall not take any action, or
fail to take any action that will interfere with the enforcement of any rights
under this Agreement or the other Transaction Agreements.
(h) Successor Parties. The Trust will not remove or replace, or
cause to be removed or replaced, the Master Servicer, the Indenture Trustee, the
Owner Trustee or the Administrator.
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Section 2.04. Representations and Warranties of WII. WII
represents and warrants to Financial Security as follows:
(a) Due Organization. WII is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business and
had at all relevant times, and has, the power and authority to acquire its
beneficial ownership interest in the Certificates; WII is duly qualified to do
business as a foreign corporation in good standing under the laws of each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, except such jurisdictions, if
any, in which the failure to be so qualified will not have a material adverse
effect on the business or properties of WII; WII holds all material licenses,
certificates and permits from all governmental authorities necessary for the
conduct of its business as presently conducted. WII's principal place of
business, chief executive office and the office where it keeps its records is
located at 23 Pasteur, Irvine, California 92618.
(b) Corporate Power and Authority. WII has full right, power and
authority to own its properties and to conduct its business as presently
conducted; WII has the power and authority to execute and deliver this Agreement
and each other Transaction Agreement to which WII is a party and to carry out
the terms of each such agreement.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which WII is a party constitutes a legal, valid, and binding
obligation of WII, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
WII is a party and the fulfillment of the terms hereof and thereof shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute a default (nor an event which, with the giving of notice or passage
of time, or both, would constitute a default) under, the articles of
incorporation or by-laws of WII, or any indenture, agreement, or other
instrument to which WII is a party or by which it shall be 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; nor violate any
law or any order, rule, or regulation applicable to WII of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WII or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WII of this Agreement or of any other
Transaction Agreement to which WII is a party, except (in each case) such as
have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To WII's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WII or its properties: (A) asserting
the invalidity of this Agreement, any other Transaction Agreement to which WII
is a party, or the Notes, (B) seeking to prevent the issuance of the Notes or
the consummation of any of the transactions contemplated by any of the
Transaction Agreements to which WII is a party, (C) seeking any determination or
ruling that might materially and adversely affect the performance by WII of its
obligations under, or the validity or enforceability of, this Agreement or any
other Transaction Agreement to which WII is a party, or (D) involving WII and
which might adversely affect the federal income tax attributes of the Notes, the
Certificates or the Trust.
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(g) Incorporation of Representations and Warranties. All of the
representations and warranties made by WII in the Transaction Agreements are
incorporated herein as if set forth herein and each such representation and
warranty is true and correct as of the Closing Date.
Section 2.05. Affirmative Covenants of WII. WII covenants and
agrees with Financial Security that, at all times during the term of this
Agreement:
(a) Compliance with Agreements. WII will comply with all terms
and conditions of this Agreement and each other Transaction Agreement to which
it is a party. WII will not cause or permit to become effective any amendment to
or modification of the Transaction Agreements unless Financial Security shall
have previously approved in writing the form of such amendment or modification.
(b) Financial Statements, Accountants' Reports, Other
Information. WII shall keep proper books and records, in which full and correct
entries shall be made of financial transactions and the assets and business of
WII in accordance with generally accepted accounting principles consistently
applied. WII shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements or notices furnished to the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders, as the case may
be, pursuant to the Sale and Servicing Agreement.
(c) Certificate of Compliance. WII shall deliver to Financial
Security, concurrently with the delivery of the financial statements required
pursuant to paragraph (b) above, a certificate signed by an Authorized Officer
of WII stating that:
(i) a review of WII's performance under this Agreement and the
other Transaction Agreements to which WII is a party during such period
has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, WII has fulfilled all its obligations under this Agreement and
the other Transaction Agreements to which WII is a party during such
period, or, if there has been a default of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
WII shall, upon the reasonable request of Financial Security, permit Financial
Security's Authorized Agent at reasonable times (i) to inspect such books and
records of WII as may relate to the Notes, the Certificates and the obligations
of WII under this Agreement and the other Transaction Agreements to which WII is
a party; and (ii) to discuss the affairs, finances and accounts of WII with any
of its respective officers, directors and representatives, including its
Independent Accountants.
(e) Maintain Licenses. WII shall maintain all licenses, permits,
charters and registrations that are material to the performance by WII of its
obligations under the Transaction Agreements to which it is a party or by which
WII is bound.
(f) Maintain Existence; Merger. WII shall keep in full effect its
existence, rights and franchises under the laws of the State of California, and
shall at all times continue to be duly organized, duly qualified and duly
authorized (as described in Sections 2.04(a) and (b) hereof) and shall conduct
its business in accordance with the terms of its corporate charter and bylaws.
WII shall not consolidate with or merge into any other Person or convey,
transfer or lease substantially all of its assets as an entirety to any Person
unless the Person formed by such consolidation or into which WII has merged or
the Person which acquires by conveyance, transfer or lease substantially all the
assets of WII as an entirety, can lawfully perform the obligations of WII
hereunder and executes and delivers to the Owner Trustee an agreement, in form
and substance reasonably satisfactory to the Owner Trustee and Financial
Security,
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which contains an assumption by such Person of the due and punctual performance
and satisfaction of each covenant and condition to be performed or satisfied by
WII under this Agreement.
(g) Maintenance of Separate Corporate Existence. WII shall at all
times hold itself out to the public, including the Seller, WFS and the Bank,
under WII's own name and as a separate and distinct entity from the Seller, WFS
and the Bank. At all times at least one director and one executive officer of
WII (or one individual serving in both capacities) shall be a Person who is not
a director, officer or employee of any Person owning beneficially more than 10%
of the outstanding common stock of WII. WII shall maintain separate corporate
records and books of account from those of the Seller, WFS and the Bank, shall
not commingle its assets with any other Person (except to the limited extent (if
any) permitted by the approval of Financial Security) and shall authorize its
corporate actions in accordance with applicable law. WII shall not engage in
business transactions with any of its Affiliates on terms and conditions less
favorable to WII than those available to WII for comparable transactions from
Persons who are not Affiliates of WII. WII shall maintain its chief executive
office, principal place of business and the office where it keeps its records in
the State of California and separate and apart from any office of the Seller,
the Bank, the Master Servicer or any Affiliate of any of them.
(h) Retirement of Notes. WII shall cause the Trust, upon
retirement of the Notes, to furnish to Financial Security a notice of such
retirement, and, upon such retirement and the expiration of the term of the
Policy, to surrender the Policy to Financial Security for cancellation.
(i) Incorporation of Covenants. WII agrees to comply with each of
the covenants of WII set forth in the Transaction Agreements and hereby
incorporates such covenants by reference as if each were set forth herein.
(j) Tax Matters. As of the Closing Date, the Trust is, and shall
remain during the term of this Agreement, taxable as a partnership for federal
and state income tax purposes and not as an association (or publicly traded
partnership) taxable as a corporation.
(k) Certificates. Except as may be agreed to by Financial
Security in its sole discretion, WII shall purchase from the Underwriters and
thereafter retain beneficial and record ownership of Certificates representing
at least 1% of the Certificate Balance.
Section 2.06. Negative Covenants of WII. WII agrees and covenants
with Financial Security that at all times during the term of this Agreement:
(a) Amendments to Organizational Documents. WII shall not amend,
supplement or otherwise modify, or cause to permit any amendment, supplement or
other modification of, Articles 2 or 4 of its charter (or any other Articles of
its charter that relate to the matters addressed by such Articles 2 or 4) or its
bylaws without the prior written consent of Financial Security.
(b) No Liens. Without the prior written consent of Financial
Security, WII shall not create, incur, assume or suffer to exist any mortgage,
deed of trust, security interest, assignment, deposit arrangement or other
preferential arrangement, charge or encumbrance (including, without limitation,
any conditional sale or other title retention agreement or finance lease) of any
nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement that names WII as a debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement.
(c) Creation of Indebtedness. Without the prior written consent
of Financial Security, WII shall not create, incur, assume or suffer to exist
any indebtedness other than indebtedness guaranteed or approved in writing by
Financial Security.
(d) Guarantees, Etc. Without the prior written consent of
Financial Security, WII shall not assume, guarantee, endorse or otherwise be or
become directly or contingently liable for the
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obligations of any Person by, among other things, agreeing to purchase any
obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, WII shall not form, or cause to be formed, any subsidiaries.
(f) Insolvency. WII shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seek appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or make a general
assignment for the benefit of its creditors. WII shall not take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in
any of the acts set forth above. WII shall not be unable to, or admit in writing
its inability to, pay its debts.
(g) Impairment of Rights. WII shall not take any action or fail
to take any action that will interfere with the enforcement of any rights under
this Agreement or the other Transaction Agreements.
(h) Insolvency of Trust. WII shall not, for any reason, institute
proceedings for the Trust to be adjudicated a bankrupt or insolvent, or consent
to the institution of bankruptcy or insolvency proceedings against the Trust, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial part of
the property of the Trust or cause or permit the Trust to make any assignment
for the benefit of creditors, or admit in writing the inability of the Trust to
pay its debt generally as they become due, or declare or effect a moratorium on
the debt of the Trust or take any action in furtherance of any such action.
(i) No Withdrawal. WII shall not, for any reason, withdraw or
attempt to withdraw from the Trust Agreement, dissolve, institute proceedings
for it to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition seeking
or consenting to reorganize or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
(j) Compliance with Transaction Agreements and similar
transactions. The provisions of subsections 2.06(c), (d) and (g),
notwithstanding, WII's execution and performance of its covenants and
obligations under the Transaction Agreements and under any similar documents
executed in connection with one or more other owner trust transactions as to
which Financial Security has issued one or more insurance policy similar to the
Policy shall not require the prior written consent of Financial Security and
shall not be deemed to impair the rights of WII under this Agreement or the
other Transaction Agreements.
Section 2.07. Representations and Warranties of the Seller. The
Seller represents and warrants to Financial Security as follows:
(a) Due Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business and
had at all relevant times, and has, power, authority, and legal right to
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acquire, pledge and sell the Contracts; the Seller is duly qualified to do
business as a foreign corporation in good standing under the laws of each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, except such jurisdictions, if
any, in which the failure to be so qualified will not have a material adverse
effect on the business or properties of the Seller; the Seller holds all
material licenses, certificates and permits from all governmental authorities
necessary for the conduct of its business as presently conducted. the Seller's
principal place of business, chief executive office and the office where it
keeps its records is located at 23 Pasteur, Irvine, California 92618.
(b) Corporate Power and Authority. The Seller has full right,
power and authority to own its properties and to conduct its business as
presently conducted; the Seller has the power and authority to execute and
deliver this Agreement and each other Transaction Agreement to which the Seller
is a party and to carry out the terms of each such agreement, and has full power
and authority to sell and assign the property to be sold and assigned to the
Owner Trustee and deposited with the Owner Trustee as part of the Trust and has
duly authorized such sale and assignment to the Trustee by all necessary
corporate action; and the execution, delivery, and performance of this Agreement
and each other Transaction Agreement to which the Seller is a party has been
duly authorized by the Seller by all necessary corporate action.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which the Seller is a party constitutes a legal, valid, and
binding obligation of the Seller, enforceable in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, receivership or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity or at
law. The Certificates, when executed, authenticated and delivered in accordance
with the Trust Agreement, will be validly issued and outstanding and entitled to
the benefits of the Trust Agreement and will evidence the entire beneficial
ownership in the Trust. The Notes when executed, authenticated and delivered in
accordance with the Indenture, will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Trust,
enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
the Seller is a party and the fulfillment of the terms hereof and thereof shall
not conflict with, result in any breach of any of the terms and provisions of,
nor constitute a default (nor an event which, with the giving of notice or
passage of time, or both, would constitute a default) under, the articles of
incorporation or by-laws of the Seller, or any indenture, agreement, or other
instrument to which the Seller is a party or by which it shall be 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 this Agreement and the Collateral Assignment); nor violate any law
or 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.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by the Seller of this Agreement or of any
other Transaction Agreement to which the Seller is a party, except (in each
case) such as have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To the Seller's best
knowledge, there are no proceedings or investigations pending, or 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, any other Transaction Agreement to
which the Seller is a
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<PAGE> 20
party, 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 any of the Transaction Agreements to which the Seller is a
party, (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 or any other Transaction Agreement
to which the Seller is a party, or (D) involving the Seller and which might
adversely affect the federal income tax attributes of the Notes, the
Certificates or the Trust.
(g) Registration Statement; Prospectus. The Seller has filed with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (No.___), including a preliminary prospectus and
prospectus supplement for the registration of the Notes under the Securities
Act, has filed such amendments thereto, if any, and such amended preliminary
prospectuses and prospectus supplements as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended, if applicable) and the prospectus together
with the prospectus supplement relating to the Notes, constituting a part
thereof (including in each case all documents, if any, incorporated by reference
therein and the information, if any, deemed to be part thereof pursuant to the
rules and regulations of the Commission under the Securities Act (the "Rules and
Regulations")), as from time to time amended or supplemented pursuant to the
Securities Act or otherwise, are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus or prospectus supplement shall be provided by the Seller for use in
connection with the offering of the Notes which differs from the Prospectus on
file at the Commission pursuant to Rule 424 of the Rules and Regulations
(whether or not such revised prospectus is required to be filed by the Seller
pursuant to Rule 424 of the Rules and Regulations), the term "Prospectus" shall
refer to such revised prospectus and prospectus supplement from and after the
time it is first provided to the Underwriters for such use. As of the date
hereof, the Registration Statement and Prospectus filed under the Securities Act
or pursuant to the Rules and Regulations complies in all material respects with
the Securities Act and the Rules and Regulations, and the Registration Statement
at the time it became effective and at all times subsequent thereto complied,
and at each time that the Prospectus is provided to the Underwriters for use in
connection with the offering or sale of any Note will comply, in all material
respects with the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement and the Prospectus at the time the
Registration Statement became effective did not and on the date hereof does not,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and the Prospectus at the time it was filed under the Securities Act
or the Rules and Regulations and at the time it was first provided to the
Underwriters for use in connection with the offering of the Notes did not, and
on the Closing Date does not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that the representations and
warranties in this subparagraph shall not apply to statements in or omissions
from the Registration Statement or the Prospectus or any preliminary prospectus
made in reliance upon information furnished to the Seller in writing by
Financial Security expressly for use therein.
(h) Incorporation of Representations and Warranties. All of the
representations and warranties made by the Seller as Seller in Section 3.01(b)
of the Sale and Servicing Agreement and as Depositor in, Section 2.10 of the
Trust Agreement and in the Underwriting Agreement are incorporated herein as if
set forth herein and each such representation and warranty is true and correct
as of the Closing Date.
(i) Security Interest in Contracts. This Agreement, together with
possession of the Collateral by the Master Servicer pursuant to the Sale and
Servicing Agreement and the filing referred to below, creates as security for
the Seller's obligations under this Agreement a security interest in favor of
the Collateral Agent, as collateral agent for Financial Security, in each item
of the Collateral, as
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constituted as of the Closing Date; such security interest has been perfected
and is a valid, binding and enforceable first priority security interest,
subject only, to the extent set forth in Section 5.01(d) hereof, to the interest
of the Indenture Trustee with respect to the Indenture Property and the
Securityholders; a financing statement with respect to the Contracts has been
filed with the California Secretary of State pursuant to the California UCC, and
the marking required by Section 3.01(b)(xvi) of the Sale and Servicing Agreement
has been made on each Contract, except to the extent (if any) that Financial
Security has waived in writing compliance with such requirement; no other
filings in any jurisdiction or any other actions are necessary to perfect the
security interest of the Collateral Agent, as collateral agent for Financial
Security, in the Collateral, as constituted as of the Closing Date, as against
any third parties.
(j) Security Interest in Other Collateral. Assuming the
acquisition of Eligible Investments in accordance with the Sale and Servicing
Agreement, such Eligible Investments will be subject to a valid, binding and
enforceable first priority security interest in favor of the Collateral Agent,
as collateral agent for Financial Security, subject only, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; assuming deposit of
each check constituting proceeds of the Contracts in the Collection Account or
Holding Account, as applicable, within ten days of receipt of such check by the
Master Servicer, such check will be subject to a valid, first priority perfected
security interest in favor of the Collateral Agent, subject, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; at such time as it is
received by the Master Servicer and until deposited in the Collection Account or
Holding Account, as applicable; the proceeds of such deposited check that remain
in the Collection Account or the Holding Account will be subject to a valid,
first priority security interest in favor of the Collateral Agent, subject, to
the extent set forth in Section 5.01(d) hereof, to the interest of the Trust
under the Sale and Servicing Agreement.
(k) Valid Transfer of Contracts. The Sale and Servicing Agreement
and the Seller Assignments constitute a valid sale, transfer and assignment of
the Contracts, enforceable against creditors of and purchasers from the Seller,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, receivership or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity or at
law.
(l) Financial Information. The audited financial statements of
the Seller for the fiscal year ended December 31, _____ and the unaudited
financial statements of the Seller for the fiscal quarter ended
_________________, copies of which have been furnished to Financial Security, as
of the dates and for the periods referred to therein (i) are true, complete and
correct in all material respects, (ii) fairly present the financial condition of
the Seller and the results of operations and changes in financial position of
the Seller and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied (subject, in the case of the
quarterly financial statements, to normal year-end adjustments), and such
financial statements indicate that the Seller is solvent and will not be
rendered insolvent by the execution, delivery and performance of the Transaction
Agreements. Since ________________, there has been no material adverse change in
the business, financial condition or operations of the Seller.
Section 2.08. Representations and Warranties of WFS. WFS
represents and warrants to Financial Security as follows:
(a) Due Organization. WFS is duly organized and validly existing
as a licensed consumer finance company organized and existing and in good
standing under the laws of the State of California, with power and authority to
own its properties and to conduct its business and had at all relevant times,
and has, power, authority, and legal right to acquire and own the Contracts and
is duly qualified to do business as a foreign corporation in good standing, and
shall have obtained all necessary
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licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualification.
(b) Corporate Power and Authority. WFS has the power and
authority to execute and deliver this Agreement and each other Transaction
Agreement to which WFS is a party and to carry out the terms of each such
agreement, and has full power and authority to sell and assign the property to
be sold and assigned to the Seller for inclusion in the Trust and the Spread
Account and has duly authorized such sale and assignment to the Seller by all
necessary corporate action; and the execution, delivery, and performance of this
Agreement and each other Transaction Agreement to which WFS is a party has been
duly authorized by WFS by all necessary corporate action.
(c) Valid and Binding Obligations. The WFS Assignments constitute
a valid sale, transfer, and assignment of the Contracts to the Seller,
enforceable against creditors of and purchasers from WFS, and each of the
Transaction Agreements to which WFS is a party constitutes a legal, valid, and
binding obligation of WFS, enforceable in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, receivership or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity or at
law. The Certificates, when executed, authenticated and delivered in accordance
with the Trust Agreement, will be validly issued and outstanding and entitled to
the benefits of the Trust Agreement and will evidence the entire beneficial
ownership in the Trust. The Notes when executed, authenticated and delivered in
accordance with the Indenture, will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Trust,
enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
WFS is a party and the fulfillment of the terms hereof and thereof shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute a default (nor an event which, with the giving of notice or passage
of time, or both, would constitute a default) under, the articles of
organization or by-laws of WFS, or any indenture, agreement, or other instrument
to which WFS is a party or by which it shall be 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 instruments; nor violate any
law or any order, rule, or regulation applicable to WFS of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFS or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WFS of this Agreement or of any other
Transaction Agreement to which WFS is a party, except (in each case) such as
have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To WFS's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFS or its properties: (A) asserting
the invalidity of this Agreement or any other Transaction Agreement to which WFS
is a party, (B) seeking to prevent the consummation of any of the transactions
contemplated by any of the Transaction Agreements to which WFS is a party, (C)
seeking any determination or ruling that might materially and adversely affect
the performance by WFS of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Agreement to which
WFS is a party, or (D) involving WFS and which might adversely affect the
federal income tax attributes of the Certificates.
(g) Affirmation and Incorporation of Certain Representations and
Warranties. WFS represents and warrants to Financial Security that the
representations and warranties of the Seller set forth
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in Section 2.07 hereof, in the Underwriting Agreement and in Section 3.01(b) of
the Sale and Servicing Agreement and Section 2.10 of the Trust Agreement are (in
each case) true and correct as if set forth herein and that the representations
and warranties of WFS set forth in the Underwriting Agreement and by WFS as
Master Servicer set forth in Section 4.06 of the Sale and Servicing Agreement
are (in each case) true and correct as if set forth herein.
(h) Valid Transfer of Contracts. The WFS Assignments constitute a
valid sale, transfer and assignment of the Contracts to the Company, enforceable
against creditors of and purchasers from WFS, except as such enforceability may
be limited by (i) bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(i) Random Selection; No Adverse Selection. The Contracts that
are being transferred to the Seller were randomly selected by WFS. No selection
procedures adverse to the interests of the Seller, the Trust, the Noteholders,
the Certificateholders or the Insurer have been utilized in selecting the
Contracts.
(j) Financial Information. The audited consolidated financial
statements of WFS for the fiscal year ended December 31, ______ and the
unaudited consolidated financial statements of WFS for the fiscal quarter ended
_____________, copies of which have been furnished to Financial Security, as of
the dates and for the periods referred to therein (i) are true, complete and
correct in all material respects, (ii) fairly present the consolidated financial
condition of WFS and the consolidated results of operations and changes in cash
flows of WFS and its consolidated subsidiaries, and (iii) have been prepared in
accordance with generally accepted accounting principles consistently applied
(subject, in the case of the quarterly financial statements, to normal year-end
adjustments), and such financial statements indicate that WFS is solvent and
will not be rendered insolvent by the execution, delivery and performance of the
Transaction Agreements. Since _______________, there has been no material
adverse change in the business, financial condition or operations of WFS.
Section 2.09. Affirmative Covenants of the Seller. The Seller
covenants and agrees with Financial Security that, at all times during the term
of this Agreement:
(a) Compliance with Agreements. The Seller will comply with all
terms and conditions of this Agreement and each other Transaction Agreement to
which it is a party. The Seller will not cause or permit to become effective any
amendment to or modification of the Transaction Agreements unless Financial
Security shall have previously approved in writing the form of such amendment or
modification.
(b) Financial Statements, Accountants' Reports, Other
Information. The Seller shall keep proper books and records, in which full and
correct entries shall be made of financial transactions and the assets and
business of the Seller in accordance with generally accepted accounting
principles consistently applied. The Seller shall furnish to Financial Security,
simultaneously with the delivery of such documents to the Owner Trustee,
Indenture Trustee, the Noteholders or the Certificateholders, as the case may
be, copies of all reports, certificates, statements or notices furnished to the
Owner Trustee, the Noteholders or the Certificateholders, as the case may be,
pursuant to the Transaction Agreements.
(c) Certificate of Compliance. The Seller shall deliver to
Financial Security, concurrently with the delivery of the financial statements
required pursuant to paragraph (b) above, a certificate signed by an Authorized
Officer of the Company stating that:
(i) a review of the Seller's performance under this Agreement
and the other Transaction Agreements to which the Seller is a party
during such period has been made under such officer's supervision; and
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(ii) to the best of such officer's knowledge, based upon such
review, the Seller has fulfilled all its obligations under this
Agreement and the other Transaction Agreements to which the Seller is a
party during such period, or, if there has been a default of any such
obligation, specifying each such default known to such officer and the
nature and status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
The Seller shall, upon the reasonable request of Financial Security, permit an
authorized agent of Financial Security at reasonable times (i) to inspect such
books and records of the Seller as may relate to the Notes, the Certificates and
the obligations of the Seller under this Agreement and the other Transaction
Agreements to which the Seller is a party; and (ii) to discuss the affairs,
finances and accounts of the Seller with any of its respective officers,
directors and representatives, including its Independent Accountants.
(e) Maintain Licenses. The Seller shall maintain all licenses,
permits, charters and registrations that are material to the performance by the
Seller of its obligations under the Transaction Agreements to which it is a
party or by which the Seller is bound.
(f) Financing Statements and Further Assurances. The Seller will
file all necessary financing statements, assignments or other instruments, and
any amendments or continuation statements relating thereto, necessary to be kept
and filed in such manner and in such places as may be required by law to
preserve and protect fully the Lien and security interest in and all rights of
Financial Security with respect to the Collateral, subject to the Sale and
Servicing Agreement, and the Seller shall, upon the request of Financial
Security, from time to time, execute and deliver and, if necessary, file such
further instruments and take such further action as may be reasonably necessary
to effectuate the provisions of this Agreement or to protect the security
interest of Financial Security, subject to the Sale and Servicing Agreement, in
the Collateral.
(g) Maintain Existence; Merger. The Seller shall keep in full
effect its existence, rights and franchises under the laws of the State of
California, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and the Transaction Agreements to which the Seller is a party. The
Seller shall not consolidate with or merge into any other Person or convey,
transfer or lease substantially all of its assets as an entirety to any Person
unless the Person formed by such consolidation or into which the Seller has
merged or the Person which acquires by conveyance, transfer or lease
substantially all the assets of the Seller as an entirety, can lawfully perform
the obligations of the Seller hereunder and executes and delivers to the Owner
Trustee an agreement, in form and substance reasonably satisfactory to the Owner
Trustee and Financial Security, which contains an assumption by such Person of
the due and punctual performance and satisfaction of each covenant and condition
to be performed or satisfied by the Seller under this Agreement.
(h) Maintenance of Separate Corporate Existence. The Seller shall
at all times hold itself out to the public, including WFS and the Bank, under
the Seller's own name and as a separate and distinct entity from WFS and the
Bank. At all times at least one director and one executive officer of the Seller
(or one individual serving in both capacities) shall be a Person who is not a
director, officer or employee of any Person owning beneficially more than 10% of
the outstanding common stock of the Seller. The Seller shall maintain separate
corporate records and books of account from those of WFS and the Bank, shall not
commingle its assets with any other Person (except to the limited extent (if
any) permitted by the approval of Financial Security) and shall authorize its
corporate actions in accordance with applicable law. The Seller shall not engage
in business transactions with any of its Affiliates on terms and conditions less
favorable to the Seller than those available to the Seller for comparable
transactions from Persons who are not Affiliates the Seller. The Seller shall
maintain its chief executive office, principal place of business and the office
where it keeps its records in the State of California and separate and apart
from any office of the Master Servicer.
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(i) Random Selection; No Adverse Selection. The Contracts that
are being transferred by the Seller to the Trust were randomly selected by the
Seller. No selection procedures adverse to the interests of the Trust, the
Noteholders, the Certificateholders or the Insurer have been utilized in
selecting the Contracts.
(j) Compliance with Article 76 of New York Insurance Law. The
Seller shall ensure that the Prospectus, and any supplements or amendments
thereto, and every preliminary prospectus delivered with respect to the Notes,
clearly disclose that the Policy is not covered by the property/casualty
insurance security fund specified in Article 76 of the New York Insurance Law.
Section 2.10. Negative Covenants of the Seller. The Seller agrees
and covenants with Financial Security that at all times during the term of this
Agreement:
(a) Amendments to Organizational Documents. The Seller shall not
amend, supplement or otherwise modify, or cause to permit any amendment,
supplement or other modification of, Articles 2 or 5 of its charter (or any
other Articles of its charter that relate to the matters addressed by such
Article 2 or 5) or its bylaws without the prior written consent of Financial
Security.
(b) No Liens. Without the prior written consent of Financial
Security, the Seller shall not create, incur, assume or suffer to exist any
mortgage, deed of trust, security interest, assignment, deposit arrangement or
other preferential arrangement, charge or encumbrance (including, without
limitation, any conditional sale or other title retention agreement or finance
lease) of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names the Seller as a
debtor, or sign any security agreement authorizing any secured party thereunder
to file such financing statement.
(c) Creation of Indebtedness. Except as contemplated in
connection with the transaction to which this Agreement relates, without the
prior written consent of Financial Security, the Seller shall not create, incur,
assume or suffer to exist any indebtedness other than indebtedness guaranteed or
approved in writing by Financial Security.
(d) Guarantees, Etc. Except as contemplated in connection with
the transaction to which this Agreement relates, without the prior written
consent of Financial Security, the Seller shall not assume, guarantee, endorse
or otherwise be or become directly or contingently liable for the obligations of
any Person by, among other things, agreeing to purchase any obligation of
another Person, agreeing to advance funds to such Person or causing or assisting
such Person to maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, the Seller shall not form, or cause to be formed, any subsidiaries.
(f) Insolvency. The Seller shall not commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seek appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its assets,
or make a general assignment for the benefit of its creditors. The Seller shall
not take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in any of the acts set forth above. The Seller shall not be
unable to, or admit in writing its inability to, pay its debts.
(g) Impairment of Rights. The Seller shall not take any action or
fail to take any action that will interfere with the enforcement of any rights
under this Agreement or the other Transaction Agreements.
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Section 2.11. Affirmative Covenants of WFS. WFS covenants and
agrees with Financial Security that, at all times during the term of this
Agreement:
(a) Compliance With Agreements. WFS will comply with all terms
and conditions of this Agreement and each other Transaction Agreement to which
it is a party. WFS will not cause or permit to become effective any amendment to
or modification of the Transaction Agreements to which it is a party unless
Financial Security shall have previously approved in writing the form of such
amendment or modification.
(b) Financial Statements, Accountants' Reports, Other
Information. WFS shall keep proper books and records, in which full and correct
entries shall be made of financial transactions and the assets and business of
WFS in accordance with generally accepted accounting principles consistently
applied. WFS shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Indenture Trustee, the Noteholders or the
Certificateholders, as the case may be, copies of all reports, certificates,
statements or notices furnished to the Indenture Trustee or the
Certificateholders, as the case may be, pursuant to the Sale and Servicing
Agreement. WFS shall also deliver to Financial Security, simultaneously with the
delivery of such documents to the relevant federal or state department or agency
copies of all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
periodic reports on Form 8-K required to be filed by WFS with the Securities and
Exchange Commission.
(c) Certificate of Compliance. WFS shall deliver to Financial
Security, concurrently with the delivery of the financial statements required
pursuant to paragraph (b) above, a certificate signed by an Authorized Officer
of WFS stating that:
(i) a review of WFS's performance under this Agreement and the
other Transaction Agreements to which WFS is a party during such period
has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, WFS has fulfilled all its obligations under this Agreement and
the other Transaction Agreements to which WFS is a party during such
period, or, if there has been a default of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
WFS shall, upon the reasonable request of Financial Security, permit Financial
Security's Authorized Agent at reasonable times (i) to inspect such books and
records of WFS as may relate to the Notes, the Certificates and the obligations
of WFS under this Agreement and the other Transaction Agreements to which WFS is
a party; and (ii) to discuss the affairs, finances and accounts of WFS with any
of its respective officers, directors and representatives, including its
Independent Accountants.
(e) Maintain Licenses. WFS shall maintain all licenses, permits,
charters and registrations that are material to the performance by WFS of its
obligations under the Transaction Agreements to which it is a party or by which
WFS is bound.
(f) Maintain Existence; Merger. WFS shall keep in full effect its
existence, rights and franchises under the laws of the State of California, and
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Contract Documents
and the Transaction Agreements to which WFS is a party. WFS shall not
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the Person
formed by such consolidation or into which WFS has merged or the Person which
acquires by conveyance, transfer or lease substantially all the assets of WFS as
an entirety, can lawfully perform the obligations of WFS hereunder and executes
and delivers to the Owner Trustee an agreement, in form and substance reasonably
satisfactory to the Owner Trustee and Financial Security, which contains an
assumption by
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such Person of the due and punctual performance and satisfaction of each
covenant and condition to be performed or satisfied by WFS under this Agreement.
(g) Subservicing. WFS, as Master Servicer, shall not appoint,
pursuant to Section 4.01 of the Sale and Servicing Agreement, any Subservicer
that has not been approved in advance by Financial Security. WFS as Master
Servicer shall not cause or permit to become effective any Subservicing
Agreement that is in a form that varies substantially from the form thereof set
forth as Exhibit E to the Sale and Servicing Agreement unless the form of such
varying agreement shall have been approved in writing by Financial Security.
(h) No Petition Agreement. WFS covenants and agrees that, for a
period of one year plus one day after payment in full of all amounts payable in
respect of the Notes and the Certificates, it will not institute against, or
join any other Person in instituting against the Seller any bankruptcy,
reorganization, arrangement, conservatorship, receivership, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy, receivership or similar law, in connection with any amounts due WFS
(or any Affiliate or parent thereof) under any Transaction Agreement or
otherwise without the prior written consent of Financial Security. The
provisions of this paragraph shall survive termination of this Agreement.
ARTICLE III
THE POLICIES; INDEMNIFICATION
Section 3.01. Agreement to Issue Policy. Financial Security
agrees to issue the Policy subject to the satisfaction of the conditions
hereinafter set forth.
Section 3.02. Conditions Precedent to Issuance of Policy.
(a) The obligation of Financial Security to issue the Policy is
subject to the following having occurred or being true (as the case may be): (i)
WFS shall have assigned, conveyed and transferred, or caused to be assigned,
conveyed and transferred, the Collateral to the Seller, (ii) the Seller shall
have created a valid security interest in the Collateral in favor of the
Collateral Agent, (iii) the Seller shall have assigned, conveyed and transferred
the Collateral to the Trust, (iv) no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the best knowledge of the Seller,
threatened by the Commission and any request for additional information on the
part of the Commission (to be included in the Registration Statement, the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Commission, (v) the Premium shall have been paid in
accordance with Section 3.03 hereof, (vi) the representations and warranties of
the Trust and each Western Entity set forth or incorporated by reference in this
Agreement shall be true and correct on and as of the Closing Date, and (vii)
each Transaction Agreement shall be in full force and effect as of the Closing
Date and no default (or event which, with the giving of notice or passage of
time, or both, would become a default) thereunder shall have occurred and be
continuing.
(b) The obligation of Financial Security to issue the Policy is
further subject to the condition precedent that Financial Security shall have
received on the Closing Date, or, in its sole and absolute discretion, received
the opportunity to review prior to and on the Closing Date, the following, each
dated the Closing Date and in full force and effect on such date, except as
otherwise provided herein, in form and substance satisfactory to Financial
Security and its counsel:
(i) a certificate of an Authorized Officer of each Western
Entity stating that nothing has come to the attention of such Western
Entity to indicate that the Registration Statement, the Prospectus or
the Prospectus Supplement, on the date the Registration Statement became
effective, contained an untrue statement of a material fact or omitted
to state a material
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fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus on any date on which it
was furnished to the Underwriters for use in connection with the
offering of the Notes contained, or on the Closing Date contains, any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements made therein not misleading;
(ii) copies, certified to be true copies by the Secretary or
an Assistant Secretary of each Western Entity, of (i) the resolutions of
the Board of Directors of such Western Entity authorizing the execution,
delivery and performance of this Agreement and each other Transaction
Agreement to which such Western Entity is a party and all other
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of such Western
Entity (which certification shall state that such resolutions have not
been modified, are in full force and effect and constitute the only
resolutions adopted by such Western Entity's Board of Directors or any
committee thereof with respect thereto), (ii) the articles of
association, as amended, of such Western Entity and (iii) the by-laws,
as amended, of such Western Entity;
(iii) copies, certified to be true copies by an Authorized
Officer of the Owner Trustee, of (i) the resolutions of the board of
directors of the Owner Trustee authorizing the execution, delivery and
performance by the Owner Trustee of this Agreement and each other
Transaction Agreement to which the Owner Trustee is a party and all
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of the Owner
Trustee (which certification shall state that such resolutions have not
been modified, are in full force and effect and constitute the only
resolutions adopted by the Owner Trustee's board of directors or any
committee thereof with respect thereto and (ii) the Certificate of
Trust, certified by the Secretary of State or other appropriate official
of the State of Delaware;
(iv) a certificate of an Authorized Officer of each Western
Entity stating that (i) attached thereto are true and complete copies,
if any, of all consents, licenses and approvals necessary for each
Western Entity to execute, deliver and perform this Agreement, the other
Transaction Agreements to which such Western Entity is a party and all
other documents and instruments on the part of such Western Entity to be
delivered pursuant hereto or thereto, and (ii) all such consents,
licenses and approvals are in full force and effect, such Western Entity
has not received any notice of any proceeding for the revocation of any
such license, charter, permit or approval, and, to such Western Entity's
knowledge, there is no threatened action or proceeding or any basis
therefor;
(v) a certificate of an Authorized Officer of the Owner
Trustee stating that (i) attached thereto are true and complete copies,
if any, of all consents, licenses and approvals necessary for the Owner
Trustee to execute, deliver and perform this Agreement, the other
Transaction Agreements to which the Owner Trustee is a party and all
other documents and instruments on the part of the Owner Trustee to be
delivered pursuant hereto or thereto have been obtained, and (ii) all
such consents, licenses and approvals are in full force and effect, the
Owner Trustee has not received any notice of any proceeding for the
revocation of any such license, charter, permit or approval, and, to the
Owner Trustee's knowledge, there is no threatened action or proceeding
or any basis therefor;
(vi) a certificate of the Secretary or an Assistant Secretary
of such Western Entity certifying (i) the names and true signatures of
the officers of such Western Entity executing and delivering this
Agreement, the other Transaction Agreements to which such Western Entity
is a party and the other documents to be executed and delivered by such
Western Entity hereunder and thereunder, (ii) that approval by such
Western Entity's stockholders of the execution and delivery of this
Agreement, the other Transaction Agreements and all other such documents
to be
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executed and delivered, by such Western Entity hereunder, has been
obtained or is not required, and (iii) that no resolution for the
dissolution of such Western Entity has been adopted or contemplated and
that no such proceedings have been commenced or are contemplated;
(vii) a certificate of an Authorized Officer of the Owner
Trustee certifying (i) the names and the true signatures of the officers
of the Owner Trustee executing and delivering this Agreement, the other
Transaction Agreements to which the Owner Trustee is a party and the
other documents to be executed and delivered by the Owner Trustee
hereunder and thereunder, (ii) that approval by the Owner Trustee's
equity holders of the execution and delivery of this Agreement, the
other Transaction Agreements and all other such documents to be executed
and delivered, by the Owner Trustee hereunder, has been obtained or its
not required, and (iii) that no action for the dissolution of the Owner
Trustee has been adopted or contemplated and that no such proceedings
have commenced or contemplated;
(viii) a certificate of an Authorized Officer of each Western
Entity to the effect that (x) the representations and warranties of such
Western Entity set forth or incorporated by reference in this Agreement
are true and correct on and as of the Closing Date and (y) confirming
that the conditions precedent set forth herein with respect to such
Western Entity are satisfied;
(ix) a certificate of an Authorized Officer of the Trust to
the effect that (x) the representations and warranties of the Trust set
forth or incorporated by reference in this Agreement are true and
correct on and as of the Closing Date and (y) confirming that the
conditions precedent set forth herein with respect to the Trust are
satisfied;
(x) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, counsel to the Seller, WFS, the Bank and WII, as to certain
corporate, securities law and other matters, and such counsel shall have
been instructed by its client to deliver such opinion to the addressees
thereof, in form and substance satisfactory to counsel to Financial
Security;
(xi) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, counsel to the Seller, WFS and the Bank, as to certain
bankruptcy and insolvency matters, and such counsel shall have been
instructed by its client to deliver such opinion to the addressees
thereof, in form and substance satisfactory to Financial Security;
(xii) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, special tax counsel to the Seller, WFS, the Bank and WII as
to certain tax matters (which may be included in the opinion referred to
in clause (x) above), and such counsel shall have been instructed by its
client to deliver such opinion to the addressees thereof, in form and
substance satisfactory to counsel to Financial Security;
(xiii) a favorable opinion of Richards, Layton & Finger,
counsel to the Trust and the Owner Trustee, and such counsel shall have
been instructed by its client to deliver such opinion to the addressees
thereof, substantially in the form of Exhibit G hereto;
(xiv) a certificate from the Collateral Agent and the
Indenture Trustee, substantially in the form of Exhibit E hereto;
(xv) a favorable opinion of White & Case, counsel to the
Collateral Agent, the Proceeds Agent and the Indenture Trustee, and such
counsel shall have been instructed by its client to deliver such opinion
to the addressees thereof, substantially in the form of Exhibit F
hereto;
(xvi) evidence that amounts due and payable to Financial
Security under Section 3.03 of this Agreement have been paid or that
acceptable provisions therefor have been made;
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(xvii) a fully executed copy of each of the Transaction
Agreements;
(xviii) evidence that all actions necessary or, in the opinion
of Financial Security, desirable to perfect and protect the interests
transferred by the Sale and Servicing Agreement and the liens and
security interests created by this Agreement, including, without
limitation, the filing of any financing statements required by Financial
Security or its counsel, have been taken or promptly shall be taken;
(xix) a certificate or opinion of Independent Accountants
addressed to Financial Security to the effect set forth in Exhibit H
hereto;
(xx) a certificate of the Master Servicer, signed by an
Authorized Officer, identifying those Contracts as to which the Title
Documents are not in the possession of the Seller and certifying that
such Title Documents showing WFS or the Bank as first lienholder have
been applied for and as to which Section 3.09 of the Sale and Servicing
Agreement applies;
(xxi) evidence that the Seller shall have deposited, or caused
to have been deposited, in the Collection Account, the deposits required
under the eighth paragraph of Section 4.01 of the Sale and Servicing
Agreement, the deposits required in the Spread Account and any other
deposits required to be made on the Closing Date under the Transaction
Agreements to which the Seller is a party; and
(xxii) such other documents, instruments, approvals (and, if
requested by Financial Security, certified duplicates of executed copies
thereof) or opinions as Financial Security may reasonably request.
Section 3.03. Premium. In consideration of the issuance by
Financial Security of the Policy, the Seller shall pay to Financial Security the
initial installment of the Premium at the time of delivery of the Policy and
further installments of the Premium, all in accordance with the terms of the
letter agreement between the Seller and Financial Security referred to in the
definition of "Premium" set forth herein. Failure by the Seller to pay any such
further installments of the Premium shall not cause the Policy to be cancelled
and shall not in any way relieve Financial Security of its obligations to make
any payments under the Policy. Anything herein to the contrary notwithstanding,
it is hereby agreed between the parties hereto that the full amount of the
Premium shall have been earned by Financial Security upon its issuance of the
Policy on the Closing Date and upon the occurrence of a Servicer Default under
Section 8.01 of the Sale and Servicing Agreement (including without limitation,
the failure of the Seller to pay any installment of the Premium as and when
due), the entire outstanding balance of further installments of the Premium
shall be immediately due and payable. The Premium shall be nonrefundable without
regard to whether Financial Security makes any payment under the Policy, any
prepayment or early retirement of the Notes or the Certificates occur or any
other circumstances occur relating to the Notes or the Certificates.
Section 3.04. Reimbursement Obligation.
(a) Each of the Trust and the Seller agrees absolutely and
unconditionally to pay to Financial Security, in the manner provided in Section
3.04(b), as follows:
(i) a sum equal to the total of all amounts which may be paid
by Financial Security under the Policy;
(ii) any accrued but unpaid installments of the Premium and
any and all reasonable charges and expenses which Financial Security may
pay or incur relating to any payment under the Policy, including, but
not limited to, any fees and charges in connection with any accounts
established to facilitate payments under the Policy, to the extent
Financial Security
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has not been immediately reimbursed on the date that any amount is paid
by Financial Security under the Policy;
(iii) the amount of any reasonable costs or expenses
(including attorneys' and accountants' fees and expenses) incurred by
Financial Security (A) in connection with the enforcement of this
Agreement or any of the other Transaction Agreements or (B) in
connection with the foreclosure upon, sale or other disposition of the
Collateral, to the extent that such costs and expenses are not recovered
from such foreclosure, sale or other disposition;
(iv) the amount of any payments made by Financial Security on
behalf of the Seller other than amounts specified under Section
3.04(a)(i) above, including, without limitation, the fees and expenses
of the Collateral Agent, the Indenture Trustee, the Owner Trustee, the
Trust and any Independent Accountants, and the amount of any payments
made by Financial Security to (i) the Owner Trustee in respect of
amounts (if any) owing by the Trust to the Owner Trustee pursuant to,
Section 8.02 of the Trust Agreement and (ii) the Indenture Trustee
pursuant to Section 6.07 of the Indenture to the extent that such
amounts shall not have been paid by the Trust and are paid by Financial
Security;
(v) any federal, state or local tax (other than taxes payable
in respect of the gross income of Financial Security) or other
governmental charge imposed in connection with the issuance of the
Policy or the business or operations of the Seller including, without
limitation, by reason of the Seller being deemed to do business in the
State of California;
(vi) Financial Security's cost of providing to the Seller (or
to any Person at the request of the Seller) any audited or unaudited
financial statements, including, without limitation, the fees and
expenses of Financial Security's Independent Accountants in reviewing
such financial statements in connection with such provision and mailing
and incremental printing costs;
(vii) any amount otherwise required to be paid to or on behalf
of Financial Security under this Agreement;
(viii) any payments made by Financial Security as, or in lieu
of, servicing, management, trustee, custodial or administrative fees
payable, in the sole discretion of Financial Security, to third parties
in connection with the transaction, to the extent (in each case) that
such payment occurs following (i) the occurrence of an Event of Default
(or event or circumstance that, with the giving of notice or the passage
of time or both, would become an Event of Default) or (ii) the failure
of any Person to perform its obligation to pay any such amount at the
time and in the manner specified in this Agreement or any other
Transaction Agreement; and
(ix) interest on any and all such amounts from the date of
payment by Financial Security of such amounts until payment thereof in
full and interest on any and all amounts described in Sections 3.03 and
3.09 hereof, from the date due until payment thereof in full, in each
case, payable at the Late Payment Rate.
(b) All amounts to be paid by the Trust or the Seller pursuant to
subsection (a) above shall be due and payable without demand, in full without
any requirement on the part of Financial Security to seek reimbursement from any
other sources of indemnity therefor or to allocate expenses to other
transactions benefiting therefrom, and all such amounts shall be payable in the
priority and in the manner provided in the Sale and Servicing Agreement;
provided, however, that upon the occurrence of any Servicer Default under the
Sale and Servicing Agreement, Financial Security shall have the rights provided
for herein and therein.
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Section 3.05. Non-Recourse Obligation.
(a) Notwithstanding any provision to the contrary contained in
Section 3.04(a), the payment obligations provided in Sections 3.04(a)(i) (to the
extent that such payment obligations do not arise from any failure or default in
the performance by the Bank or the WFAL2 of any of its payment obligations under
the RIC), 3.04(a)(ii) and (to the extent that such payment obligations do not
arise from any failure or default in the performance by the Seller of any of its
obligations under the Transaction Agreements) 3.04(a)(iii)(A) and (B), and any
interest on the foregoing in accordance with Section 3.04(a)(ix), shall not be
recourse to the Seller, WFS, WII, the Owner Trustee, the Indenture Trustee, the
Collateral Agent or the Proceeds Agent, but shall be payable solely by
application of moneys (excluding the Retained Yield) received from time to time
in accordance with the Sale and Servicing Agreement (including but not limited
to all amounts paid into the Collection Account, the Note Distribution Account,
the Certificate Distribution Account or the Holding Account pursuant to the Sale
and Servicing Agreement by any Western Entity, but not including the Retained
Yield to the extent that any amount thereof is deposited into any such Account)
and by realization on the Collateral pursuant to Section 6.03 hereof. Such
payment obligations shall be limited, except as set forth in the preceding
sentence, solely to application of monies, if any, in the Spread Account from
time to time in accordance with Transaction Agreements.
(b) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of the Seller under Section 3.04
are solely the corporate obligations of the Seller, and shall be payable by the
Seller, solely as provided in Section 3.04. The Seller shall only be required
to pay (i) any fees, expenses, indemnities or other liabilities that it may
incur under Section 3.04 (y) from funds available pursuant to, and in
accordance with the payment priorities set forth in Section 5.06 of the Sale
and Servicing Agreement and (z) to the extent the Seller has additional funds
available (other than funds described in the preceding clause (y)) that would
be in excess of amounts that would be necessary to pay the debt and other
obligations of the Seller incurred in accordance with its certificate of
incorporation and all financing documents to which it is a party and (ii) any
expenses, indemnities or other liabilities that it may incur under Section 3.04
(y) from funds available pursuant to, and in accordance with the payment
priorities set forth in Section 5.06 of the Sale and Servicing Agreement and
(z) only to the extent it receives additional funds designated for such
purposes or to the extent it has additional funds available (other than funds
described in the preceding clause (y)) that would be in excess of amounts that
would be necessary to pay its debt and other obligations incurred in accordance
with its certificate of incorporation and all financing documents to which it
is a party. In addition, no amount owing by the hereunder in excess of the
liabilities that it is required to pay in accordance with the preceding
sentence shall constitute a "claim" (as defined in Section 101(5) of the
Bankruptcy Code) against it. No recourse shall be had for the payment of any
amount owing hereunder or for the payment of any fee hereunder or any other
obligation of, or claim against, the Seller arising out of or based upon
Section 3.04, against any stockholder, employee, officer, agent, director or
authorized person of the Seller or Affiliate thereof; provided, however, that
the foregoing shall not relieve any such person or entity of any liability they
might otherwise have as a result of fraudulent actions or omissions taken by
them.
Section 3.06. Indemnification.
(a) In addition to any and all rights of indemnification or any
other rights of Financial Security pursuant hereto or under law or equity, the
Seller agrees to pay, and to protect, indemnify and save harmless, Financial
Security and its officers, directors, shareholders, employees, agents and each
person, if any, who controls Financial Security within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including, without
limitation, fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) or obligations whatsoever (herein
collectively referred to as "Liabilities") of any nature arising out of or
relating to the transactions contemplated by this Agreement and the other
Transaction Agreements by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon (A)
information set forth in the Prospectus under the caption "Financial
Security" or in the financial statements of Financial Security,
including any information in any amendment or supplement to the
Prospectus furnished by Financial Security in writing expressly for use
therein that amends or supplements such information (all such
information being referred to herein as "Financial Security
Information"), or (B) information set forth under the caption
"Underwriting" in the Prospectus, including any information in any
amendment or supplement to the Prospectus furnished by the Underwriters
through the Representative in writing expressly for use therein that
amends or supplements such information (all such information being
referred to herein as "Underwriter Information");
(ii) to the extent not covered by clause (i) above, any act or
omission of WII, the Seller or the Trust in connection with the
offering, issuance, sale or delivery of the Notes or the Certificates
other than by reason of false or misleading Financial Security
Information;
(iii) the misfeasance or malfeasance of, or theft committed
by, any director, officer, employee or agent of WII, the Seller or the
Trust;
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(iv) the violation by the Seller, the Trust or WII of any
federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of the Notes
or the transactions contemplated by this Agreement and the other
Transaction Agreements;
(v) the violation by WII, the Seller or the Trust of any
federal or state laws, rules or regulations relating to the maximum
amount of interest permitted to be received on account of the loan of
money or with respect to the Contracts;
(vi) the negligence or willful misconduct of the Seller, the
Trust or WII or any of its directors, officers, employees or agents;
(vii) the breach by WII, the Seller or the Trust of its
obligations under this Agreement or any of the other Transaction
Agreements;
(viii) the breach by WII, the Seller or the Trust of any
representation or warranty on the part of WII, the Seller or the Trust,
respectively, contained in or incorporated by reference in this
Agreement or any other Transaction Agreement or in any certificate
furnished or delivered to Financial Security hereunder and thereunder,
or the occurrence, in respect of the Seller or the Trust, under any of
the Transaction Agreements of any event of default or any event which,
with the giving of notice or lapse of time or both, would constitute any
event of default; and
(ix) the use, ownership or operation by the Seller, the Trust,
WII or any affiliate of the Seller, of a Financed Vehicle.
(b) In addition to any and all rights of indemnification or any
other rights of Financial Security pursuant hereto or under law or equity, WFS
agrees to pay, and to protect, indemnify and save harmless, Financial Security
and its officers, directors, shareholders, employees, agents and each person, if
any, who controls Financial Security within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all claims, losses, liabilities (including penalties), actions, suits,
judgments, demands, damages, costs or expenses (including, without limitation,
fees and expenses of attorneys, consultants and auditors and reasonable costs of
investigations) or obligations whatsoever (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the transactions
contemplated by this Agreement and the other Transaction Agreements by reason
of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon (A)
information set forth in the Prospectus under the caption "Financial
Security" or in the financial statements of Financial Security,
including any information in any amendment or supplement to the
Prospectus furnished by Financial Security in writing expressly for use
therein that amends or supplements such information (all such
information being referred to herein as "Financial Security
Information"), or (B) information set forth under the caption
"Underwriting" in the Prospectus, including any information in any
amendment or supplement to the Prospectus furnished by the Underwriters
through the Representative in writing expressly for use therein that
amends or supplements such information (all such information being
referred to herein as "Underwriter Information");
(ii) to the extent not covered by clause (i) above, any act or
omission of WFS in connection with the offering, issuance, sale or
delivery of the Notes or the Certificates other than by reason of false
or misleading Financial Security Information;
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(iii) the misfeasance or malfeasance of, or theft committed
by, any director, officer, employee or agent of WFS;
(iv) the violation by WFS or any Affiliate (other than
Westcorp) thereof of any federal or state securities, banking or
antitrust laws, rules or regulations in connection with the issuance,
offer and sale of the Notes or the Certificates or the transactions
contemplated by this Agreement and the other Transaction Agreements;
(v) the violation by WFS or any Affiliate (other than
Westcorp) thereof of any federal or state laws, rules or regulations
relating to the maximum amount of interest permitted to be received on
account of the loan of money or with respect to the Contracts;
(vi) the negligence or willful misconduct of WFS or any of
their respective directors, officers, employees or agents;
(vii) the breach by WFS of its obligations under this
Agreement or any of the other Transaction Agreements;
(viii) the breach by WFS of any representation or warranty on
the part of WFS contained in or incorporated by reference in this
Agreement or any other Transaction Agreement or in any certificate
furnished or delivered to Financial Security hereunder and thereunder;
(ix) the use, ownership or operation by WFS, or any Affiliate
thereof (other than Westcorp), of a Financed Vehicle; and
(x) the violation by the Seller, the Trust or WII of any of
the provisions of (a) above caused by or at the direction of WFS.
(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against Financial Security or any
person controlling Financial Security (hereinafter collectively referred to as a
Financial Security Indemnified Party) in respect of which indemnity may be
sought from the Seller pursuant to Section 3.06(a)(i) or (ii) or WFS pursuant to
Section 3.06(b)(i), (ii) or (x) (such Western Entity or Western Entities, as the
case may be, herein referred to as the Indemnifying Western Entity), then
Financial Security or such controlling person shall give the Indemnifying
Western Entity written or telegraphic notice of such action or claim reasonably
promptly after receipt of written notice thereof. The Indemnifying Western
Entity shall be entitled to participate in the defense of any such action or
claim in reasonable cooperation with, and with the reasonable cooperation of,
the Financial Security Indemnified Party. The Financial Security Indemnified
Party shall have the right to employ its own counsel in any such action in
addition to the counsel of the Indemnifying Western Entity, but fees and
expenses of such counsel will be at the expense of the Financial Security
Indemnified Party unless (1) the employment of counsel by the Financial Security
Indemnified Party has been authorized in writing by the Indemnifying Western
Entity or (2) the Indemnifying Western Entity has not in fact employed counsel
to assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action or (3) the named parties to any such
action or proceeding (including any impleaded parties) include both the
Indemnifying Western Entity on the one hand and the Financial Security
Indemnified Party on the other hand, and the Financial Security Indemnified
Party shall have been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Indemnifying Western Entity (it being understood, however, that
the Indemnifying Western Entity shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the Financial Security
Indemnified Party, which firm shall be designated in writing by the Financial
Security Indemnified Party), in each of which cases the fees and expenses of
counsel will be at the expense of the Indemnifying Western Entity and all such
fees and
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expenses will be reimbursed promptly as they are incurred. No settlement of any
such claim or action shall be entered into without the consent of Financial
Security on the one hand and the Indemnifying Western Entity who is subject to
such claim or action on the other hand. Any failure by Financial Security to
comply with the provisions of this Section shall relieve the Indemnifying
Western Entity of liability only if substantially prejudicial to the position of
the Indemnifying Western Entity and then only to the extent of such prejudice.
(d) The rights to indemnification provided for in this Section
3.06 shall survive the termination of this Agreement and shall survive until the
statute of limitations has run on any causes of action that arise from these
provisions and until all suits filed as a result thereof have been finally
concluded.
(e) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of the Seller under this Section
3.06 are solely the corporate obligations of the Seller, and shall be payable
by the Seller, solely as provided in Section 3.06. The Seller shall only be
required to pay (i) any fees, expenses, indemnities or other liabilities that
it may incur under this Section 3.06 (y) from funds available pursuant to, and
in accordance with, the payment priorities set forth in Section 5.06 of the
Sale and Servicing Agreement and (z) to the extent the Seller has additional
funds available (other than funds described in the preceding clause (y)) that
would be in excess of amounts that would be necessary to pay the debt and other
obligations of the Seller incurred in accordance with its certificate of
incorporation and all financing documents to which it is a party and (ii) any
expenses, indemnities or other liabilities that it may incur under this Section
3.06 (y) from funds available pursuant to, and in accordance with, the payment
priorities set forth in Section 5.06 of the Sale and Servicing Agreement and
(z) only to the extent it receives additional funds designated for such
purposes or to the extent it has additional funds available (other than funds
described in the preceding clause (y)) that would be in excess of amounts that
would be necessary to pay its debt and other obligations incurred in accordance
with its certificate of incorporation and all financing documents to which it
is a party. In addition, no amount owing by the Seller hereunder in excess of
the liabilities that it is required to pay in accordance with the preceding
sentence shall constitute a "claim" (as defined in Section 101(5) of the
Bankruptcy Code) against it. No recourse shall be had for the payment of any
amount owing hereunder or for the payment of any fee hereunder or any other
obligation of, or claim against, the Seller arising out of or based upon this
Section 3.06, against any stockholder, employee, officer, agent, director or
authorized person of the Seller or Affiliate thereof; provided, however, that
the foregoing shall not relieve any such person or entity of any liability they
might otherwise have as a result of fraudulent actions or omissions taken by
them.
Section 3.07. Liability Absolute. The obligations of the Seller,
WFS, WII and the Trust hereunder shall be absolute, unconditional and
irrevocable and shall be paid and performed strictly in accordance with the
terms of this Agreement under all circumstances whatsoever, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of the Policy or all
or any provision of this Agreement or of any of the other Transaction
Agreements;
(b) any amendment or waiver of or any consent to departure from
all or any provision of this Agreement or of any other Transaction Agreement;
(c) the existence of any claim, setoff, defense, reduction,
abatement or other right which either Western Entity may have at any time
against Financial Security or any other Person;
(d) any statement, instrument of assignment or any other document
presented to Financial Security in connection with the Policy proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever;
(e) payment by Financial Security under the Policy against
presentation of a certificate or other document which does not comply with the
terms of the Policy, provided that such payment shall not have been the result
of the gross negligence or willful misconduct of Financial Security;
(f) any nonapplication or misapplication by the Indenture
Trustee, the Owner Trustee, or any paying agent of the proceeds of the demand
for payment under the Policy;
(g) the failure of the Seller or, indirectly, WFS, to receive the
proceeds of the sale of the Notes or the Certificates; or
(h) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, provided that such circumstance or
happening shall not have been the result of the gross negligence or willful
misconduct of Financial Security.
Section 3.08. Liability of Financial Security. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for (a) the unauthorized use which may be made of the Policy by the
Indenture Trustee or the Owner Trustee or any unauthorized acts or omissions of
the Indenture Trustee or the Owner Trustee in connection with the Policy; or (b)
the validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereto, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; or (c) any acts or
omissions to act of the Indenture Trustee in connection with the Collateral
other than such acts or omissions that are at the direction of Financial
Security. In furtherance and not in limitation of the foregoing, Financial
Security (or its Fiscal Agent) may accept documents that appear on their face to
be in order, without responsibility for further investigation. Each of the Owner
Trustee, the Indenture Trustee and each Western Entity acknowledges that it has
not relied on any information or materials provided by
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Financial Security in connection with the issuance of the Notes and the
Certificates except for the information furnished in writing by Financial
Security for inclusion in the Registration Statement. Each of them also
acknowledges that it has not relied on any investigation by Financial Security
of the Collateral or of the financial statements or other financial statistical
data used in connection with the issuance of the Notes and Certificates.
Section 3.09. Payment of Costs, Fees and Expenses.
(a) The Seller shall pay on demand any and all charges, fees,
costs and expenses which Financial Security may reasonably pay or incur,
including, but not limited to, attorneys' and accountants' fees and expenses, in
connection with (A) the enforcement, defense or preservation of any rights in
respect of any of this Agreement or any other Transaction Agreements, including
defending, monitoring or participating in any litigation or proceeding
(including any bankruptcy proceeding in respect of any transaction participant
or any Affiliate (other than WII or Westcorp) thereof) relating to any of the
Transaction Agreements and this Agreement, any party to any of the Transaction
Agreements and this Agreement, or the transaction, (B) any amendment, waiver or
other action with respect to, or related to, any Transaction Agreements and this
Agreement whether or not executed or completed or (C) any review or approval by
Financial Security in connection with the delivery of any additional or
substitute collateral under any of the Transaction Agreements and this
Agreement. In addition, the Seller shall reimburse Financial Security for its
expenses, including, without limitation, legal fees and disbursements, incurred
in connection with the preparation of this Agreement and the Transaction
Agreements and the consummation of the initial transactions contemplated hereby
and thereby, it being understood that the Seller's obligations to reimburse
Financial Security pursuant to this sentence shall be limited in the aggregate
to the dollar amount set forth in the letter agreement between the Seller and
Financial Security referred to in the definition of "Premium" set forth herein,
plus rating agency fees, to the extent paid by Financial Security.
(b) WFS shall pay on demand any and all charges, fees, costs and
expenses not paid by the Seller which Financial Security may reasonably pay or
incur, including, but not limited to, attorneys' and accountants' fees and
expenses, in connection with (A) the enforcement, defense or preservation of any
rights in respect of this Agreement or any other Transaction Agreements,
including defending, monitoring or participating in any litigation or proceeding
(including any bankruptcy proceeding in respect of any transaction participant
or any Affiliate (other than Westcorp) thereof) relating to this Agreement or
any other Transaction Agreements, any party to any of the Transaction Agreements
and this Agreement, or the transaction, (B) any amendment, waiver or other
action with respect to, or related to, this Agreement or any other Transaction
Agreements, whether or not executed or completed or (C) any review or approval
by Financial Security in connection with the delivery of any additional or
substitute collateral under any of the Transaction Agreements and this
Agreement.
(c) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of the Seller under this Section
3.09 are solely the corporate obligations of the Seller, and shall be payable
by the Seller, solely as provided in Section 3.09. The Seller shall only be
required to pay (i) any fees, expenses or other liabilities that it may incur
under this Section 3.09 (y) from funds available pursuant to, and in accordance
with, the payment priorities set forth in Section 5.06 of the Sale and
Servicing Agreement and (z) to the extent the Seller has additional funds
available (other than funds described in the preceding clause (y)) that would
be in excess of amounts that would be necessary to pay the debt and other
obligations of the Seller incurred in accordance with its certificate of
incorporation and all financing documents to which it is a party and (ii) any
expenses, indemnities or other liabilities that it may incur under this Section
3.09 (y) from funds available pursuant to, and in accordance with, the payment
priorities set forth in Section 5.06 of the Sale and Servicing Agreement and
(z) only to the extent it receives additional funds designated for such
purposes or to the extent it has additional funds available (other than funds
described in the preceding clause (y)) that would be in excess of amounts that
would be necessary to pay its debt and other obligations incurred in accordance
with its certificate of incorporation and all financing documents to which it
is a party. In addition, no amount owing by the Seller hereunder in excess of
the liabilities that it is required to pay in accordance with the preceding
sentence shall constitute a "claim" (as defined in Section 101(5) of the
Bankruptcy Code) against it. No recourse shall be had for the payment of any
amount owing hereunder or for the payment of any fee hereunder or any other
obligation of, or claim against, the Seller arising out of or based upon this
Section 3.09, against any stockholder, employee, officer, agent, director or
authorized person of the Seller or Affiliate thereof; provided, however, that
the foregoing shall not relieve any such person or entity of any liability they
might otherwise have as a result of fraudulent actions or omissions taken by
them.
Section 3.10. Payment Procedure. All payments made pursuant to
this Agreement shall be made to Financial Security in lawful currency of the
United States of America and in one-day clearing-house funds at Financial
Security's Notice Address before 1:00 p.m. (New York City time) on the date when
due.
Section 3.11. Business Days. In any case where the date of any
payment to Financial Security or the expiration of any time period hereunder
occurs on a day which is not a Business Day, then such payment may be made, or
such expiration shall occur, on the next succeeding Business Day with the same
force and effect as if made on the day of maturity or expiration of such period,
except that interest shall continue to accrue for the period after such date to
the next Business Day.
Section 3.12. Waivers and Consents by Seller and WFS. The Seller,
WFS and any and all others who are now or may become liable for all or part of
the obligations of the Seller and WFS under this Agreement (all of the foregoing
being referred to collectively in this Section as the "Obligors") agree
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to be bound by this Agreement and (a) waive and renounce any and all redemption
and exemption rights and the benefit of all valuation and appraisement
privileges against any amounts to be paid hereunder or any extension or renewal
hereof; (b) waive presentment and demand for payment, notices of nonpayment and
of dishonor, protest of dishonor and notice of protest; (c) waive all notices in
connection with the delivery and acceptance hereof and all other notices in
connection with the performance, default or enforcement of the payment hereof
except as required by this Agreement; (d) waive any and all lack of diligence
and delays in the enforcement of the payment hereof; (e) agree that the
liability of each of the Obligors shall be unconditional and without regard to
the liability of any other person or entity for the payment hereof and shall not
in any manner be affected by any indulgence or forbearance granted or consented
to by Financial Security with respect hereto; (f) consent to any and all
extensions of time, renewals, waivers or modifications that may be granted by
Financial Security with respect to the payment or other provisions hereof, and
to the release of any security at any time given for the payment hereof, or any
part thereof, with or without substitution, and to the release of any person or
entity liable for the payment hereof; and (g) consent to the addition of any and
all other makers, endorsers, guarantors and other obligors for the payment
hereof, and to the acceptance of any and all other security for the payment
hereof or thereof, and agree that the addition of any such obligors or security
shall not affect the liability of any of the Obligors for the payment hereof.
ARTICLE IV
PLEDGE OF COLLATERAL
Section 4.01. Obligations Secured Hereby. The agreements
contained in this Article IV are made to provide for and secure repayment of the
following indebtedness and liabilities of the Seller (such indebtedness and
liabilities being herein called the "Obligations") in the order of priority
indicated:
First, (i) the repayment of all amounts, if any, advanced
or expended by the Collateral Agent, in its capacity as Collateral
Agent, for the account of the Seller hereunder, (ii) the payment of all
reasonable costs and expenses at any time and from time to time incurred
by the Collateral Agent, in its capacity as Collateral Agent, in
connection with the administration or enforcement of this Agreement or
any related document (including, without limitation, the fees and
out-of-pocket expenses of counsel employed by the Collateral Agent in
connection therewith) and (iii) the payment of all indemnities at any
time and from time to time payable hereunder to the Collateral Agent, by
the Seller, and
Second, (i) the repayment of all amounts advanced or paid
by Financial Security under the Policy pursuant to this Agreement and
(ii) the payment of any accrued but unpaid installments of the Premium
and all costs and expenses at any time and from time to time incurred by
Financial Security in connection with the administration or enforcement
of this Agreement or any other Transaction Agreement or any related
document (including, without limitation, the fees and out-of-pocket
expenses of counsel employed by Financial Security in connection
therewith) and under or in connection with this Agreement and the
Policy.
Section 4.02. Granting Clause. Conveyance by the Seller. In order
to secure and to provide for the repayment of the Obligations, the Seller hereby
sells, assigns, conveys, transfers, delivers and sets over unto the Collateral
Agent, as collateral agent for Financial Security, and hereby grants the
Collateral Agent, as collateral agent for Financial Security, a security
interest in all of its right, title and interest in the Collateral, to have and
to hold said Collateral unto the Collateral Agent, its successors and assigns,
forever in pledge and trust for the benefit and security of Financial Security,
subject to the terms and provisions set forth in Article V of this Agreement.
The assignment and security
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interest so granted to the Collateral Agent shall not relieve the Seller from
the performance of any term, covenant, condition or agreement on the Seller's
part to be performed or observed under or in connection with this Agreement or
any other Transaction Agreement, or impose any obligation on the Collateral
Agent or Financial Security to perform or observe any such term, covenant,
condition or agreement on the Seller's part to be so performed or observed or
impose any liability on the Collateral Agent or Financial Security for any act
or omission on the part of the Seller relative thereto or for any breach of any
representation or warranty on the part of the Seller contained therein, or made
in connection therewith, and the Seller hereby agrees to indemnify and hold
harmless the Collateral Agent and Financial Security from and against any and
all losses, liabilities (including liabilities for penalties), claims, demands,
actions, suits, judgments, costs and expenses arising out of or resulting from
the assignment and security interest granted hereby by virtue of any act or
omission on the part of the Seller (other than an act or omission on the part of
the Seller pursuant to or in accordance with an express direction from the
Collateral Agent or Financial Security), including, without limitation, the
reasonable costs, expenses and disbursements (including attorneys' fees)
incurred by the Collateral Agent or Financial Security in enforcing this
Agreement or any other Transaction Agreement. The assignment and security
interest granted to the Collateral Agent pursuant to this Section shall become
effective prior to the effectiveness of the Seller Assignments, and the
assignment by the Seller to the Trust under Section 2.01 of the Sale and
Servicing Agreement and the assignment by the Trust to the Indenture Trustee
under the Indenture and, upon the effectiveness of such assignment and security
interest, such assignment and security interest shall be subject to the
provisions of Section 5.01(d) hereof.
Section 4.03. Release of Collateral. Financial Security hereby
instructs the Collateral Agent that, at such time as a Contract is reconveyed by
the Trust pursuant to Section 9.01 of the Sale and Servicing Agreement, the
Collateral Agent shall release such Contract from the lien of the security
interest created hereby upon receipt by Financial Security of a Certificate of
the Seller that the conditions set forth in Section 9.01 of the Sale and
Servicing Agreement have been satisfied.
ARTICLE V
INTERCREDITOR PROVISIONS
Section 5.01. Financial Security's Direction Upon Servicer
Default.
(a) So long as no Financial Security Insolvency has occurred and
no Financial Security Default has occurred and is continuing, if there exists
any Servicer Default pursuant to Section 8.01 of the Sale and Servicing
Agreement, Financial Security shall, notwithstanding the provisions of Article
VIII of the Sale and Servicing Agreement, have the sole right to direct the
Indenture Trustee as to any and all actions to be taken under the Indenture or
the Sale and Servicing Agreement, as applicable, including, without limitation,
all actions with respect to (i) the giving of directions to the Master Servicer
and any Subservicer with respect to the servicing of the Contracts and any of
the respective obligations of the Seller under the Sale and Servicing Agreement,
(ii) the exercise of all rights, remedies, powers, privileges and claims against
any obligor under the Sale and Servicing Agreement and (iii) the giving or
withholding of all consents, requests, notices, directions, approvals,
extensions or waivers under or with respect to the Indenture or the Sale and
Servicing Agreement, as applicable, in each case to the same extent as the
Noteholders or the Certificateholders might do but for the collateral assignment
and security interests granted to Financial Security hereunder, provided,
however, that the Indenture Trustee, without obtaining the consent or direction
of Financial Security, may at all times take any action permitted or required to
be taken by it under the terms of the Indenture or as a fiduciary in order to
protect the Indenture Trustee's, the Noteholders' and the Certificateholders'
interest in the Trust Estate or to preserve any available claims against the
Seller on behalf of the Noteholders and the Certificateholders. Financial
Security shall indemnify the Indenture Trustee in full for any costs and
expenses incurred (including the reasonable fees and expenses of the Indenture
Trustee's counsel) in connection with the Indenture Trustee's due
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performance of directions pursuant to this subsection (a) or in connection with
any inaction of the Indenture Trustee as a result of a direction from Financial
Security at any time when Financial Security holds the right to direct the
Indenture Trustee as provided for in this paragraph (a).
(b) Financial Security shall not unreasonably withhold any
consent required of it under the Sale and Servicing Agreement or the Indenture,
as applicable, and shall promptly respond when any approval or consent is
required of it under the Sale or Servicing Agreement and the Indenture, as
applicable.
(c) Notwithstanding any provision of the Sale and Servicing
Agreement or the Indenture, as applicable, to the contrary, so long as no
Financial Security Insolvency has occurred and no Financial Security Default has
occurred and is continuing,
(i) without the prior written consent of Financial Security,
the Owner Trustee shall not (A) terminate the rights and powers of the
Master Servicer pursuant to Section 8.01 of the Sale and Servicing
Agreement or (B) waive any Servicer Default thereunder;
(ii) without the prior written consent of Financial Security,
(A) neither the Seller nor the Trust shall cause to be appointed any
successor Indenture Trustee, and, (B) neither the Indenture Trustee nor
the Administrator shall cause to be appointed any Co-Trustee under the
Indenture;
(iii) without the prior written consent of Financial Security,
neither the Seller or WFS nor the Owner Trustee or the Indenture Trustee
shall appoint new Independent Accountants;
(iv) without the prior written consent of Financial Security,
neither the Seller or WFS nor the Owner Trustee or the Indenture Trustee
shall consent to the amendment of or supplement to any of the
Transaction Agreements; and
(v) Financial Security shall have the power to direct the
actions to be taken by the Seller pursuant to Section 3.02 of the Sale
and Servicing Agreement.
(d) Financial Security agrees that, until such time that all
required payments shall have been made with respect to the Notes, the security
interest in the Collateral granted to Financial Security under this Agreement
shall be junior and subordinate to the interest of the Indenture Trustee and the
Securityholders. Financial Security further agrees that, until such time that
all required payments shall have been made with respect to the Notes, neither
Financial Security nor any Person acting on its behalf may take any action to
foreclose or otherwise pursue remedies with respect to the Collateral other than
in accordance with the Sale and Servicing Agreement and the Indenture.
Section 5.02. Financial Security's Direction of Insolvency
Proceedings. Financial Security shall have the rights provided for in Section
8.06 of the Sale and Servicing Agreement.
ARTICLE VI
THE COLLATERAL AGENT; REMEDIES
Section 6.01. Appointment and Powers of Collateral Agent.
Financial Security hereby appoints Bankers Trust Company as the Collateral
Agent, and Bankers Trust Company accepts such appointment hereunder, and
Financial Security hereby authorizes the Collateral Agent to take such action on
its behalf and to exercise such rights, remedies, powers and privileges
hereunder as Financial Security may direct and as are specifically authorized to
be exercised by the Collateral Agent by the terms hereof, together with such
rights, remedies, powers and privileges as are reasonably incidental thereto.
The Collateral Agent may execute any of its duties as agent hereunder by or
through agents or employees and shall be entitled to retain counsel and to act
in reliance upon the advice of such counsel concerning all
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matters pertaining to the agencies hereby created and its duties hereunder, and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of counsel selected by it. The Collateral
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement. The duties of the Collateral Agent shall be mechanical and
administrative in nature. The Collateral Agent shall not have by reason of this
Agreement a fiduciary relationship. Nothing in this Agreement, express or
implied, is intended to or shall be so construed as to impose upon the
Collateral Agent any obligations in respect of this Agreement except as
expressly set forth herein. Neither the Collateral Agent nor Financial Security,
nor any of its or their respective directors, officers or employees, shall be
liable for any action taken or omitted to be taken by it or them hereunder, or
in connection herewith, except for its or their own gross negligence or willful
misconduct; nor shall the Collateral Agent or Financial Security be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Seller of this Agreement or any other document furnished pursuant hereto or
in connection herewith, or of the Collateral (or any part thereof). The
Collateral Agent shall be entitled to rely on any communication, instrument,
paper or other document believed by it to be genuine and correct and to have
been signed or sent by the proper Person or Persons.
Section 6.02. Successor Collateral Agent. The Collateral Agent
acting hereunder at any time may resign by an instrument in writing addressed
and delivered to the Seller and Financial Security. If the Collateral Agent is
also the Indenture Trustee and, as such, determines that it has a conflicting
interest on account of its acting as Collateral Agent, the Collateral Agent
shall eliminate such conflicting interest by resigning as Collateral Agent
hereunder rather than resigning as Indenture Trustee. Financial Security shall
appoint a successor to the Collateral Agent upon any such resignation by an
instrument of substitution complying with the requirements of applicable law,
or, in the absence of any such requirements, without formality other than
appointment and designation in writing, a copy of which instrument or writing
shall be sent to the Seller; provided, however, that the validity of any such
appointment shall not be impaired or affected by any failure to give any such
notice to the Seller or by any defect therein. Upon the making and acceptance of
such appointment, the execution and delivery by such successor Collateral Agent
of a ratifying instrument pursuant to which such successor Collateral Agent
agrees to assume the duties and obligations imposed on the Collateral Agent by
the terms of this Agreement, and the delivery to such successor Collateral Agent
of the Collateral and related documents then held by the retiring Collateral
Agent, such successor Collateral Agent shall thereupon succeed to and become
vested with all the estate, rights, powers, remedies, privileges, immunities,
indemnities, duties and obligations hereby granted to or conferred or imposed
upon the Collateral Agent named herein, and one such appointment and designation
shall not exhaust the right to appoint and designate further successor
Collateral Agents hereunder. No Collateral Agent shall be discharged from its
duties or obligations hereunder until the Collateral and related documents then
held by such Collateral Agent shall have been transferred and delivered to the
successor Collateral Agent and such retiring Collateral Agent shall have
executed and delivered to the successor Collateral Agent appropriate instruments
establishing the successor Collateral Agent as the record holder of all liens
and security interests in favor of Financial Security in the Collateral and
transferring to such successor Collateral Agent all power given to it by the
Indenture Trustee to act as attorney-in-fact of the Indenture Trustee for
purposes of this Agreement. Each such successor Collateral Agent shall provide
the Seller and Financial Security with its address (which shall thereupon become
such successor Collateral Agent's Notice Address for purposes of this
Agreement), and its telephone, Telex, TWX and telecopier numbers, to be used for
purposes of Section 7.02 hereof, in a notice complying with the terms of said
Section.
Section 6.03. Remedies Available to Collateral Agent.
(a) To the fullest extent permitted by applicable law and subject
to Article V hereof, if the Master Servicer shall have been terminated upon the
occurrence of any Servicer Default pursuant to Section 8.01 of the Sale and
Servicing Agreement, then in every such case, the Collateral Agent may, to
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the extent permitted by applicable law and subject to Article V hereof, exercise
the following rights, privileges and remedies:
(i) Collection of the Collateral. The Collateral Agent shall
have the right to collect all proceeds of the Collateral, to pay all
expenses of such collection, including the reasonable expenses and
compensation of the Collateral Agent, its agents and attorneys, and to
apply the remainder of the moneys so received as provided herein.
(ii) Sale of Collateral. The Collateral Agent may sell, or
cause to be sold, the Collateral or any part thereof or interest
therein, at public auction to the highest bidder for cash or at private
sale or auction with or without demand, advertisement or notice of the
date, time or place of sale or any adjournment thereof, upon such terms
as Financial Security may approve, and upon such sale the Collateral
Agent shall make and deliver to the purchaser or purchasers an
appropriate instrument or instruments of transfer. The Collateral Agent
is hereby irrevocably appointed the true and lawful attorney of the
Indenture Trustee, in its name and stead, to make all necessary
transfers of property thus sold; and for that purpose it may execute all
necessary instruments of transfer, and may substitute one or more
Persons with like power, the Indenture Trustee hereby ratifying and
confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof. Nevertheless, if so
requested by the Collateral Agent or any purchaser of the Collateral or
any part thereof, the Indenture Trustee shall ratify and confirm any
such sale or transfer by executing and delivering to the Collateral
Agent or such purchaser all proper instruments of transfer and releases
as may be designated in any such request. The Collateral Agent may
proceed at law or in equity to foreclose the lien of this Agreement
against all or any part of the Collateral and to have the same sold
under the judgment or decree of a court having jurisdiction or as
otherwise may be required or permitted by law. Upon any such sale,
whether made under the power of sale hereby given or by virtue of
judicial proceedings, any Noteholder, Certificateholder or Financial
Security may bid for and purchase the Collateral or any part thereof
and, upon compliance with the terms of such sale, may hold, retain,
possess or dispose of such property in its or their own absolute right
without accountability; and any purchaser at any such sale may, in
paying the purchase money, turn in any of the Notes or Certificates, as
applicable, in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon. Said
Notes or Certificates, in case the amounts so payable thereon shall be
less than the amount due thereon, shall be returned to the Holders
thereof after being properly stamped to show partial payment. Upon any
sale, whether made under the power of sale hereby given or by virtue of
judicial proceedings, a receipt of the Collateral Agent, or of the
officer making such sale under judicial proceedings, shall be a
sufficient discharge to the purchaser or purchasers at such sale for its
or their purchase money, and such purchaser or purchasers shall not be
obliged to see to the application thereof. Any such sale, whether under
the power of sale hereby given or by virtue of judicial proceedings,
shall bind the Collateral Agent, the Seller, the Indenture Trustee, the
Noteholders and the Certificateholders, shall operate to divest all
right, title and interest whatsoever, either at law or in equity, of
each of them in and to the property sold, and shall be a perpetual bar,
both at law and in equity, against each of them and their successors and
assigns, and against any and all Persons claiming through or under them.
(iii) Other Actions. The Collateral Agent shall have the right
to cause any other action permitted at law or in equity to be initiated
and prosecuted to enforce this Agreement and any rights granted by
virtue of the pledge of the Collateral hereunder and to collect or
enforce the Notes and the Certificates.
Section 6.04. Waiver of Stay or Extension Laws; Marshalling of
Assets. Each of the Seller, the Owner Trustee, and the Indenture Trustee (in
each case to the extent permitted by applicable law) covenants that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take
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the benefit or advantage of, any appraisement, valuation, stay, extension or
redemption law wherever enacted, now or at any time hereafter in force, in order
to prevent or hinder the enforcement of this Agreement or the absolute sale of
the Collateral or any part thereof, or the possession thereof by any purchaser
at any sale under this Article; and each of the Seller and the Indenture Trustee
(in each case to the extent permitted by applicable law), for itself and all who
may claim under it, hereby waives the benefit of all such laws, and covenants
that none of them will hinder, delay or impede the execution of any power herein
granted to the Collateral Agent, but will suffer and permit the execution of
every such power as though no such law had been enacted. Each of the Seller, the
Owner Trustee and the Indenture Trustee, for itself and all who may claim under
it, waives (in each case to the extent permitted by applicable law) all right to
have the Collateral marshalled upon any foreclosure hereof, and agrees that any
court having jurisdiction to foreclose this Agreement may order the sale of the
Collateral as an entirety without the marshalling thereof.
Section 6.05. Restoration of Rights and Remedies. If the
Collateral Agent has instituted any proceeding to enforce any right or remedy
under this Agreement, and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Collateral Agent, then and
in every such case the Seller, the Collateral Agent and the Indenture Trustee
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Collateral Agent shall continue as though no such proceeding
had been instituted.
Section 6.06. Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Collateral Agent is intended to be exclusive
of any other right or remedy, and every right shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law, in equity or otherwise, and each
and every right, power and remedy, whether specifically herein given or
otherwise existing, may be exercised from time to time and as often and in such
order as may be deemed expedient by the Collateral Agent, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy.
Section 6.07. Control by Financial Security. So long as no
Financial Security Insolvency has occurred and no Financial Security Default has
occurred and is continuing, Financial Security shall, upon the occurrence and
during the continuation of any of the Servicer Default described in Section 8.01
of the Sale and Servicing Agreement, subject to Article V hereof, have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Collateral Agent hereunder or otherwise or exercising any trust
or power conferred upon the Collateral Agent hereunder provided that:
(1) such direction shall not be in conflict with any rule
of law or with this Agreement or the Sale and Servicing Agreement; and
(2) such Collateral Agent may take any other action deemed
proper by such Collateral Agent that is not inconsistent with such
direction.
Section 6.08. Proceeds Agent as Custodian and Bailee of
Collateral Agent. In order to facilitate the making of payments under the
Contracts, such payments shall be deposited by the Master Servicer in the
Collection Account or the Holding Account, and certain amounts in the Collection
Account shall be deposited in the Spread Account, in accordance with the Sale
and Servicing Agreement. The Proceeds Agent shall retain all proceeds deposited
in the Collection Account, the Spread Account and Holding Account as custodian
and bailee of the Collateral Agent for Financial Security. Financial Security
hereby acknowledges that the Proceeds Agent will also hold all such proceeds for
the benefit of the Noteholders and the Certificateholders. Solely for purposes
of perfection under Section 9-305 of the UCC, Financial Security and the
Proceeds Agent hereby acknowledge that the Proceeds Agent is acting as
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agent and bailee of the Collateral Agent for Financial Security in holding such
property in the Collection Account, the Spread Account and the Holding Account,
and any other items constituting a part of the Collateral which from time to
time come into the possession of the Proceeds Agent. It is intended that, by the
Proceeds Agent's acceptance of such custodianship and bailment pursuant to this
Agreement, the Collateral Agent for Financial Security, as secured party, will
be deemed to have possession of such Collateral, items, moneys and such other
items for purposes of Section 9-305 of the UCC.
Section 6.09. Indemnification of Collateral Agent. Financial
Security hereby indemnifies and holds the Collateral Agent harmless from and
against any and all judgments, claims, defenses, charges, losses, liabilities,
costs or expenses that the Collateral Agent may incur or that may be claimed
against the Collateral Agent by any Person by reason of any action taken, or any
failure to act, in connection with the duties and responsibilities of the
Collateral Agent under the terms of this Agreement; provided, however, that
Financial Security shall not be required to indemnify the Collateral Agent
pursuant to this Section for any judgments, claims, defenses, charges, losses,
liabilities, costs or expenses to the extent caused by such Collateral Agent's
willful misconduct or gross negligence in any action taken, or any failure to
act, in connection with the duties and responsibilities of the Collateral Agent
under the terms of this Agreement. The Collateral Agent shall have the right to
retain counsel in any action for which indemnification from Financial Security
is provided herein, and the reasonable fees and expenses of such counsel shall
constitute costs and expenses of such Collateral Agent for which indemnification
from Financial Security is provided herein. The Collateral Agent shall be
entitled to submit a written request, with supporting documentation, for any
amounts expended by it for which indemnification is provided herein, as such
amounts are expended or on a periodic basis, as the Collateral Agent shall
choose, and Financial Security shall reimburse to the Collateral Agent the
amount specified in each such written request promptly. The indemnity agreements
contained in this Section shall remain operative and in full force and effect
regardless of the termination of this Agreement.
Section 6.10. Compensation Payable to Collateral Agent. In
consideration of the Collateral Agent's services to be rendered hereunder, the
Master Servicer agrees to pay to the Collateral Agent, on behalf of Financial
Security, the compensation set forth in a separate letter agreement dated as of
the date hereof between the Master Servicer and the Collateral Agent
incorporated herein by this reference. The Collateral Agent acknowledges,
notwithstanding the fact that, in the event that payments from the Collection
Account are insufficient, it shall look solely to the Master Servicer for
payment of its compensation hereunder, that the Collateral Agent is acting
solely as the agent for Financial Security for purposes of this Agreement.
Failure by the Master Servicer to pay the Collateral Agent's compensation
hereunder shall not cause this Agreement to be cancelled, void or voidable or
otherwise terminated or otherwise affect the Collateral Agent's obligations
hereunder.
Section 6.11. Protection of Financial Security's Security
Interest.
(a) The Seller shall execute and file (or cause to be executed
and filed) such financing statements and execute and file (or cause to be
executed and filed) such continuation statements, against the Seller, all in
such manner and in such places as may be required by law (whether in the event
of a change of the Seller's name, identity or corporate structure, or otherwise)
fully to preserve, maintain, and protect the interest of Financial Security in
the Collateral. The Seller shall deliver (or cause to be delivered) to Financial
Security file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement filed by the Seller, in accordance with paragraph (a)
above, seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given the Collateral Agent and Financial Security at least
60 days' prior written notice thereof.
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(c) The Seller shall give Financial Security at least 60 days'
prior written notice of any relocation of either the Seller's principal
executive offices, as applicable if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement. WFS shall at all times maintain each office from which it shall
service the Contracts, and its principal executive office, within the United
States of America.
(d) The Seller agrees that, upon request by Financial Security,
the Seller shall furnish to Financial Security, within seven Business Days, a
list of the Contracts then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Master Servicer's certificates furnished pursuant to the Sale and Servicing
Agreement before such request; provided, however, that Financial Security shall
not make such request more than four times in any calendar year. Neither of the
Seller nor the Master Servicer shall grant a security interest in, or lien upon,
or in any manner encumber the Collateral, or release or waive the security
interest granted hereunder, except as contemplated herein.
(e) In the event that either the Master Servicer or the Seller
relocates its principal executive office, such party shall provide an Opinion of
Counsel to Financial Security, in form and substance satisfactory to Financial
Security, to the effect that upon the filing of any necessary amendment to any
previously filed financing or continuation statement or a new financing
statement, the Collateral Agent's security interest in the Collateral granted
hereunder shall remain valid and effective.
(f) The Seller shall be obligated to pay all reasonable costs and
disbursements in connection with the perfection and the maintenance of
perfection, as against all third parties, of Financial Security's right, and
security interest in and to the Collateral.
Section 6.12. Representations and Warranties of Indenture
Trustee. The representations and warranties of the Indenture Trustee, made as
Indenture Trustee, in Section 6.13 of the Indenture are incorporated by
reference herein as if set forth in full herein and Financial Security may rely
upon such representations and warranties.
Section 6.13. Certain Guaranties. Each of the Indenture Trustee
and the Master Servicer agrees that it (i) shall not treat any ledger account or
deposit account as an "Eligible Account" by reason of a guaranty of the type
described in clause (ii)(a) of the definition of "Eligible Account" in the Sale
and Servicing Agreement unless Financial Security shall have previously approved
in writing the form of such guaranty and (ii) shall not treat any investment as
an "Eligible Investment" by reason of a guaranty of the type described in clause
(iii)(b) or clause (vii) of the definition of "Eligible Investments" in the Sale
and Servicing Agreement unless Financial Security shall have previously approved
in writing the form of such guaranty.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under the Policy;
(b) any representation or warranty made by the Trust, the Seller
or WFS, WII under any of the Transaction Agreements, or in any certificate or
report furnished under any of the Transaction Agreements, shall prove to be
untrue or incorrect in any material respect, provided however, a violation of
Section 3.01(b) of the Sale and Servicing Agreement as to which the Seller shall
have in a timely
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manner cured or repurchased the Contract as to each such Financed Vehicle
pursuant to Section 3.02 of the Sale and Servicing Agreement shall not
constitute an Event of Default hereunder;
(c) (i) the Trust, the Seller or WFS shall fail to pay when due
any amount payable by it under any of the Transaction Agreements (other than
payments of principal and interest on the Notes and the Certificates); (ii) the
Trust, WII, the Seller or WFS shall have asserted that any of the Transaction
Agreements to which it is a party is not valid and binding on the parties
thereto; or (iii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Agreements or
property thereof shall find or rule that any material provision of any of the
Transaction Agreements is not valid and binding on the parties thereto; provided
that as a result of such finding or ruling the rights or remedies of Financial
Security under this Agreement shall have been directly or indirectly impaired in
any material respect;
(d) the Trust, WII, the Seller or WFS shall fail to perform or
observe any other covenant or agreement by it contained in any of the
Transaction Agreements (except for the obligations described under clause (b) or
(c) above) and such failure shall continue for a period of 30 days after written
notice shall have been given to it; provided that, if such failure shall be of a
nature that it cannot be cured within 30 days, such failure shall not constitute
an Event of Default hereunder if within such 30-day period such party shall have
given notice to Financial Security of corrective action it proposes to take,
which corrective action is agreed in writing by Financial Security to be
satisfactory and such party shall thereafter pursue such corrective action
diligently until such default is cured, and provided further as a result of such
failure the rights or remedies of Financial Security under this Agreement shall
have been directly or indirectly impaired in any material respect;
(e) there shall have occurred an "Event of Default" as specified
in Section 5.01 of the Indenture;
(f) the Trust shall adopt a voluntary plan of liquidation or
shall fail to pay its debts generally as they come due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors, or shall institute any proceeding
seeking to adjudicate the Trust insolvent or seeking a liquidation, or shall
take advantage of any insolvency act, or shall commence a case or other
proceeding naming the Trust as debtor under the United States Bankruptcy Code or
similar law, domestic or foreign, or a case or other proceeding shall be
commenced against the Trust under the United States Bankruptcy Code or similar
law, domestic or foreign, or any proceeding shall be instituted against the
Trust seeking liquidation of its assets and the Trust shall fail to take
appropriate action resulting in the withdrawal or dismissal of such proceeding
within 30 days or there shall be appointed or the Trust consent to, or acquiesce
in, the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Trust or the whole or any substantial part of its
properties or assets, or the Trust shall take any corporate action in
furtherance of any of the foregoing or the Trust terminates pursuant to Section
9.02 of the Trust Agreement;
(g) the Trust becomes taxable as an association (or publicly
traded partnership) taxable as a corporation for federal or state income tax
purposes;
(h) on any Distribution Date, the sum of Net Collections with
respect to such Distribution Date and the amounts available in the Spread
Account is less than the sum of the amounts payable on such Distribution Date
pursuant to clauses (i) through (ix) of Section 5.05 of the Sale and Servicing
Agreement; and
Section 7.02. Remedies; Waivers
(a) Upon the occurrence of an Event of Default, Financial
Security may exercise any one or more of the rights and remedies set forth
below:
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(i) declare all indebtedness of every type or description owed
by the Trust, the Seller, WFS or WII to Financial Security, including,
without limitation, the entire outstanding balance of further
installments of the Premium, to be immediately due and payable, and
shall there upon be immediately due and payable; and
(ii) the Collateral Agent, subject to Article V hereof, shall
have the right to take any action or initiate any proceeding at law or
equity available to it to enforce the terms of this Agreement.
(b) Financial Security shall have the right, to be exercised in
its complete discretion, to waive any Event of Default hereunder, by a writing
setting forth terms, conditions, and extent of such waiver signed by Financial
Security and delivered to an Authorized Officer of the Seller. Unless such
writing expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence that gave rise to the Event of Default
so waived and not to any other similar event or occurrence that occurs
subsequent to the date of such waiver.
(c) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Agreements or existing at law or in equity.
No delay or failure to exercise any right or power accruing under any
Transaction Agreements upon the occurrence of any Event of Default or otherwise
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle Financial Security to
exercise any remedy reserved to Financial Security in this Article, it shall not
be necessary to give any notice.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Changes and Modifications. This
Agreement may be amended, changed, modified, altered or terminated only by
written instrument or written instruments signed by the parties hereto.
Section 8.02. Notices. All notices, certificates or other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, sent by overnight courier, or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed to the appropriate Notice Address. A duplicate copy of each notice,
certificate or other communication given hereunder to the Seller, WFS, WII,
Financial Security, the Trust, the Indenture Trustee or the Collateral Agent
shall also be given to each of the others. Each party hereto may, by telecopy
notice or by such other notice described hereunder, designate any further or
different address to which subsequent notices, certificates or other
communications shall be sent without any requirement of execution of any
amendment to this Agreement.
Section 8.03. Method of Payment. Except as otherwise expressly
provided herein, all payments to be made hereunder shall be made by wire
transfer or by certified or bank check payable to the appropriate party.
Section 8.04. Further Assurances and Corrective Instruments.
(a) To the fullest extent permitted by law, the parties hereto
agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as Financial Security may reasonably request and as may
be reasonably required in Financial Security's judgment to effectuate the
intention of or facilitate the performance of this Agreement and to protect the
interests of Financial Security and the Collateral
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Agent, including, without limitation, the creation and maintenance of Financial
Security's security interest in the Collateral pursuant to this Agreement,
subject to the Intercreditor Agreement. The Seller and the Master Servicer
hereby authorize the Collateral Agent to file, at the direction of Financial
Security, financing statements and amendments thereto relating to all or any
part of the Collateral without the signature of an officer of such entity where
permitted by law in order to maintain and perfect the security interests granted
by this Agreement.
(b) In order to facilitate the servicing of the Contracts by the
Master Servicer, the Master Servicer is hereby authorized, in the name and on
behalf of Financial Security, the Trust, the Indenture Trustee and the Seller,
to execute instruments of satisfaction or cancellation, or of partial or full
release or discharge, and other comparable instruments with respect to the
Contracts and with respect to the Financed Vehicles (and the Indenture Trustee
shall execute any such documents on request of the Master Servicer), subject to
the obligations of the Master Servicer under the Sale and Servicing Agreement.
Section 8.05. Term of Agreement. This Agreement shall continue in
effect until the later of (a) the date on which Financial Security has no
further liability under the Policy or (b) the date on which each Western Entity
shall have paid or caused to be paid to Financial Security all amounts to be
paid by such Western Entity hereunder.
Section 8.06. Assignments; Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither the
Seller, WFS, WII, nor the Collateral Agent may assign its rights or obligations
under this Agreement, or delegate any of its duties hereunder, without the prior
written consent of Financial Security. Any assignment made in violation of this
Agreement shall be null and void.
(b) Financial Security shall have the right to give
participations in its rights under this Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
Financial Security may in its discretion determine; provided, however, that no
such participation or reinsurance agreement or arrangement shall relieve
Financial Security of any of its obligations hereunder or under the Policy and
provided further that Financial Security shall reimburse the Seller, WFS or WII
as the case may be, for any expense incurred by such Western Entity in
connection with the giving by Financial Security of participations or the
entering into such contracts of reinsurance.
(c) In addition, Financial Security shall be entitled to assign
or pledge to any bank or other lender providing liquidity or credit with respect
to the transactions contemplated by the Transaction Agreements or this Agreement
or the obligations of Financial Security in connection therewith any rights of
Financial Security under the Transaction Agreements or this Agreement or with
respect to any real or personal property or other interests pledged to Financial
Security, or in which Financial Security has a security interest, in connection
with the transactions contemplated by the Transaction Agreements or this
Agreement; provided that Financial Security shall reimburse the Seller, WFS or
WII as the case may be, for any expense incurred by either such Western Entity
in connection with the making by Financial Security of any such assignment or
pledge.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Noteholder or
Certificateholder, other than Financial Security, against the Seller, WFS or WII
and all the terms, covenants, conditions, promises and agreements contained
herein shall be for the sole and exclusive benefit of the parties hereto and
their successors and permitted assigns. Neither the Owner Trustee or the
Indenture Trustee nor any Noteholder or Certificateholder shall have any right
to payment from any premiums paid or payable hereunder or from any other amounts
paid by the Seller, WFS or WII pursuant to Section 3.03 or 3.04 hereof.
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Section 8.07. Consent of Financial Security. In the event that
Financial Security's consent is required under the terms hereof, or under the
terms of any other Transaction Agreement, it is understood and agreed that,
except as otherwise provided expressly herein or in any other Transaction
Agreement, the determination whether to grant or withhold such consent shall be
made solely by Financial Security in its absolute discretion.
Section 8.08. Right to Enforce Sale and Servicing Agreement. The
parties hereto acknowledge that Financial Security is a beneficiary of the Sale
and Servicing Agreement, and without limiting or restricting any of the
provisions thereof or hereof, Financial Security shall have the right to enforce
the provisions of the Sale and Servicing Agreement to the extent that it could
if it were a signatory of such agreement.
Section 8.09. WFS and WII as Parties Only for Certain Provisions.
(a) Notwithstanding any provision to the contrary contained in
this Agreement, the parties hereto agree that WFS is joined as a party to this
Agreement solely for purposes of Sections 2.08, 2.11, 3.02, 3.06, 3.07, 3.08,
3.09, 3.10, 3.11, 3.12 and 6.13 of this Agreement and the other Sections
contained in Article VII of this Agreement.
(b) Notwithstanding any provisions to the contrary contained in
this Agreement, the parties hereto agree that WII is joined as a party to this
Agreement solely for purposes of Sections 2.04, 2.05, 2.06, 3.02, 3.07 and 3.08,
of this Agreement and the other Sections contained in Article VII of this
Agreement.
Section 8.10. Severability. In the event that any provision of
this Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by Financial Security hereunder is unavailable or unenforceable shall
not affect in any way the ability of Financial Security to pursue any other
remedy available to it.
Section 8.11. Reports. Any report, certificate, statement or
notice which the Seller, WFS as the Master Servicer, and any successor Master
Servicer, is required to provide to the Owner Trustee, Indenture Trustee,
Noteholders or the Certificateholders under the Sale and Servicing Agreement
shall also be provided to Financial Security within the same time period
specified in the Sale and Servicing Agreement.
Section 8.12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto and each such counterpart shall be considered
an original and all such counterparts shall constitute one and the same
instrument.
Section 8.13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 8.14. Headings. The headings of articles and sections and
the table of contents contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its construction
or interpretation. Unless otherwise indicated, all references to articles and
sections in this Agreement refer to the corresponding articles and sections of
this Agreement.
Section 8.15. Trial by Jury Waived. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION AGREEMENTS OR ANY OF THE
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<PAGE> 49
TRANSACTIONS CONTEMPLATED THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE
TRANSACTION AGREEMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS
WAIVER.
Section 8.16. Limited Liability. No recourse under any
Transaction Agreement shall be had against, and no personal liability shall
attach to, any officer, employee, director, affiliate or shareholder of any
party hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Transaction Agreements, the Notes, the Certificates or the Policy, it being
expressly agreed and understood that each Transaction Agreement is solely a
corporate obligation of each party hereto, and that any and all personal
liability, either in common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under any Transaction Agreement is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Agreement.
Section 8.17. Limited Liability of Chase Manhattan Bank Delaware.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Chase Manhattan Bank Delaware not
individually or personally but solely as Owner Trustee on behalf of the Trust,
(b) each of the representations, undertakings and agreements herein made on the
part of the Trust is made and intended not as personal representations,
undertakings and agreements by Chase Manhattan Bank Delaware, but are made and
intended for the purpose of binding only the Trust Estate, (c) nothing herein
contained shall be construed as creating any liability on Chase Manhattan Bank
Delaware, individually or personally, to perform any covenant of the Trust
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any person claiming by, through or
under such parties and (d) under no circumstances shall Chase Manhattan Bank
Delaware be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement.
Section 8.18. Entire Agreement. This Agreement and the Policy set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above mentioned.
WFS FINANCIAL _________ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE
not in its individual capacity, but
solely in its capacity as Owner
Trustee under the Trust Agreement
By:
------------------------------------------
Title:
WFS FINANCIAL AUTO LOANS, INC.
By:
------------------------------------------
Title:
WFS FINANCIAL INC.
By:
------------------------------------------
Title:
WFS INVESTMENTS, INC.
By:
------------------------------------------
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------------
Title:
BANKERS TRUST COMPANY,
as Collateral Agent, Proceeds Agent
and Indenture Trustee
By:
------------------------------------------
Title:
<PAGE> 1
EXHIBIT 10.3.2
INSURANCE, INDEMNITY AND PLEDGE AGREEMENT
THIS INSURANCE, INDEMNITY AND PLEDGE AGREEMENT is made as of
____________ 1, 20__, by and among WFS FINANCIAL 20____-___ OWNER TRUST, a
Delaware business trust (the "Trust"), WFS FINANCIAL AUTO LOANS, INC., a
California corporation ("WFAL"), WFS RECEIVABLES CORPORATION, a California
corporation ("WFSRC"), WFS FINANCIAL INC, a California corporation ("WFS"),
FINANCIAL SECURITY ASSURANCE INC., a New York financial guaranty insurance
company ("Financial Security"), and BANKERS TRUST COMPANY, a New York banking
corporation, in its capacities as Collateral Agent and Proceeds Agent (each as
defined below), and in its capacity as Indenture Trustee under the Indenture
referred to below (the "Indenture Trustee").
INTRODUCTION
Each of WFAL and WFSRC are the owners of the Contracts. WFAL
proposes to sell and assign to the Trust and WFSRC proposes to pledge and assign
to the Trust all of such party's right, title and interest in and to the
Contracts and certain other property pursuant to the Sale and Servicing
Agreement. The Trust will issue Certificates pursuant to the Trust Agreement and
Notes pursuant to the Indenture.
Each Certificate will represent a fractional undivided interest
in the Trust. Each Note will be secured by the Indenture Property.
Each Seller has agreed to convey a security interest in that
portion of the Collateral owned by it and all the property conveyed by each
Seller to the Trust (with the exception of the Policy) pursuant to the Sale and
Servicing Agreement in favor of Financial Security prior in right to all liens,
claims, rights or interests other than those of the Trust.
The Trust has requested that Financial Security issue the Note
Policy to the Indenture Trustee to guarantee payment of the Scheduled Payments
(as defined in such Note Policy) on each Distribution Date in respect of the
Notes.
Financial Security is willing to issue the Policy for the purpose
stated above if the Trust, the Sellers, WFS and the Indenture Trustee enter into
this Agreement and, in order to secure each Seller's obligations hereunder, each
Seller pledges the Collateral to the Collateral Agent for the benefit of
Financial Security, subject to the provisions hereof.
The parties hereto desire to specify the indemnity and
reimbursement obligations to be provided in respect of amounts paid by Financial
Security under the Policy, the security to be provided in respect of such
indemnity and reimbursement obligations, and certain other matters.
<PAGE> 2
AGREEMENTS
In consideration of the mutual promises, covenants,
representations and warranties hereinafter set forth, the parties hereto agree
to as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All words and phrases defined in the
Trust Agreement and the Sale and Servicing Agreement shall have the same
meanings in this Agreement unless a different meaning is set forth in this
Agreement. In addition, the following words and phrases shall have the following
respective meanings:
"Administration Agreement" means the Administration Agreement
dated as of the date hereof, among the Trust, WFS Financial Inc, as
Administrator, each Seller and the Indenture Trustee.
"Agreement" means this Insurance, Indemnity and Pledge Agreement,
as the same may be amended, modified or supplemented from time to time.
"Authorized Officer" means, with respect to WFS, each Seller or
any corporation, the president, the chief financial officer or any vice
president.
"Bank" means, Western Financial Bank, a federally-chartered
savings association.
"Collateral" means all of the Contracts listed in the Schedule of
Contracts attached to the Sale and Servicing Agreement, including, without
limitation, all payments of Monthly P&I (exclusive of Retained Yield, if any)
due on or after the Cut-Off Date (excluding the amount allocable to principal
and interest due prior to the Cut-Off Date), all Net Liquidation Proceeds and
Net Insurance Proceeds with respect to any Financed Vehicle to which a Contract
relates received on or after the Cut-Off Date and all other proceeds received in
respect of such Contracts (other than payments of Monthly P&I due prior to the
Cut-Off Date), and any and all security interests in the Financed Vehicles; the
Contract Documents relating to the Contracts (except the Contract Documents for
Contracts which have been the subject of a Full Prepayment received on or after
the Cut-Off Date but no later than one Business Day prior to the Closing Date,
in lieu of which the Sellers shall have deposited in or credited to the
Collection Account on or prior to the Closing Date an amount equal to such Full
Prepayment); all Spread Account Collateral; 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.
"Collateral Agent" means, initially, Bankers Trust Company, as
collateral agent for Financial Security pursuant to this Agreement and,
thereafter, any successor Collateral Agent named pursuant to this Agreement.
"Collateral Assignment" means, with respect to any Contracts, the
original instrument of collateral assignment of such Contracts by each Seller to
the Collateral Agent, substantially in the form included in Exhibit A hereto.
"Controlling Party" means Financial Security so long as no
Financial Security Insolvency shall have occurred and no Financial Security
Default shall have occurred and be continuing and, at any other time, the
Indenture Trustee.
"Event of Default" has the meaning set forth in Section 7.01
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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<PAGE> 3
"Financial Security's Authorized Agent" means each Authorized
Officer of Financial Security and each other Person that Financial Security
designates as its authorized agent with notice to WFAL and WFSRC.
"Indemnification Agreement" means the Indemnification Agreement,
dated as of the date hereof, among the Sellers, WFS, Financial Security and the
Representative.
"Indenture Property" means the property pledged to the Indenture
Trustee on behalf of the Noteholders pursuant to the Indenture.
"Independent Accountant" means an independent accountant within
the meaning of the Securities Act and the Exchange Act.
"Late Payment Rate" means the greater of a per annum rate equal
to 3% in excess of (i) Financial Security's cost of funds, determined on a
monthly basis, or (ii) the arithmetic average of the prime or base lending rates
publicly announced by The Chase Manhattan Bank, N.A. (New York, New York) and
Citibank, N.A. (New York, New York), as in effect on the last day of the month
for which interest is being computed, but in no event greater than the maximum
rate permitted by law.
"Note Policy" means the financial guaranty insurance policy,
including and endorsements thereto, issued by Financial Security with respect to
the Notes, substantially in the form attached as Exhibit B hereto.
"Notice Address" means
(a) as to WFAL:
23 Pasteur
Irvine, California 92618
Attention: Thomas A. Wolfe
(b) as to WFSRC:
6655 West Sahara Avenue
Las Vegas, Nevada 89102
Attention: David A. Gray
(c) as to WFS:
23 Pasteur
Irvine, California 92618
Attention: Joy Schaefer
(d) as to the Trust:
WFS Financial ______ Owner Trust
c/o Chase Manhattan Bank Delaware
as Owner Trustee
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
Department
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<PAGE> 4
(e) as to Financial Security:
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Telecopier Nos.: (212) 339-3518
(212) 339-3529
(in each case in which the notice or other communication
to Financial Security refers to an Event of Default or a
claim under the Policy or is a notice or other
communication as to which a failure on the part of
Financial Security to respond shall be deemed to
constitute consent or acceptance, then with a copy to the
attention of the Senior Vice President - Surveillance)
(f) as to the Collateral Agent:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
(g) as to the Proceeds Agent:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
(h) as to the Indenture Trustee:
Four Albany Street
10th Floor
New York, New York 10006
Attention: Corporate Trust
Department - Asset Backed Group
"Obligations" has the meaning set forth in Section 4.01 hereof.
"Owner Trustee" means Chase Manhattan Bank Delaware or its
successors in interest, acting not individually but solely on owner trustee
under the Trust Agreement.
"Policy" means the Note Policy.
"Premium" means the premium payable to Financial Security by the
Sellers as consideration for the issuance of the Policy, as set forth in a
letter agreement between the Sellers and Financial Security.
"Proceeds Agent" means, initially, Bankers Trust Company, as
proceeds agent for Financial Security and, thereafter, any successor appointed
by the Indenture Trustee and Financial Security.
"Prospectus" has the meaning set forth in Section 2.07(g) of this
Agreement.
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<PAGE> 5
"Registration Statement" has the meaning set forth in Section
2.07(g) of this Agreement.
"Representative" means ___________________, as representative of
the several Underwriters.
"Rules and Regulations" has the meaning set forth in Section
2.07(g) of this Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of the date hereof, among the Sellers, WFS and the Trust, as
the same may be amended or modified from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Assignments" means the Assignments, as such term is
defined in the Sale and Servicing Agreement.
"Sellers" mean WFAL and WFSRC.
"Spread Account" means the Spread Account established pursuant to
the Sale and Servicing Agreement, in favor of the Indenture Trustee on behalf of
the Holders of Notes and as Collateral Agent for Financial Security.
"Spread Account Collateral" means (i) the Spread Account Initial
Deposit, (ii) all other amounts deposited in or credited to the Spread Account
from time to time under the Sale and Servicing Agreement, (iii) all Eligible
Investments made with amounts on deposit in such Account, and (iv) all earnings
and distributions on, and proceeds of, any and all of the foregoing.
"Transaction Agreements" means this Agreement, the WFS
Assignments, the Seller Assignments, the Collateral Assignment, the Sale and
Servicing Agreement, the Trust Agreement, the Certificate of Trust, the
Indenture, the Administration Agreement, the Underwriting Agreement, the
Subservicing Agreement, the Indemnification Agreement and the RIC.
"Trust Agreement" means the Trust Agreement, dated as of
___________, 2000 among the Sellers, WFS, Financial Security and Chase Manhattan
Bank Delaware, as Owner Trustee.
"Underwriter Information" has the meaning set forth in Section
3.06(a)(i) of this Agreement.
"Underwriters" means ______________________ and each other
institution, if any, named as an underwriter in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
_____________, 2000 among the Sellers, WFS and the Representative.
"Western Entities" means WFAL, WFSRC and WFS.
"WFAL2" means Western Financial Auto Loans 2, Inc., a California
corporation.
"WFS Assignments" means, with respect to the Contracts, the
original instrument or instruments of assignment of such Contracts by WFS, as
seller, to WFAL, substantially in the form included in Exhibit A hereto.
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<PAGE> 6
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Trust. The
Trust represents and warrants to Financial Security as follows:
(a) Due Organization and Qualification. The Trust is duly formed
and validly existing as a Delaware statutory business trust and is in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business and had at all relevant times,
and has, power, authority, and legal right to acquire the Contracts; the Trust
is duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as described in the
Prospectus and the performance of its obligations under the Transaction
Agreements, in each jurisdiction in which the failure to be so qualified or to
obtain such approvals would render the Contracts in such jurisdiction or any
Transaction Agreement unenforceable in any respect or would otherwise have a
material adverse effect upon the Trust; the Trust holds all material licenses,
certificates and permits from all governmental authorities necessary for the
conduct of its business as presently conducted.
(b) Power and Authority. The Trust has all necessary trust power
and authority to conduct its business as presently conducted; the Trust has the
power and authority to execute and deliver this Agreement and each other
Transaction Agreement to which the Trust is a party and to carry out the terms
of each such agreement, and has full power and authority to issue the Notes and
the Certificates and pledge and assign its assets pursuant to the Indenture and
has duly authorized the issuance of the Notes and Certificates and the
assignment of its assets by all necessary trust proceedings, and the execution,
delivery and performance of this Agreement and each other Transaction Agreement
to which the Trust is a party has been duly authorized by all necessary action
on the part of the Trust.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which the Trust is a party constitutes a legal, valid and binding
obligation of the Trust enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general equitable principles, regardless of whether
such enforceability shall be considered a proceeding in equity or at law. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits of
the Indenture and will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transaction
contemplated by this Agreement and by each other Transaction Agreement to which
the Trust is a party, and the fulfillment of the terms hereof and thereof shall
not conflict with, result in any breach of any of the terms and provisions of,
nor constitute a default (nor an event which, with the giving of notice or
passage of time, or both, would constitute a default) under the Certificate of
Trust or the Trust Agreement, or any indenture, agreement or other instrument to
which the Trust is a party or by which it shall be 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 this
Agreement and the Collateral Assignment); nor violate any law or any order,
rule, or regulation applicable to the Trust of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trust or its properties.
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<PAGE> 7
(e) No Consents. No consent, license, approval or authorization
from, or registration, or declaration with, any governmental authority, bureau
or agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by the Trust of this Agreement or of any
other Transaction Agreement to which the Trust is a party, except (in each case)
such as have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To the Trust's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Trust or its properties: (A)
asserting the invalidity of this Agreement or any other Transaction Agreement to
which the Trust is a party; (B) seeking to prevent the issuance of the Notes or
the Certificates, or the consummation of the transactions contemplated by any of
the Transaction Agreements to which the Trust is a party; (C) seeking any
determination or ruling that might materially and adversely affect the validity
or enforceability of, this Agreement or any other Transaction Agreement to which
the Trust is a party, or (D) involving the Trust and which might adversely
affect the federal or state tax attributes of the Notes, the Certificates or the
Trust.
(g) Incorporation of Representations and Warranties. The
representations and warranties of the Trust set forth in each Transaction
Document are (in each case) true and correct as if set forth herein.
(h) Security Interest in Contracts. This Agreement, together with
possession of the Collateral by the Master Servicer pursuant to the Sale and
Servicing Agreement and the filing referred to below, creates as security for
each Seller's obligations under this Agreement a security interest in favor of
the Collateral Agent, as collateral agent for Financial Security, in each item
of the Collateral, as constituted as of the Closing Date; such security interest
has been perfected and is a valid, binding and enforceable first priority
security interest, subject only, to the extent set forth in Section 5.01(d)
hereof, to the interest of the Indenture Trustee with respect to the Indenture
Property and the Securityholders; a financing statement with respect to the
Contracts has been filed with the California Secretary of State pursuant to the
California UCC and the Nevada Secretary of State pursuant to the Nevada UCC, as
applicable, and the marking required by Section 3.01(b)(xvi) of the Sale and
Servicing Agreement has been made on each Contract, except to the extent (if
any) that Financial Security has waived in writing compliance with such
requirement; no other filings in any jurisdiction or any other actions are
necessary to perfect the security interest of the Collateral Agent, as
collateral agent for Financial Security, in the Collateral, as constituted as of
the Closing Date, as against any third parties.
(i) Security Interest in Other Collateral. Assuming the
acquisition of Eligible Investments in accordance with the Sale and Servicing
Agreement, such Eligible Investments will be subject to a valid, binding and
enforceable first priority security interest in favor of the Collateral Agent,
as collateral agent for Financial Security, subject only, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; assuming deposit of
each check constituting proceeds of the Contracts in the Collection Account or
Holding Account, as applicable, within ten days of receipt of such check by the
Master Servicer, such check will be subject to a valid, first priority perfected
security interest in favor of the Collateral Agent, subject, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; at such time as it is
received by the Master Servicer and until deposited in the Collection Account or
Holding Account, as applicable; the proceeds of such deposited check that remain
in the Collection Account or the Holding Account will be subject to a valid,
first priority security interest in favor of the Collateral Agent, subject, to
the extent set forth in Section 5.01(d) hereof, to the interest of the Trust
under the Sale and Servicing Agreement.
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<PAGE> 8
Section 2.02. Affirmative Covenants of the Trust. The Trust
hereby covenants and agrees with Financial Security that, at all times during
the term of this Agreement:
(a) Compliance with Agreements. The Trust will comply with all
terms and conditions of this Agreement and each other Transaction Agreement to
which it is a party. The Trust will not cause or permit to become effective any
amendment to or modification of any of the Transaction Agreements unless
Financial Security shall have previously approved in writing the form of such
amendment or modification.
(b) Financial Statements; Accountants' Reports; Other
Information. The Trust shall keep or cause to be kept proper books and records
in which full and correct entries shall be made of financial transactions and
the assets and business of the Trust in accordance with generally accepted
accounting principles consistently applied. The Trust shall furnish to Financial
Security, simultaneously with the delivery of such documents to the Indenture
Trustee, the Noteholders or the Certificateholders, as the case may be, copies
of all reports, certificates, statements, financial statements or notices
furnished to the Indenture Trustee, the Noteholders or the Certificateholders,
as the case may be, pursuant to the Transaction Agreements.
(c) Certificate of Compliance. The Trust shall deliver to
Financial Security concurrently with the delivery of the financial statements
required pursuant to paragraph (b) above, a certificate signed by an Authorized
Officer of the Administrator stating that:
(i) a review of the Trust's performance under this Agreement
and the other Transaction Agreements to which the Trust is a party
during such period has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge based upon such
review, the Trust has fulfilled all its obligations under this Agreement
and the other Transaction Agreements to which the Trust is a party
during such period, or, if there has been a default of any such
obligation, specifying each such default known to such officer and the
nature and status thereof.
(d) Access to Records; Discussions with Officers and Accountants.
The Trust shall, upon the reasonable request of Financial Security, permit
Financial Security's Authorized Agent at reasonable times (i) to inspect such
books and records of the Trust as they may relate to the Notes, the Certificates
and the obligations of the Trust under this Agreement and the other Transaction
Agreements to which the Trust is a party; and (ii) to discuss the affairs,
finances and accounts of the Trust with any of its respective officers,
directors and representatives, including its Independent Accountants.
(e) Financing Statements and Further Assurances. The Trust will
file all necessary financing statements, assignments or other instruments, and
any amendments or continuation statements relating thereto, necessary to be kept
and filed in such manner and in such places as may be required by law to
preserve and protect fully the lien and security interest in, and all rights of
the Collateral Agent with respect to the Collateral, and the Trust shall, upon
the request of Financial Security, from time to time, execute and deliver and,
if necessary, file such further instruments and take such further action as may
be reasonably necessary to effectuate the provisions of this Agreement or to
protect the security interest of the Collateral Agent in the Collateral.
(f) Retirement of Notes. The Trust shall, upon retirement of the
Notes furnish to Financial Security a notice of such retirement, and, upon such
retirement and the expiration of the term of the Policy, to surrender the Policy
to Financial Security for cancellation.
(g) Maintenance of Separate Existence. The Trust shall at all
times hold itself out to the public, including the Sellers, WFS and the Bank,
under the Trust's own name and as a separate and distinct entity from the
Sellers, WFS and the Bank. The Trust shall maintain trust records and books of
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<PAGE> 9
account separate from those of the Sellers, WFS and the Bank, shall not
commingle its assets with any other Person (except to the limited extent (if
any) permitted by the approval of Financial Security) and shall obtain proper
authorization from its equity owners of all trust action in accordance with
applicable law. The Trust shall maintain an arm's-length relationship with the
Bank, the Sellers and WFS and each Affiliate of any of them.
(h) Compliance with Article 76 of New York Insurance Law. The
Trust shall ensure that the Prospectus, and any supplements or amendments
thereto, and every preliminary prospectus delivered with respect to the Notes,
clearly disclose that the Policy is not covered by the property/casualty
insurance security fund specified in Article 76 of the New York Insurance Law.
(i) Tax Matters. The Trust will take all actions necessary to
ensure that the Trust is taxable as a partnership for federal and state income
tax purposes and not as an association (or publicly traded partnership), taxable
as a corporation.
Section 2.03. Negative Covenants of the Trust. The Trust agrees
and covenants with Financial Security that at all times during the term of this
Agreement:
(a) Amendments to Organizational Documents. The Trust shall not
amend, supplement or otherwise modify or cause to permit any amendment,
supplement or other modification of, any of the provisions of the Certificate of
Trust or the Trust Agreement without the prior written consent of Financial
Security.
(b) No Liens. Without the prior written consent of Financial
Security, the Trust shall not create, incur, assume or suffer to exist any
mortgage, deed of trust, security interest, assignment, deposit arrangement or
other preferential arrangement, charge or encumbrance (including without
limitation any conditional sale or other title retention agreement or finance
lease) of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names the Trust as debtor,
or sign any security agreement authorizing any secured party thereunder to file
such a financing statement, except as contemplated in the Transaction
Agreements.
(c) Creation of Indebtedness. Without the prior written consent
of Financial Security, the Trust shall not create, incur, assume or suffer to
exist any indebtedness other than indebtedness guaranteed or approved in writing
by Financial Security, except as contemplated in the Transaction Agreements.
(d) Guarantees, Etc. Without the prior written consent of
Financial Security, the Trust shall not assume, guarantee, endorse or otherwise
be or become directly or contingently liable for the obligations of any Person
by, among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, the Trust shall not form, or cause to be formed, any Subsidiaries.
(f) Insolvency. The Trust shall not commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, consolidation or other relief with respect to it or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets or make a general assignment
for the benefit of its creditors. The Trust shall not take any action in
furtherance of, or indicating the
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<PAGE> 10
consent to, approval of, or acquiescence in any of the acts set forth above. The
Trust shall not admit in writing its inability to pay its debts.
(g) Impairment of Rights. The Trust shall not take any action, or
fail to take any action that will interfere with the enforcement of any rights
under this Agreement or the other Transaction Agreements.
(h) Successor Parties. The Trust will not remove or replace, or
cause to be removed or replaced, the Master Servicer, the Indenture Trustee, the
Owner Trustee or the Administrator.
Section 2.04. Representations and Warranties of WFAL. WFAL
represents and warrants to Financial Security as follows:
(a) Due Organization. WFAL is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business and
had at all relevant times, and has, power, authority, and legal right to
acquire, pledge and sell the Contracts; WFAL is duly qualified to do business as
a foreign corporation in good standing under the laws of each jurisdiction where
the character of its properties or the nature of its activities makes such
qualification necessary, except such jurisdictions, if any, in which the failure
to be so qualified will not have a material adverse effect on the business or
properties of WFAL; WFAL holds all material licenses, certificates and permits
from all governmental authorities necessary for the conduct of its business as
presently conducted. WFAL's principal place of business, chief executive office
and the office where it keeps its records is located at 23 Pasteur, Irvine,
California 92618.
(b) Corporate Power and Authority. WFAL has full right, power and
authority to own its properties and to conduct its business as presently
conducted; WFAL has the power and authority to execute and deliver this
Agreement and each other Transaction Agreement to which WFAL is a party and to
carry out the terms of each such agreement, and has full power and authority to
sell and assign the property to be sold and assigned to WFSRC and the Owner
Trustee and deposited with the Owner Trustee as part of the Trust and has duly
authorized such sale and assignment to the Trustee by all necessary corporate
action; and the execution, delivery, and performance of this Agreement and each
other Transaction Agreement to which WFAL is a party has been duly authorized by
WFAL by all necessary corporate action.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which WFAL is a party constitutes a legal, valid, and binding
obligation of WFAL, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership in the Trust. The Notes when executed, authenticated and delivered in
accordance with the Indenture, will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Trust,
enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
WFAL is a party and the fulfillment of the terms hereof and thereof shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute a default (nor an event which, with the giving of notice or passage
of time, or both, would constitute a default) under, the articles of
incorporation or by-laws of WFAL, or any indenture, agreement, or other
instrument to which WFAL is a party or by which it shall be bound; nor result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any
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<PAGE> 11
such indenture, agreement, or other instrument (other than this Agreement and
the Collateral Assignment); nor violate any law or any order, rule, or
regulation applicable to WFAL of any court or of any federal or state regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over WFAL or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WFAL of this Agreement or of any other
Transaction Agreement to which WFAL is a party, except (in each case) such as
have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To WFAL's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFAL or its properties: (A) asserting
the invalidity of this Agreement, any other Transaction Agreement to which WFAL
is a party, 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 any of the Transaction Agreements to which WFAL is a party, (C)
seeking any determination or ruling that might materially and adversely affect
the performance by WFAL of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Agreement to which
WFAL is a party, or (D) involving WFAL and which might adversely affect the
federal income tax attributes of the Notes, the Certificates or the Trust.
(g) Registration Statement; Prospectus. The Sellers have filed
with the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (No.___), including a preliminary prospectus and
prospectus supplement for the registration of the Notes under the Securities
Act, has filed such amendments thereto, if any, and such amended preliminary
prospectuses and prospectus supplements as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended, if applicable) and the prospectus together
with the prospectus supplement relating to the Notes, constituting a part
thereof (including in each case all documents, if any, incorporated by reference
therein and the information, if any, deemed to be part thereof pursuant to the
rules and regulations of the Commission under the Securities Act (the "Rules and
Regulations")), as from time to time amended or supplemented pursuant to the
Securities Act or otherwise, are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus or prospectus supplement shall be provided by the Sellers for use in
connection with the offering of the Notes which differs from the Prospectus on
file at the Commission pursuant to Rule 424 of the Rules and Regulations
(whether or not such revised prospectus is required to be filed by the Sellers
pursuant to Rule 424 of the Rules and Regulations), the term "Prospectus" shall
refer to such revised prospectus and prospectus supplement from and after the
time it is first provided to the Underwriters for such use. As of the date
hereof, the Registration Statement and Prospectus filed under the Securities Act
or pursuant to the Rules and Regulations complies in all material respects with
the Securities Act and the Rules and Regulations, and the Registration Statement
at the time it became effective and at all times subsequent thereto complied,
and at each time that the Prospectus is provided to the Underwriters for use in
connection with the offering or sale of any Note will comply, in all material
respects with the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement and the Prospectus at the time the
Registration Statement became effective did not and on the date hereof does not,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and the Prospectus at the time it was filed under the Securities
Act or the Rules and Regulations and at the time it was first provided to the
Underwriters for use in connection with the offering of the Notes did not, and
on the Closing Date does not, contain any untrue statement of a material fact or
omit to state a material
11
<PAGE> 12
fact required to be stated therein or necessary to make the statements therein
not misleading, except that the representations and warranties in this
subparagraph shall not apply to statements in or omissions from the Registration
Statement or the Prospectus or any preliminary prospectus made in reliance upon
information furnished to the Sellers in writing by Financial Security expressly
for use therein.
(h) Incorporation of Representations and Warranties. All of the
representations and warranties made by WFAL as Seller in Section 3.01(b) of the
Sale and Servicing Agreement and as Depositor in, Section 2.10 of the Trust
Agreement and in the Underwriting Agreement are incorporated herein as if set
forth herein and each such representation and warranty is true and correct as of
the Closing Date.
(i) Security Interest in Contracts. This Agreement, together with
possession of the Collateral by the Master Servicer pursuant to the Sale and
Servicing Agreement and the filing referred to below, creates as security for
WFAL's obligations under this Agreement a security interest in favor of the
Collateral Agent, as collateral agent for Financial Security, in each item of
the Collateral owned by WFAL, as constituted as of the Closing Date; such
security interest has been perfected and is a valid, binding and enforceable
first priority security interest, subject only, to the extent set forth in
Section 5.01(d) hereof, to the interest of the Indenture Trustee with respect to
the Indenture Property and the Securityholders; a financing statement with
respect to the Contracts has been filed with the California Secretary of State
pursuant to the California UCC, and the marking required by Section 3.01(b)(xvi)
of the Sale and Servicing Agreement has been made on each Contract, except to
the extent (if any) that Financial Security has waived in writing compliance
with such requirement; no other filings in any jurisdiction or any other actions
are necessary to perfect the security interest of the Collateral Agent, as
collateral agent for Financial Security, in the Collateral, as constituted as of
the Closing Date, as against any third parties.
(j) Security Interest in Other Collateral. Assuming the
acquisition of Eligible Investments in accordance with the Sale and Servicing
Agreement, such Eligible Investments will be subject to a valid, binding and
enforceable first priority security interest in favor of the Collateral Agent,
as collateral agent for Financial Security, subject only, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; assuming deposit of
each check constituting proceeds of the Contracts in the Collection Account or
Holding Account, as applicable, within ten days of receipt of such check by the
Master Servicer, such check will be subject to a valid, first priority perfected
security interest in favor of the Collateral Agent, subject, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; at such time as it is
received by the Master Servicer and until deposited in the Collection Account or
Holding Account, as applicable; the proceeds of such deposited check that remain
in the Collection Account or the Holding Account will be subject to a valid,
first priority security interest in favor of the Collateral Agent, subject, to
the extent set forth in Section 5.01(d) hereof, to the interest of the Trust
under the Sale and Servicing Agreement.
(k) Valid Transfer of Contracts. The Sale and Servicing Agreement
and the Seller Assignments constitute a valid sale, transfer and assignment of
the Contracts, enforceable against creditors of and purchasers from WFAL, except
as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, receivership or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity, regardless of
whether such enforceability shall be considered in a proceeding in equity or at
law.
(l) Financial Information. The audited financial statements of
WFAL for the fiscal year ended December 31, _____ and the unaudited financial
statements of WFAL for the fiscal quarter ended _________________, copies of
which have been furnished to Financial Security, as of the dates and for the
periods referred to therein (i) are true, complete and correct in all material
respects, (ii) fairly present the financial condition of WFAL and the results of
operations and changes in financial position of
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<PAGE> 13
WFAL and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied (subject, in the case of the
quarterly financial statements, to normal year-end adjustments), and such
financial statements indicate that WFAL is solvent and will not be rendered
insolvent by the execution, delivery and performance of the Transaction
Agreements. Since ________________, there has been no material adverse change in
the business, financial condition or operations of WFAL.
Section 2.05. Representations and Warranties of WFSRC. WFSRC
represents and warrants to Financial Security as follows:
(a) Due Organization. WFSRC is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business and
had at all relevant times, and has, power, authority, and legal right to
acquire, pledge and sell the Contracts; WFSRC is duly qualified to do business
as a foreign corporation in good standing under the laws of each jurisdiction
where the character of its properties or the nature of its activities makes such
qualification necessary, except such jurisdictions, if any, in which the failure
to be so qualified will not have a material adverse effect on the business or
properties of WFSRC; WFSRC holds all material licenses, certificates and permits
from all governmental authorities necessary for the conduct of its business as
presently conducted. WFSRC's principal place of business, chief executive office
and the office where it keeps its records is located at 6655 West Sahara Avenue,
Las Vegas, Nevada, 89102.
(b) Corporate Power and Authority. WFSRC has full right, power
and authority to own its properties and to conduct its business as presently
conducted; WFSRC has the power and authority to execute and deliver this
Agreement and each other Transaction Agreement to which WFSRC is a party and to
carry out the terms of each such agreement, and has full power and authority to
transfer and assign the property to be transferred and assigned to and deposited
with the Owner Trustee as part of the Trust and has duly authorized such
transfer and assignment to the Trustee by all necessary corporate action; and
the execution, delivery, and performance of this Agreement and each other
Transaction Agreement to which WFSRC is a party has been duly authorized by
WFSRC by all necessary corporate action.
(c) Valid and Binding Obligations. Each of the Transaction
Agreements to which WFSRC is a party constitutes a legal, valid, and binding
obligation of WFSRC, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership in the Trust. The Notes when executed, authenticated and delivered in
accordance with the Indenture, will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Trust,
enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
WFSRC is a party and the fulfillment of the terms hereof and thereof shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute a default (nor an event which, with the giving of notice or passage
of time, or both, would constitute a default) under, the articles of
incorporation or by-laws of WFSRC, or any indenture, agreement, or other
instrument to which WFSRC is a party or by which it shall be 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 this
Agreement and the Collateral Assignment); nor violate any law or any order,
rule, or regulation applicable to WFSRC of any court or
13
<PAGE> 14
of any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over WFSRC or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WFSRC of this Agreement or of any other
Transaction Agreement to which WFSRC is a party, except (in each case) such as
have been obtained and are in full force and effect.
(f) Pending Litigation or Other Proceeding. To WFSRC's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFSRC or its properties: (A) asserting
the invalidity of this Agreement, any other Transaction Agreement to which WFSRC
is a party, 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 any of the Transaction Agreements to which WFSRC is a party, (C)
seeking any determination or ruling that might materially and adversely affect
the performance by WFSRC of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Agreement to which
WFSRC is a party, or (D) involving WFSRC and which might adversely affect the
federal income tax attributes of the Notes, the Certificates or the Trust.
(g) Registration Statement; Prospectus. The Sellers have filed
with the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (No. ___), including a preliminary prospectus and
prospectus supplement for the registration of the Notes under the Securities
Act, has filed such amendments thereto, if any, and such amended preliminary
prospectuses and prospectus supplements as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such
registration statement (as amended, if applicable) and the prospectus together
with the prospectus supplement relating to the Notes, constituting a part
thereof (including in each case all documents, if any, incorporated by reference
therein and the information, if any, deemed to be part thereof pursuant to the
rules and regulations of the Commission under the Securities Act (the "Rules and
Regulations")), as from time to time amended or supplemented pursuant to the
Securities Act or otherwise, are hereinafter referred to as the "Registration
Statement" and the "Prospectus," respectively, except that if any revised
prospectus or prospectus supplement shall be provided by the Sellers for use in
connection with the offering of the Notes which differs from the Prospectus on
file pursuant to Rule 424 of the Rules and Regulations (whether or not such
revised prospectus is required to be filed by the Sellers pursuant to Rule 424
of the Rules and Regulations), the term "Prospectus" shall refer to such revised
prospectus and prospectus supplement from and after the time it is first
provided to the Underwriters for such use. As of the date hereof, the
Registration Statement and Prospectus filed under the Securities Act or pursuant
to the Rules and Regulations complies in all material respects with the
Securities Act and the Rules and Regulations, and the Registration Statement at
the time it became effective and at all times subsequent thereto complied, and
at each time that the Prospectus is provided to the Underwriters for use in
connection with the offering or sale of any Note will comply, in all material
respects with the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement and the Prospectus at the time the
Registration Statement became effective did not and on the date hereof does not,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and the Prospectus at the time it was filed under the Securities Act
or the Rules and Regulations and at the time it was first provided to the
Underwriters for use in connection with the offering of the Notes did not, and
on the Closing Date does not, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, except that the representations and
14
<PAGE> 15
warranties in this subparagraph shall not apply to statements in or omissions
from the Registration Statement or the Prospectus or any preliminary prospectus
made in reliance upon information furnished to the Sellers in writing by
Financial Security expressly for use therein.
(h) Incorporation of Representations and Warranties. All of the
representations and warranties made by WFSRC in Section 3.01(b) of the Sale and
Servicing Agreement and as Depositor in, Section 2.10 of the Trust Agreement and
in the Underwriting Agreement are incorporated herein as if set forth herein and
each such representation and warranty is true and correct as of the Closing
Date.
(i) Security Interest in Contracts. This Agreement, together with
possession of the Collateral by the Master Servicer pursuant to the Sale and
Servicing Agreement and the filing referred to below, creates as security for
WFSRC's obligations under this Agreement a security interest in favor of the
Collateral Agent, as collateral agent for Financial Security, in each item of
the Collateral owned by WFSRC, as constituted as of the Closing Date; such
security interest has been perfected and is a valid, binding and enforceable
first priority security interest, subject only, to the extent set forth in
Section 5.01(d) hereof, to the interest of the Indenture Trustee with respect to
the Indenture Property and the Securityholders; a financing statement with
respect to the Contracts has been filed with the Nevada Secretary of State
pursuant to the Nevada UCC, and the marking required by Section 3.01(b)(xvi) of
the Sale and Servicing Agreement has been made on each Contract, except to the
extent (if any) that Financial Security has waived in writing compliance with
such requirement; no other filings in any jurisdiction or any other actions are
necessary to perfect the security interest of the Collateral Agent, as
collateral agent for Financial Security, in the Collateral, as constituted as of
the Closing Date, as against any third parties.
(j) Security Interest in Other Collateral. Assuming the
acquisition of Eligible Investments in accordance with the Sale and Servicing
Agreement, such Eligible Investments will be subject to a valid, binding and
enforceable first priority security interest in favor of the Collateral Agent,
as collateral agent for Financial Security, subject only, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; assuming deposit of
each check constituting proceeds of the Contracts in the Collection Account or
Holding Account, as applicable, within ten days of receipt of such check by the
Master Servicer, such check will be subject to a valid, first priority perfected
security interest in favor of the Collateral Agent, subject, to the extent set
forth in Section 5.01(d) hereof, to the interest of the Indenture Trustee with
respect to the Indenture Property and the Securityholders; at such time as it is
received by the Master Servicer and until deposited in the Collection Account or
Holding Account, as applicable; the proceeds of such deposited check that remain
in the Collection Account or the Holding Account will be subject to a valid,
first priority security interest in favor of the Collateral Agent, subject, to
the extent set forth in Section 5.01(d) hereof, to the interest of the Trust
under the Sale and Servicing Agreement.
(k) Valid Transfer of Contracts. The Sale and Servicing Agreement
and the Seller Assignments constitute a valid sale, transfer and assignment, as
applicable, of the Contracts, enforceable against creditors of and purchasers
from WFSRC, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, receivership or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity, regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
(l) Financial Information. The audited financial statements of
WFSRC for the fiscal year ended December 31, ____ and the unaudited financial
statements of WFSRC for the fiscal quarter ended ________ __, ____, copies of
which have been furnished to Financial Security, as of the dates and for the
periods referred to therein (i) are true, complete and correct in all material
respects, (ii) fairly present the financial condition of WFSRC and the results
of operations and changes in financial position of WFSRC and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied (subject, in the case of the quarterly financial
statements, to normal year-end
15
<PAGE> 16
adjustments), and such financial statements indicate that WFSRC is solvent and
will not be rendered insolvent by the execution, delivery and performance of the
Transaction Agreements. Since ________ __, ____, there has been no material
adverse change in the business, financial condition or operations of WFSRC.
Section 2.06. Representations and Warranties of WFS. WFS
represents and warrants to Financial Security as follows:
(a) Due Organization. WFS is duly organized and validly existing
as a licensed consumer finance company organized and existing and in good
standing under the laws of the State of California, with power and authority to
own its properties and to conduct its business and had at all relevant times,
and has, power, authority, and legal right to acquire and own the Contracts and
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
requires such qualification.
(b) Corporate Power and Authority. WFS has the power and
authority to execute and deliver this Agreement and each other Transaction
Agreement to which WFS is a party and to carry out the terms of each such
agreement, and has full power and authority to sell and assign the property to
be sold and assigned to WFAL for inclusion in the Trust and the Spread Account
and has duly authorized such sale and assignment to WFAL by all necessary
corporate action; and the execution, delivery, and performance of this Agreement
and each other Transaction Agreement to which WFS is a party has been duly
authorized by WFS by all necessary corporate action.
(c) Valid and Binding Obligations. The WFS Assignments constitute
a valid sale, transfer, and assignment of the Contracts to WFAL, enforceable
against creditors of and purchasers from WFS, and each of the Transaction
Agreements to which WFS is a party constitutes a legal, valid, and binding
obligation of WFS, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
receivership or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership in the Trust. The Notes when executed, authenticated and delivered in
accordance with the Indenture, will be entitled to the benefits of the Indenture
and will constitute legal, valid and binding obligations of the Trust,
enforceable in accordance with their terms.
(d) Noncontravention. The consummation of the transactions
contemplated by this Agreement and by each other Transaction Agreement to which
WFS is a party and the fulfillment of the terms hereof and thereof shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute a default (nor an event which, with the giving of notice or passage
of time, or both, would constitute a default) under, the articles of
organization or by-laws of WFS, or any indenture, agreement, or other instrument
to which WFS is a party or by which it shall be 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 instruments; nor violate any
law or any order, rule, or regulation applicable to WFS of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFS or its properties.
(e) No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WFS of this Agreement or of any other
Transaction Agreement
16
<PAGE> 17
to which WFS is a party, except (in each case) such as have been obtained and
are in full force and effect.
(f) Pending Litigation or Other Proceeding. To WFS's best
knowledge, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFS or its properties: (A) asserting
the invalidity of this Agreement or any other Transaction Agreement to which WFS
is a party, (B) seeking to prevent the consummation of any of the transactions
contemplated by any of the Transaction Agreements to which WFS is a party, (C)
seeking any determination or ruling that might materially and adversely affect
the performance by WFS of its obligations under, or the validity or
enforceability of, this Agreement or any other Transaction Agreement to which
WFS is a party, or (D) involving WFS and which might adversely affect the
federal income tax attributes of the Certificates.
(g) Affirmation and Incorporation of Certain Representations and
Warranties. WFS represents and warrants to Financial Security that the
representations and warranties of WFAL and of WFSRC set forth in Section 2.04
and Section 2.05 hereof, respectively, in the Underwriting Agreement and in
Section 3.01(b) of the Sale and Servicing Agreement and Section 2.10 of the
Trust Agreement are (in each case) true and correct as if set forth herein and
that the representations and warranties of WFS set forth in the Underwriting
Agreement and by WFS as Master Servicer set forth in Section 4.06 of the Sale
and Servicing Agreement are (in each case) true and correct as if set forth
herein.
(h) Valid Transfer of Contracts. The WFS Assignments constitute a
valid sale, transfer and assignment of the Contracts to the Company, enforceable
against creditors of and purchasers from WFS, except as such enforceability may
be limited by (i) bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(i) Random Selection; No Adverse Selection. The Contracts that
are being transferred to WFAL were randomly selected by WFS. No selection
procedures adverse to the interests of WFAL, WFSRC, the Trust, the Noteholders,
the Certificateholders or the Insurer have been utilized in selecting the
Contracts.
(j) Financial Information. The audited consolidated financial
statements of WFS for the fiscal year ended December 31, ______ and the
unaudited consolidated financial statements of WFS for the fiscal quarter ended
_____________, copies of which have been furnished to Financial Security, as of
the dates and for the periods referred to therein (i) are true, complete and
correct in all material respects, (ii) fairly present the consolidated financial
condition of WFS and the consolidated results of operations and changes in cash
flows of WFS and its consolidated subsidiaries, and (iii) have been prepared in
accordance with generally accepted accounting principles consistently applied
(subject, in the case of the quarterly financial statements, to normal year-end
adjustments), and such financial statements indicate that WFS is solvent and
will not be rendered insolvent by the execution, delivery and performance of the
Transaction Agreements. Since _______________, there has been no material
adverse change in the business, financial condition or operations of WFS.
Section 2.07. Affirmative Covenants of WFAL. WFAL covenants and
agrees with Financial Security that, at all times during the term of this
Agreement:
(a) Compliance with Agreements. WFAL will comply with all terms
and conditions of this Agreement and each other Transaction Agreement to which
it is a party. WFAL will not cause or permit to become effective any amendment
to or modification of the Transaction Agreements unless Financial Security shall
have previously approved in writing the form of such amendment or modification.
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(b) Financial Statements, Accountants' Reports, Other
Information. WFAL shall keep proper books and records, in which full and correct
entries shall be made of financial transactions and the assets and business of
WFAL in accordance with generally accepted accounting principles consistently
applied. WFAL shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Owner Trustee, Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements or notices furnished to the Owner Trustee, the
Noteholders or the Certificateholders, as the case may be, pursuant to the
Transaction Agreements.
(c) Certificate of Compliance. WFAL shall deliver to Financial
Security, concurrently with the delivery of the financial statements required
pursuant to paragraph (b) above, a certificate signed by an Authorized Officer
of the Company stating that:
(i) a review of WFAL's performance under this Agreement and
the other Transaction Agreements to which WFAL is a party during such
period has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, WFAL has fulfilled all its obligations under this Agreement and
the other Transaction Agreements to which WFAL is a party during such
period, or, if there has been a default of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
WFAL shall, upon the reasonable request of Financial Security, permit an
authorized agent of Financial Security at reasonable times (i) to inspect such
books and records of WFAL as may relate to the Notes, the Certificates and the
obligations of WFAL under this Agreement and the other Transaction Agreements to
which WFAL is a party; and (ii) to discuss the affairs, finances and accounts of
WFAL with any of its respective officers, directors and representatives,
including its Independent Accountants.
(e) Maintain Licenses. WFAL shall maintain all licenses, permits,
charters and registrations that are material to the performance by WFAL of its
obligations under the Transaction Agreements to which it is a party or by which
WFAL is bound.
(f) Financing Statements and Further Assurances. WFAL will file
all necessary financing statements, assignments or other instruments, and any
amendments or continuation statements relating thereto, necessary to be kept and
filed in such manner and in such places as may be required by law to preserve
and protect fully the Lien and security interest in and all rights of Financial
Security with respect to the Collateral, subject to the Sale and Servicing
Agreement, and WFAL shall, upon the request of Financial Security, from time to
time, execute and deliver and, if necessary, file such further instruments and
take such further action as may be reasonably necessary to effectuate the
provisions of this Agreement or to protect the security interest of Financial
Security, subject to the Sale and Servicing Agreement, in the Collateral.
(g) Maintain Existence; Merger. WFAL shall keep in full effect
its existence, rights and franchises under the laws of the State of California,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Contract Documents
and the Transaction Agreements to which WFAL is a party. WFAL shall not
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the Person
formed by such consolidation or into which WFAL has merged or the Person which
acquires by conveyance, transfer or lease substantially all the assets of WFAL
as an entirety, can lawfully perform the obligations of WFAL hereunder and
executes and delivers to the Owner Trustee an agreement, in form and substance
reasonably satisfactory to the Owner Trustee and Financial Security, which
contains an
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assumption by such Person of the due and punctual performance and satisfaction
of each covenant and condition to be performed or satisfied by WFAL under this
Agreement.
(h) Maintenance of Separate Corporate Existence. WFAL shall at
all times hold itself out to the public, including WFS, WFSRC and the Bank,
under WFAL's own name and as a separate and distinct entity from WFS, WFSRC and
the Bank. At all times at least one director and one executive officer of WFAL
(or one individual serving in both capacities) shall be a Person who is not a
director, officer or employee of any Person owning beneficially more than 10% of
the outstanding common stock of WFAL. WFAL shall maintain separate corporate
records and books of account from those of WFS and the Bank, shall not commingle
its assets with any other Person (except to the limited extent (if any)
permitted by the approval of Financial Security) and shall authorize its
corporate actions in accordance with applicable law. WFAL shall not engage in
business transactions with any of its Affiliates on terms and conditions less
favorable to WFAL than those available to WFAL for comparable transactions from
Persons who are not Affiliates WFAL. WFAL shall maintain its chief executive
office, principal place of business and the office where it keeps its records in
the State of California and separate and apart from any office of the Master
Servicer.
(i) Random Selection; No Adverse Selection. The Contracts that
are being transferred by WFAL to each of WFSRC and the Trust were randomly
selected by WFAL, but with the intent of creating two pools of contracts with
similar characteristics. No selection procedures adverse to the interests of
WFSRC, the Trust, the Noteholders, the Certificateholders or the Insurer have
been utilized in selecting the Contracts.
(j) Compliance with Article 76 of New York Insurance Law. WFAL
shall ensure that the Prospectus, and any supplements or amendments thereto, and
every preliminary prospectus delivered with respect to the Notes, clearly
disclose that the Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law.
(k) Incorporation of Covenants. WFAL agrees to comply with each
of the covenants of WFAL set forth in the Transaction Agreements and hereby
incorporates such covenants by reference as if each were set forth herein.
(l) Tax Matters. As of the Closing Date, the Trust is, and shall
remain during the term of this Agreement, taxable as a partnership for federal
and state income tax purposes and not as an association (or publicly traded
partnership) taxable as a corporation.
(m) Certificates. Except as may be agreed to by Financial
Security, in its sole discretion, WFAL shall purchase from the Trust and
thereafter retain beneficial and record ownership of the WFAL Certificate.
Section 2.08. Affirmative Covenants of WFSRC. WFSRC covenants and
agrees with Financial Security that, at all times during the term of this
Agreement:
(a) Compliance with Agreements. WFSRC will comply with all terms
and conditions of this Agreement and each other Transaction Agreement to which
it is a party. WFAL will not cause or permit to become effective any amendment
to or modification of the Transaction Agreements unless Financial Security shall
have previously approved in writing the form of such amendment or modification.
(b) Financial Statements, Accountants' Reports, Other
Information. WFSRC shall keep proper books and records, in which full and
correct entries shall be made of financial transactions and the assets and
business of WFSRC in accordance with generally accepted accounting principles
consistently applied. WFSRC shall furnish to Financial Security, simultaneously
with the delivery of such documents to the Owner Trustee, Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be,
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copies of all reports, certificates, statements or notices furnished to the
Owner Trustee, the Noteholders or the Certificateholders, as the case may be,
pursuant to the Transaction Agreements.
(c) Certificate of Compliance. WFSRC shall deliver to Financial
Security, concurrently with the delivery of the financial statements required
pursuant to paragraph (b) above, a certificate signed by an Authorized Officer
of WFSRC stating that:
(i) a review of WFSRC's performance under this Agreement and
the other Transaction Agreements to which WFSRC is a party during such
period has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, WFSRC has fulfilled all its obligations under this Agreement and
the other Transaction Agreements to which WFSRC is a party during such
period, or, if there has been a default of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
WFSRC shall, upon the reasonable request of Financial Security, permit an
authorized agent of Financial Security at reasonable times (i) to inspect such
books and records of WFSRC as may relate to the Notes, the Certificates and the
obligations of WFSRC under this Agreement and the other Transaction Agreements
to which WFSRC is a party; and (ii) to discuss the affairs, finances and
accounts of WFSRC with any of its respective officers, directors and
representatives, including its Independent Accountants.
(e) Maintain Licenses. WFSRC shall maintain all licenses,
permits, charters and registrations that are material to the performance by
WFSRC of its obligations under the Transaction Agreements to which it is a party
or by which WFSRC is bound.
(f) Financing Statements and Further Assurances. WFSRC will file
all necessary financing statements, assignments or other instruments, and any
amendments or continuation statements relating thereto, necessary to be kept and
filed in such manner and in such places as may be required by law to preserve
and protect fully the Lien and security interest in and all rights of Financial
Security with respect to the Collateral, subject to the Sale and Servicing
Agreement, and WFSRC shall, upon the request of Financial Security, from time to
time, execute and deliver and, if necessary, file such further instruments and
take such further action as may be reasonably necessary to effectuate the
provisions of this Agreement or to protect the security interest of Financial
Security, subject to the Sale and Servicing Agreement, in the Collateral.
(g) Maintain Existence; Merger. WFSRC shall keep in full effect
its existence, rights and franchises under the laws of the State of California,
and will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Contract Documents
and the Transaction Agreements to which WFSRC is a party. WFSRC shall not
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the Person
formed by such consolidation or into which WFSRC has merged or the Person which
acquires by conveyance, transfer or lease substantially all the assets of WFSRC
as an entirety, can lawfully perform the obligations of WFSRC hereunder and
executes and delivers to the Owner Trustee an agreement, in form and substance
reasonably satisfactory to the Owner Trustee and Financial Security, which
contains an assumption by such Person of the due and punctual performance and
satisfaction of each covenant and condition to be performed or satisfied by
WFSRC under this Agreement.
(h) Maintenance of Separate Corporate Existence. WFSRC shall at
all times hold itself out to the public, including WFS, WFAL and the Bank, under
WFSRC's own name and as a separate and distinct entity from WFS, WFAL and the
Bank. At all times at least one director and one executive officer of WFSRC (or
one individual serving in both capacities) shall be a Person who is not a
director,
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officer or employee of any Person owning beneficially more than 10% of the
outstanding common stock of WFSRC. WFSRC shall maintain separate corporate
records and books of account from those of WFS and the Bank, shall not commingle
its assets with any other Person (except to the limited extent (if any)
permitted by the approval of Financial Security) and shall authorize its
corporate actions in accordance with applicable law. WFSRC shall not engage in
business transactions with any of its Affiliates on terms and conditions less
favorable to WFSRC than those available to WFSRC for comparable transactions
from Persons who are not Affiliates of WFSRC. WFSRC shall maintain its chief
executive office, principal place of business and the office where it keeps its
records in the State of Nevada and separate and apart from any office of the
Master Servicer.
(i) Random Selection; No Adverse Selection. The Contracts which
were transferred to the Trust were randomly selected by WFSRC. No selection
procedures adverse to the interests of the Trust, the Noteholders, the
Certificateholders or the Insurer have been utilized in selecting the Contracts.
(j) Exercise of Optional Repurchase under the Sale and Servicing
Agreement. Except as otherwise consented to by the Insurer, WFSRC shall ensure
that as Holder of the WFSRC Certificate, if the optional repurchase is exercised
pursuant to Section 3.10 of the Sale and Servicing Agreement, no more than 50%
of any funds used for the exercise of such repurchase option shall be obtained
from WFS or the Bank; provided however, that if WFSRC is the Holder of the WFSRC
Certificate and seeks to exercise the optional repurchase pursuant to Section
3.10 in connection with a further securitization of such Contracts, at a such
time as the sum of the Scheduled Balances of such Contracts is greater than or
equal to 10% of the Cut-Off Date Aggregate Scheduled Principal Balance, then
WFSRC may borrow from either WFS or the Bank an amount up to 10% of the
Aggregate Scheduled Principal Balance; provided further, that any such borrowing
must be on an arms-length basis and the term of such borrowing shall be limited
to no more than 90 days.
(k) Compliance with Article 76 of New York Insurance Law. WFSRC
shall ensure that the Prospectus, and any supplements or amendments thereto, and
every preliminary prospectus delivered with respect to the Notes, clearly
disclose that the Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law.
(l) Incorporation of Covenants. WFSRC agrees to comply with each
of the covenants of WFSRC set forth in the Transaction Agreements and hereby
incorporates such covenants by reference as if each were set forth herein.
(m) Certificates. Except as may be agreed to by Financial
Security, in its sole discretion, WFSRC shall purchase from the Trust and
thereafter retain beneficial and record ownership of the WFSRC Certificate.
Section 2.09. Negative Covenants of WFAL. WFAL agrees and
covenants with Financial Security that at all times during the term of this
Agreement:
(a) Amendments to Organizational Documents. WFAL shall not amend,
supplement or otherwise modify, or cause to permit any amendment, supplement or
other modification of, Articles 2 or 5 of its charter (or any other Articles of
its charter that relate to the matters addressed by such Article 2 or 5) or its
bylaws without the prior written consent of Financial Security.
(b) No Liens. Except as contemplated in connection with the
transaction to which this Agreement relates, without the prior written consent
of Financial Security, WFAL shall not create, incur, assume or suffer to exist
any mortgage, deed of trust, security interest, assignment, deposit arrangement
or other preferential arrangement, charge or encumbrance (including, without
limitation, any conditional sale or other title retention agreement or finance
lease) of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
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Code of any jurisdiction any financing statement that names WFAL as a debtor, or
sign any security agreement authorizing any secured party thereunder to file
such financing statement.
(c) Creation of Indebtedness. Except as contemplated in
connection with the transaction to which this Agreement relates, without the
prior written consent of Financial Security, WFAL shall not create, incur,
assume or suffer to exist any indebtedness other than indebtedness guaranteed or
approved in writing by Financial Security.
(d) Guarantees, Etc. Without the prior written consent of
Financial Security, WFAL shall not assume, guarantee, endorse or otherwise be or
become directly or contingently liable for the obligations of any Person by,
among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, WFAL shall not form, or cause to be formed, any subsidiaries.
(f) Insolvency. WFAL shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seek appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or make a general
assignment for the benefit of its creditors. WFAL shall not take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in
any of the acts set forth above. WFAL shall not be unable to, or admit in
writing its inability to, pay its debts.
(g) Impairment of Rights. WFAL shall not take any action or fail
to take any action that will interfere with the enforcement of any rights under
this Agreement or the other Transaction Agreements.
(h) Insolvency of Trust. WFAL shall not, for any reason,
institute proceedings for the Trust to be adjudicated a bankrupt or insolvent,
or consent to the institution of bankruptcy or insolvency proceedings against
the Trust, or file a petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to the bankruptcy of the
Trust, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or a substantial
part of the property of the Trust or cause or permit the Trust to make any
assignment for the benefit of creditors, or admit in writing the inability of
the Trust to pay its debt generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in furtherance of any
such action.
(i) No Withdrawal. WFAL shall not, for any reason, withdraw or
attempt to withdraw from the Trust Agreement, dissolve, institute proceedings
for it to be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition seeking
or consenting to reorganize or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of it or a
substantial part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
Section 2.10. Negative Covenants of WFSRC. WFSRC agrees and
covenants with Financial Security that at all times during the term of this
Agreement:
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(a) Amendments to Organizational Documents. WFSRC shall not
amend, supplement or otherwise modify, or cause to permit any amendment,
supplement or other modification of, Articles 2 or 5 of its charter (or any
other Articles of its charter that relate to the matters addressed by such
Article 2 or 5) or its bylaws without the prior written consent of Financial
Security.
(b) No Liens. Except as contemplated in connection with the
transaction to which this Agreement relates, without the prior written consent
of Financial Security, WFSRC shall not create, incur, assume or suffer to exist
any mortgage, deed of trust, security interest, assignment, deposit arrangement
or other preferential arrangement, charge or encumbrance (including, without
limitation, any conditional sale or other title retention agreement or finance
lease) of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names WFSRC as a debtor,
or sign any security agreement authorizing any secured party thereunder to file
such financing statement.
(c) Creation of Indebtedness. Except as contemplated in
connection with the transaction to which this Agreement relates, without the
prior written consent of Financial Security, WFSRC shall not create, incur,
assume or suffer to exist any indebtedness other than indebtedness guaranteed or
approved in writing by Financial Security.
(d) Guarantees, Etc. Without the prior written consent of
Financial Security, WFSRC shall not assume, guarantee, endorse or otherwise be
or become directly or contingently liable for the obligations of any Person by,
among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person to
maintain any amount of capital.
(e) Subsidiaries. Without the prior written consent of Financial
Security, WFSRC shall not form, or cause to be formed, any subsidiaries.
(f) Insolvency. WFSRC shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seek appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or make a general
assignment for the benefit of its creditors. WFSRC shall not take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in
any of the acts set forth above. WFSRC shall not be unable to, or admit in
writing its inability to, pay its debts.
(g) Impairment of Rights. WFSRC shall not take any action or fail
to take any action that will interfere with the enforcement of any rights under
this Agreement or the other Transaction Agreements.
(h) Insolvency of Trust. WFSRC shall not, for any reason,
institute proceedings for the Trust to be adjudicated a bankrupt or insolvent,
or consent to the institution of bankruptcy or insolvency proceedings against
the Trust, or file a petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to the bankruptcy of the
Trust, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or a substantial
part of the property of the Trust or cause or permit the Trust to make any
assignment for the benefit of creditors, or admit in writing the inability of
the Trust to pay its debt generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in furtherance of any
such action.
Section 2.11. Affirmative Covenants of WFS. WFS covenants and
agrees with Financial Security that, at all times during the term of this
Agreement:
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(a) Compliance With Agreements. WFS will comply with all terms
and conditions of this Agreement and each other Transaction Agreement to which
it is a party. WFS will not cause or permit to become effective any amendment to
or modification of the Transaction Agreements to which it is a party unless
Financial Security shall have previously approved in writing the form of such
amendment or modification.
(b) Financial Statements, Accountants' Reports, Other
Information. WFS shall keep proper books and records, in which full and correct
entries shall be made of financial transactions and the assets and business of
WFS in accordance with generally accepted accounting principles consistently
applied. WFS shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Indenture Trustee, the Noteholders or the
Certificateholders, as the case may be, copies of all reports, certificates,
statements or notices furnished to the Indenture Trustee or the
Certificateholders, as the case may be, pursuant to the Sale and Servicing
Agreement. WFS shall also deliver to Financial Security, simultaneously with the
delivery of such documents to the relevant federal or state department or agency
copies of all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
periodic reports on Form 8-K required to be filed by WFS with the Securities and
Exchange Commission.
(c) Certificate of Compliance. WFS shall deliver to Financial
Security, concurrently with the delivery of the financial statements required
pursuant to paragraph (b) above, a certificate signed by an Authorized Officer
of WFS stating that:
(i) a review of WFS's performance under this Agreement and the
other Transaction Agreements to which WFS is a party during such period
has been made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, WFS has fulfilled all its obligations under this Agreement and
the other Transaction Agreements to which WFS is a party during such
period, or, if there has been a default of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(d) Access to Records; Discussions With Officers and Accountants.
WFS shall, upon the reasonable request of Financial Security, permit Financial
Security's Authorized Agent at reasonable times (i) to inspect such books and
records of WFS as may relate to the Notes, the Certificates and the obligations
of WFS under this Agreement and the other Transaction Agreements to which WFS is
a party; and (ii) to discuss the affairs, finances and accounts of WFS with any
of its respective officers, directors and representatives, including its
Independent Accountants.
(e) Maintain Licenses. WFS shall maintain all licenses, permits,
charters and registrations that are material to the performance by WFS of its
obligations under the Transaction Agreements to which it is a party or by which
WFS is bound.
(f) Maintain Existence; Merger. WFS shall keep in full effect its
existence, rights and franchises under the laws of the State of California, and
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Contract Documents
and the Transaction Agreements to which WFS is a party. WFS shall not
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the Person
formed by such consolidation or into which WFS has merged or the Person which
acquires by conveyance, transfer or lease substantially all the assets of WFS as
an entirety, can lawfully perform the obligations of WFS hereunder and executes
and delivers to the Owner Trustee an agreement, in form and substance reasonably
satisfactory to the Owner Trustee and Financial Security, which contains an
assumption by such Person of the due and punctual performance and satisfaction
of each covenant and condition to be performed or satisfied by WFS under this
Agreement.
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(g) Subservicing. WFS, as Master Servicer, shall not appoint,
pursuant to Section 4.01 of the Sale and Servicing Agreement, any Subservicer
that has not been approved in advance by Financial Security. WFS as Master
Servicer shall not cause or permit to become effective any Subservicing
Agreement that is in a form that varies substantially from the form thereof set
forth as Exhibit E to the Sale and Servicing Agreement unless the form of such
varying agreement shall have been approved in writing by Financial Security.
(h) No Petition Agreement. WFS covenants and agrees that, for a
period of one year plus one day after payment in full of all amounts payable in
respect of the Notes and the Certificates, it will not institute against, or
join any other Person in instituting against WFAL or WFSRC any bankruptcy,
reorganization, arrangement, conservatorship, receivership, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy, receivership or similar law, in connection with any amounts due WFS
(or any Affiliate or parent thereof) under any Transaction Agreement or
otherwise without the prior written consent of Financial Security. The
provisions of this paragraph shall survive termination of this Agreement.
ARTICLE III
THE POLICIES; INDEMNIFICATION
Section 3.01. Agreement to Issue Policy. Financial Security
agrees to issue the Policy subject to the satisfaction of the conditions
hereinafter set forth.
Section 3.02. Conditions Precedent to Issuance of Policy.
(a) The obligation of Financial Security to issue the Policy is
subject to the following having occurred or being true (as the case may be): (i)
WFS shall have assigned, conveyed and transferred, or caused to be assigned,
conveyed and transferred, the Collateral to WFAL, (ii) WFAL shall have assigned,
conveyed and transferred a portion of the Collateral to WFSRC, (iii) each of
WFAL and WFSRC shall have created a valid security interest in the Collateral in
favor of the Collateral Agent, (iv) WFAL and WFSRC, as applicable, shall have
assigned, conveyed, pledged and transferred the Collateral to the Trust, (v) no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been instituted or, to
the best knowledge of WFAL and WFSRC, threatened by the Commission and any
request for additional information on the part of the Commission (to be included
in the Registration Statement, the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Commission, (vi) the Premium
shall have been paid in accordance with Section 3.03 hereof, (vii) the
representations and warranties of the Trust and each Western Entity set forth or
incorporated by reference in this Agreement shall be true and correct on and as
of the Closing Date, and (viii) each Transaction Agreement shall be in full
force and effect as of the Closing Date and no default (or event which, with the
giving of notice or passage of time, or both, would become a default) thereunder
shall have occurred and be continuing.
(b) The obligation of Financial Security to issue the Policy is
further subject to the condition precedent that Financial Security shall have
received on the Closing Date, or, in its sole and absolute discretion, received
the opportunity to review prior to and on the Closing Date, the following, each
dated the Closing Date and in full force and effect on such date, except as
otherwise provided herein, in form and substance satisfactory to Financial
Security and its counsel:
(i) a certificate of an Authorized Officer of each Western
Entity stating that nothing has come to the attention of such Western
Entity to indicate that the Registration Statement, the Prospectus or
the Prospectus Supplement, on the date the Registration Statement became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or
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that the Prospectus on any date on which it was furnished to the
Underwriters for use in connection with the offering of the Notes
contained, or on the Closing Date contains, any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements made therein not
misleading;
(ii) copies, certified to be true copies by the Secretary or
an Assistant Secretary of each Western Entity, of (i) the resolutions of
the Board of Directors of such Western Entity authorizing the execution,
delivery and performance of this Agreement and each other Transaction
Agreement to which such Western Entity is a party and all other
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of such Western
Entity (which certification shall state that such resolutions have not
been modified, are in full force and effect and constitute the only
resolutions adopted by such Western Entity's Board of Directors or any
committee thereof with respect thereto), (ii) the articles of
association, as amended, of such Western Entity and (iii) the by-laws,
as amended, of such Western Entity;
(iii) copies, certified to be true copies by an Authorized
Officer of the Owner Trustee, of (i) the resolutions of the board of
directors of the Owner Trustee authorizing the execution, delivery and
performance by the Owner Trustee of this Agreement and each other
Transaction Agreement to which the Owner Trustee is a party and all
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of the Owner
Trustee (which certification shall state that such resolutions have not
been modified, are in full force and effect and constitute the only
resolutions adopted by the Owner Trustee's board of directors or any
committee thereof with respect thereto and (ii) the Certificate of
Trust, certified by the Secretary of State or other appropriate official
of the State of Delaware;
(iv) a certificate of an Authorized Officer of each Western
Entity stating that (i) attached thereto are true and complete copies,
if any, of all consents, licenses and approvals necessary for each
Western Entity to execute, deliver and perform this Agreement, the other
Transaction Agreements to which such Western Entity is a party and all
other documents and instruments on the part of such Western Entity to be
delivered pursuant hereto or thereto, and (ii) all such consents,
licenses and approvals are in full force and effect, such Western Entity
has not received any notice of any proceeding for the revocation of any
such license, charter, permit or approval, and, to such Western Entity's
knowledge, there is no threatened action or proceeding or any basis
therefor;
(v) a certificate of an Authorized Officer of the Owner
Trustee stating that (i) attached thereto are true and complete copies,
if any, of all consents, licenses and approvals necessary for the Owner
Trustee to execute, deliver and perform this Agreement, the other
Transaction Agreements to which the Owner Trustee is a party and all
other documents and instruments on the part of the Owner Trustee to be
delivered pursuant hereto or thereto have been obtained, and (ii) all
such consents, licenses and approvals are in full force and effect, the
Owner Trustee has not received any notice of any proceeding for the
revocation of any such license, charter, permit or approval, and, to the
Owner Trustee's knowledge, there is no threatened action or proceeding
or any basis therefor;
(vi) a certificate of the Secretary or an Assistant Secretary
of such Western Entity certifying (i) the names and true signatures of
the officers of such Western Entity executing and delivering this
Agreement, the other Transaction Agreements to which such Western Entity
is a party and the other documents to be executed and delivered by such
Western Entity hereunder and thereunder, (ii) that approval by such
Western Entity's stockholders of the execution and delivery of this
Agreement, the other Transaction Agreements and all other such documents
to be executed and delivered, by such Western Entity hereunder, has been
obtained or
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is not required, and (iii) that no resolution for the dissolution of
such Western Entity has been adopted or contemplated and that no such
proceedings have been commenced or are contemplated;
(vii) a certificate of an Authorized Officer of the Owner
Trustee certifying (i) the names and the true signatures of the officers
of the Owner Trustee executing and delivering this Agreement, the other
Transaction Agreements to which the Owner Trustee is a party and the
other documents to be executed and delivered by the Owner Trustee
hereunder and thereunder, (ii) that approval by the Owner Trustee's
equity holders of the execution and delivery of this Agreement, the
other Transaction Agreements and all other such documents to be executed
and delivered, by the Owner Trustee hereunder, has been obtained or its
not required, and (iii) that no action for the dissolution of the Owner
Trustee has been adopted or contemplated and that no such proceedings
have commenced or contemplated;
(viii) a certificate of an Authorized Officer of each Western
Entity to the effect that (x) the representations and warranties of such
Western Entity set forth or incorporated by reference in this Agreement
are true and correct on and as of the Closing Date and (y) confirming
that the conditions precedent set forth herein with respect to such
Western Entity are satisfied;
(ix) a certificate of an Authorized Officer of the Trust to
the effect that (x) the representations and warranties of the Trust set
forth or incorporated by reference in this Agreement are true and
correct on and as of the Closing Date and (y) confirming that the
conditions precedent set forth herein with respect to the Trust are
satisfied;
(x) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, counsel to the Sellers, WFS and the Bank, as to certain
corporate, securities law and other matters, and such counsel shall have
been instructed by its client to deliver such opinion to the addressees
thereof, in form and substance satisfactory to counsel to Financial
Security;
(xi) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, counsel to the Sellers, WFS and the Bank, as to certain
bankruptcy and insolvency matters, and such counsel shall have been
instructed by its client to deliver such opinion to the addressees
thereof, in form and substance satisfactory to Financial Security;
(xii) a favorable opinion of Messrs. Mitchell, Silberberg &
Knupp, LLP, special tax counsel to the Sellers, WFS and the Bank, as to
certain tax matters (which may be included in the opinion referred to in
clause (x) above), and such counsel shall have been instructed by its
client to deliver such opinion to the addressees thereof, in form and
substance satisfactory to counsel to Financial Security;
(xiii) a favorable opinion of Richards, Layton & Finger,
counsel to the Trust and the Owner Trustee, and such counsel shall have
been instructed by its client to deliver such opinion to the addressees
thereof, substantially in the form of Exhibit G hereto;
(xiv) a certificate from the Collateral Agent and the
Indenture Trustee, substantially in the form of Exhibit E hereto;
(xv) a favorable opinion of White & Case, counsel to the
Collateral Agent, the Proceeds Agent and the Indenture Trustee, and such
counsel shall have been instructed by its client to deliver such opinion
to the addressees thereof, substantially in the form of Exhibit F
hereto;
(xvi) evidence that amounts due and payable to Financial
Security under Section 3.03 of this Agreement have been paid or that
acceptable provisions therefor have been made;
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<PAGE> 28
(xvii) a fully executed copy of each of the Transaction
Agreements;
(xviii) evidence that all actions necessary or, in the opinion
of Financial Security, desirable to perfect and protect the interests
transferred by the Sale and Servicing Agreement and the liens and
security interests created by this Agreement, including, without
limitation, the filing of any financing statements required by Financial
Security or its counsel, have been taken or promptly shall be taken;
(xix) a certificate or opinion of Independent Accountants
addressed to Financial Security to the effect set forth in Exhibit H
hereto;
(xx) a certificate of the Master Servicer, signed by an
Authorized Officer, identifying those Contracts as to which the Title
Documents are not in the possession of WFAL and WFSRC and certifying
that such Title Documents showing WFS or the Bank as first lienholder
have been applied for and as to which Section 3.09 of the Sale and
Servicing Agreement applies;
(xxi) evidence that the Sellers shall have deposited, or
caused to have been deposited, in the Collection Account, the deposits
required under the eighth paragraph of Section 4.01 of the Sale and
Servicing Agreement, the deposits required in the Spread Account and any
other deposits required to be made on the Closing Date under the
Transaction Agreements to which each Seller is a party; and
(xxii) such other documents, instruments, approvals (and, if
requested by Financial Security, certified duplicates of executed copies
thereof) or opinions as Financial Security may reasonably request.
Section 3.03. Premium. In consideration of the issuance by
Financial Security of the Policy, the Sellers shall pay to Financial Security
the initial installment of the Premium at the time of delivery of the Policy and
further installments of the Premium, all in accordance with the terms of the
letter agreement between the Sellers and Financial Security referred to in the
definition of "Premium" set forth herein. Failure by the Sellers to pay any such
further installments of the Premium shall not cause the Policy to be cancelled
and shall not in any way relieve Financial Security of its obligations to make
any payments under the Policy. Anything herein to the contrary notwithstanding,
it is hereby agreed between the parties hereto that the full amount of the
Premium shall have been earned by Financial Security upon its issuance of the
Policy on the Closing Date and upon the occurrence of a Servicer Default under
Section 8.01 of the Sale and Servicing Agreement (including without limitation,
the failure of the Sellers to pay any installment of the Premium as and when
due), the entire outstanding balance of further installments of the Premium
shall be immediately due and payable. The Premium shall be nonrefundable without
regard to whether Financial Security makes any payment under the Policy, any
prepayment or early retirement of the Notes or the Certificates occur or any
other circumstances occur relating to the Notes or the Certificates.
Section 3.04. Reimbursement Obligation.
(a) Each of the Trust, WFAL and WFSRC agrees absolutely and
unconditionally to pay to Financial Security, in the manner provided in Section
3.04(b), as follows:
(i) a sum equal to the total of all amounts which may be paid
by Financial Security under the Policy;
(ii) any accrued but unpaid installments of the Premium and
any and all reasonable charges and expenses which Financial Security may
pay or incur relating to any payment under the Policy, including, but
not limited to, any fees and charges in connection with any accounts
established to facilitate payments under the Policy, to the extent
Financial Security
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<PAGE> 29
has not been immediately reimbursed on the date that any amount is paid
by Financial Security under the Policy;
(iii) the amount of any reasonable costs or expenses
(including attorneys' and accountants' fees and expenses) incurred by
Financial Security (A) in connection with the enforcement of this
Agreement or any of the other Transaction Agreements or (B) in
connection with the foreclosure upon, sale or other disposition of the
Collateral, to the extent that such costs and expenses are not recovered
from such foreclosure, sale or other disposition;
(iv) the amount of any payments made by Financial Security on
behalf of the Sellers other than amounts specified under Section
3.04(a)(i) above, including, without limitation, the fees and expenses
of the Collateral Agent, the Indenture Trustee, the Owner Trustee, the
Trust and any Independent Accountants, and the amount of any payments
made by Financial Security to (i) the Owner Trustee in respect of
amounts (if any) owing by the Trust to the Owner Trustee pursuant to,
Section 8.02 of the Trust Agreement and (ii) the Indenture Trustee
pursuant to Section 6.07 of the Indenture to the extent that such
amounts shall not have been paid by the Trust and are paid by Financial
Security;
(v) any federal, state or local tax (other than taxes payable
in respect of the gross income of Financial Security) or other
governmental charge imposed in connection with the issuance of the
Policy or the business or operations of the Sellers including, without
limitation, by reason of such Seller being deemed to do business in the
State of California;
(vi) Financial Security's cost of providing to the Sellers (or
to any Person at the request of either Seller) any audited or unaudited
financial statements, including, without limitation, the fees and
expenses of Financial Security's Independent Accountants in reviewing
such financial statements in connection with such provision and mailing
and incremental printing costs;
(vii) any amount otherwise required to be paid to or on behalf
of Financial Security under this Agreement;
(viii) any payments made by Financial Security as, or in lieu
of, servicing, management, trustee, custodial or administrative fees
payable, in the sole discretion of Financial Security, to third parties
in connection with the transaction, to the extent (in each case) that
such payment occurs following (i) the occurrence of an Event of Default
(or event or circumstance that, with the giving of notice or the passage
of time or both, would become an Event of Default) or (ii) the failure
of any Person to perform its obligation to pay any such amount at the
time and in the manner specified in this Agreement or any other
Transaction Agreement; and
(ix) interest on any and all such amounts from the date of
payment by Financial Security of such amounts until payment thereof in
full and interest on any and all amounts described in Sections 3.03 and
3.09 hereof, from the date due until payment thereof in full, in each
case, payable at the Late Payment Rate.
(b) All amounts to be paid by the Trust, WFAL or WFSRC pursuant
to subsection (a) above shall be due and payable without demand, in full without
any requirement on the part of Financial Security to seek reimbursement from any
other sources of indemnity therefor or to allocate expenses to other
transactions benefiting therefrom, and all such amounts shall be payable in the
priority and in the manner provided in the Sale and Servicing Agreement;
provided, however, that upon the occurrence of any Servicer Default under the
Sale and Servicing Agreement, Financial Security shall have the rights provided
for herein and therein.
Section 3.05. Non-Recourse Obligation.
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(a) Notwithstanding any provision to the contrary contained in
Section 3.04(a), the payment obligations provided in Sections 3.04(a)(i) (to the
extent that such payment obligations do not arise from any failure or default in
the performance by the Bank or WFAL2 of any of its payment obligations under the
RIC), 3.04(a)(ii) and (to the extent that such payment obligations do not arise
from any failure or default in the performance by WFAL or WFSRC of any of its
obligations under the Transaction Agreements) 3.04(a)(iii)(A) and (B), and any
interest on the foregoing in accordance with Section 3.04(a)(ix), shall not be
recourse to WFAL and WFSRC, WFS, the Owner Trustee, the Indenture Trustee, the
Collateral Agent or the Proceeds Agent, but shall be payable solely by
application of moneys (excluding the Retained Yield) received from time to time
in accordance with the Sale and Servicing Agreement (including but not limited
to all amounts paid into the Collection Account, the Note Distribution Account,
the Certificate Distribution Account or the Holding Account pursuant to the Sale
and Servicing Agreement by any Western Entity, but not including the Retained
Yield to the extent that any amount thereof is deposited into any such Account)
and by realization on the Collateral pursuant to Section 6.03 hereof. Such
payment obligations shall be limited, except as set forth in the preceding
sentence, solely to application of monies, if any, in the Spread Account from
time to time in accordance with Transaction Agreements.
(b) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of WFAL and WFSRC under Section
3.04 are solely the corporate obligations of each entity, and shall be payable
by WFAL and WFSRC, solely as provided in Section 3.04. WFAL and WFSRC shall only
be required to pay (i) any fees, expenses, indemnities or other liabilities that
it may incur under Section 3.04 (y) from funds available pursuant to, and in
accordance with, the payment priorities set forth in Section 5.06 of the Sale
and Servicing Agreement and (z) to the extent either WFAL or WFSRC has
additional funds available (other than funds described in the preceding clause
(y)) that would be in excess of amounts that would be necessary to pay the debt
and other obligations of such entity incurred in accordance with its certificate
of incorporation and all financing documents to which it is a party and (ii) any
expenses, indemnities or other liabilities that it may incur under Section 3.04
(y) from funds available pursuant to, and in accordance with, the payment
priorities set forth in Section 5.06 of the Sale and Servicing Agreement and (z)
only to the extent it receives additional funds designated for such purposes or
to the extent it has additional funds available (other than funds described in
the preceding clause (y)) that would be in excess of amounts that would be
necessary to pay its debt and other obligations incurred in accordance with its
certificate of incorporation and all financing documents to which it is a party.
In addition, no amount owing by either WFAL or WFSRC hereunder in excess of the
liabilities that it is required to pay in accordance with the preceding sentence
shall constitute a "claim" (as defined in Section 101(5) of the Bankruptcy Code)
against it. No recourse shall be had for the payment of any amount owing
hereunder or for the payment of any fee hereunder or any other obligation of, or
claim against, WFAL or WFSRC arising out of or based upon Section 3.04, against
any stockholder, employee, officer, agent, director or authorized person of the
WFAL or WFSRC or Affiliate thereof; provided, however, that the foregoing shall
not relieve any such person or entity of any liability they might otherwise have
as a result of fraudulent actions or omissions taken by them.
Section 3.06. Indemnification.
(a) In addition to any and all rights of indemnification or any
other rights of Financial Security pursuant hereto or under law or equity, WFAL
and WFSRC agree to pay, and to protect, indemnify and save harmless, Financial
Security and its officers, directors, shareholders, employees, agents and each
person, if any, who controls Financial Security within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including, without
limitation, fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) or obligations whatsoever (herein
collectively referred to as "Liabilities") of any
30
<PAGE> 31
nature arising out of or relating to the transactions contemplated by this
Agreement and the other Transaction Agreements by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon (A)
information set forth in the Prospectus under the caption "Financial
Security" or in the financial statements of Financial Security,
including any information in any amendment or supplement to the
Prospectus furnished by Financial Security in writing expressly for use
therein that amends or supplements such information (all such
information being referred to herein as "Financial Security
Information"), or (B) information set forth under the caption
"Underwriting" in the Prospectus, including any information in any
amendment or supplement to the Prospectus furnished by the Underwriters
through the Representative in writing expressly for use therein that
amends or supplements such information (all such information being
referred to herein as "Underwriter Information");
(ii) to the extent not covered by clause (i) above, any act or
omission of WFAL, WFSRC or the Trust in connection with the offering,
issuance, sale or delivery of the Notes or the Certificates other than
by reason of false or misleading Financial Security Information;
(iii) the misfeasance or malfeasance of, or theft committed
by, any director, officer, employee or agent of WFAL, WFSRC or the
Trust;
(iv) the violation by WFAL, WFSRC or the Trust of any federal
or state securities, banking or antitrust laws, rules or regulations in
connection with the issuance, offer and sale of the Notes or the
transactions contemplated by this Agreement and the other Transaction
Agreements;
(v) the violation by WFAL, WFSRC or the Trust of any federal
or state laws, rules or regulations relating to the maximum amount of
interest permitted to be received on account of the loan of money or
with respect to the Contracts;
(vi) the negligence or willful misconduct of WFAL, WFSRC or
the Trust or any of its directors, officers, employees or agents;
(vii) the breach by WFAL, WFSRC or the Trust of its
obligations under this Agreement or any of the other Transaction
Agreements;
(viii) the breach by WFAL, WFSRC or the Trust of any
representation or warranty on the part of WFAL, WFSRC or the Trust,
respectively, contained in or incorporated by reference in this
Agreement or any other Transaction Agreement or in any certificate
furnished or delivered to Financial Security hereunder and thereunder,
or the occurrence, in respect of WFAL, WFSRC or the Trust, under any of
the Transaction Agreements of any event of default or any event which,
with the giving of notice or lapse of time or both, would constitute any
event of default; and
(ix) the use, ownership or operation by WFAL, WFSRC or the
Trust, or any affiliate of the WFAL or WFSRC, of a Financed Vehicle.
(b) In addition to any and all rights of indemnification or any
other rights of Financial Security pursuant hereto or under law or equity, WFS
agrees to pay, and to protect, indemnify and save harmless, Financial Security
and its officers, directors, shareholders, employees, agents and each person, if
any, who controls Financial Security within the meaning of either Section 15 of
the Securities Act or
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<PAGE> 32
Section 20 of the Exchange Act, from and against any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) or
obligations whatsoever (herein collectively referred to as "Liabilities") of any
nature arising out of or relating to the transactions contemplated by this
Agreement and the other Transaction Agreements by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon (A)
information set forth in the Prospectus under the caption "Financial
Security" or in the financial statements of Financial Security,
including any information in any amendment or supplement to the
Prospectus furnished by Financial Security in writing expressly for use
therein that amends or supplements such information (all such
information being referred to herein as "Financial Security
Information"), or (B) information set forth under the caption
"Underwriting" in the Prospectus, including any information in any
amendment or supplement to the Prospectus furnished by the Underwriters
through the Representative in writing expressly for use therein that
amends or supplements such information (all such information being
referred to herein as "Underwriter Information");
(ii) to the extent not covered by clause (i) above, any act or
omission of WFS in connection with the offering, issuance, sale or
delivery of the Notes or the Certificates other than by reason of false
or misleading Financial Security Information;
(iii) the misfeasance or malfeasance of, or theft committed
by, any director, officer, employee or agent of WFS;
(iv) the violation by WFS or any Affiliate (other than
Westcorp) thereof of any federal or state securities, banking or
antitrust laws, rules or regulations in connection with the issuance,
offer and sale of the Notes or the Certificates or the transactions
contemplated by this Agreement and the other Transaction Agreements;
(v) the violation by WFS or any Affiliate (other than
Westcorp) thereof of any federal or state laws, rules or regulations
relating to the maximum amount of interest permitted to be received on
account of the loan of money or with respect to the Contracts;
(vi) the negligence or willful misconduct of WFS or any of
their respective directors, officers, employees or agents;
(vii) the breach by WFS of its obligations under this
Agreement or any of the other Transaction Agreements;
(viii) the breach by WFS of any representation or warranty on
the part of WFS contained in or incorporated by reference in this
Agreement or any other Transaction Agreement or in any certificate
furnished or delivered to Financial Security hereunder and thereunder;
(ix) the use, ownership or operation by WFS, or any Affiliate
thereof (other than Westcorp), of a Financed Vehicle; and
(x) the violation by WFAL, WFSRC or the Trust of any of the
provisions of (a) above caused by or at the direction of WFS.
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(c) If any action or proceeding (including any governmental
investigation) shall be brought or asserted against Financial Security or any
person controlling Financial Security (hereinafter collectively referred to as a
Financial Security Indemnified Party) in respect of which indemnity may be
sought from WFAL or WFSRC pursuant to Section 3.06(a)(i) or (ii) or WFS pursuant
to Section 3.06(b)(i), (ii) or (x) (such Western Entity or Western Entities, as
the case may be, herein referred to as the Indemnifying Western Entity), then
Financial Security or such controlling person shall give the Indemnifying
Western Entity written or telegraphic notice of such action or claim reasonably
promptly after receipt of written notice thereof. The Indemnifying Western
Entity shall be entitled to participate in the defense of any such action or
claim in reasonable cooperation with, and with the reasonable cooperation of,
the Financial Security Indemnified Party. The Financial Security Indemnified
Party shall have the right to employ its own counsel in any such action in
addition to the counsel of the Indemnifying Western Entity, but fees and
expenses of such counsel will be at the expense of the Financial Security
Indemnified Party unless (1) the employment of counsel by the Financial Security
Indemnified Party has been authorized in writing by the Indemnifying Western
Entity or (2) the Indemnifying Western Entity has not in fact employed counsel
to assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action or (3) the named parties to any such
action or proceeding (including any impleaded parties) include both the
Indemnifying Western Entity on the one hand and the Financial Security
Indemnified Party on the other hand, and the Financial Security Indemnified
Party shall have been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Indemnifying Western Entity (it being understood, however, that
the Indemnifying Western Entity shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the Financial Security
Indemnified Party, which firm shall be designated in writing by the Financial
Security Indemnified Party), in each of which cases the fees and expenses of
counsel will be at the expense of the Indemnifying Western Entity and all such
fees and expenses will be reimbursed promptly as they are incurred. No
settlement of any such claim or action shall be entered into without the consent
of Financial Security on the one hand and the Indemnifying Western Entity who is
subject to such claim or action on the other hand. Any failure by Financial
Security to comply with the provisions of this Section shall relieve the
Indemnifying Western Entity of liability only if substantially prejudicial to
the position of the Indemnifying Western Entity and then only to the extent of
such prejudice.
(d) The rights to indemnification provided for in this Section
3.06 shall survive the termination of this Agreement and shall survive until the
statute of limitations has run on any causes of action that arise from these
provisions and until all suits filed as a result thereof have been finally
concluded.
(e) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of WFAL and WFSRC under this
Section 3.06 are solely the corporate obligations of each entity, and shall be
payable by WFAL and WFSRC, solely as provided in Section 3.06. WFAL and WFSRC
shall only be required to pay (i) any fees, expenses, indemnities or other
liabilities that it may incur under this Section 3.06 (y) from funds available
pursuant to, and in accordance with, the payment priorities set forth in Section
5.06 of the Sale and Servicing Agreement and (z) to the extent either WFAL or
WFSRC has additional funds available (other than funds described in the
preceding clause (y)) that would be in excess of amounts that would be necessary
to pay the debt and other obligations of such entity incurred in accordance with
its certificate of incorporation and all financing documents to which it is a
party and (ii) any expenses, indemnities or other liabilities that it may incur
under this Section 3.06 (y) from funds available pursuant to, and in accordance
with, the payment priorities set forth in Section 5.06 of the Sale and Servicing
Agreement and (z) only to the extent it receives additional funds designated for
such purposes or to the extent it has additional funds available (other than
funds described in the preceding clause (y)) that would be in excess of amounts
that
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<PAGE> 34
would be necessary to pay its debt and other obligations incurred in accordance
with its certificate of incorporation and all financing documents to which it is
a party. In addition, no amount owing by either WFAL or WFSRC hereunder in
excess of the liabilities that it is required to pay in accordance with the
preceding sentence shall constitute a "claim" (as defined in Section 101(5) of
the Bankruptcy Code) against it. No recourse shall be had for the payment of any
amount owing hereunder or for the payment of any fee hereunder or any other
obligation of, or claim against, WFAL or WFSRC arising out of or based upon this
Section 3.06, against any stockholder, employee, officer, agent, director or
authorized person of the WFAL or WFSRC or Affiliate thereof; provided, however,
that the foregoing shall not relieve any such person or entity of any liability
they might otherwise have as a result of fraudulent actions or omissions taken
by them.
Section 3.07. Liability Absolute. The obligations of WFAL, WFSRC,
WFS and the Trust hereunder shall be absolute, unconditional and irrevocable and
shall be paid and performed strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including, without limitation, the
following circumstances:
(a) any lack of validity or enforceability of the Policy or all
or any provision of this Agreement or of any of the other Transaction
Agreements;
(b) any amendment or waiver of or any consent to departure from
all or any provision of this Agreement or of any other Transaction Agreement;
(c) the existence of any claim, setoff, defense, reduction,
abatement or other right which either Western Entity may have at any time
against Financial Security or any other Person;
(d) any statement, instrument of assignment or any other document
presented to Financial Security in connection with the Policy proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever;
(e) payment by Financial Security under the Policy against
presentation of a certificate or other document which does not comply with the
terms of the Policy, provided that such payment shall not have been the result
of the gross negligence or willful misconduct of Financial Security;
(f) any nonapplication or misapplication by the Indenture
Trustee, the Owner Trustee, or any paying agent of the proceeds of the demand
for payment under the Policy;
(g) the failure of WFAL, WFSRC, or, indirectly, WFS, to receive
the proceeds of the sale of the Notes or the Certificates; or
(h) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, provided that such circumstance or
happening shall not have been the result of the gross negligence or willful
misconduct of Financial Security.
Section 3.08. Liability of Financial Security. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for (a) the unauthorized use which may be made of the Policy by the
Indenture Trustee or the Owner Trustee or any unauthorized acts or omissions of
the Indenture Trustee or the Owner Trustee in connection with the Policy; or (b)
the validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereto, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; or (c) any acts or
omissions to act of the Indenture Trustee in connection with the Collateral
other than such acts or omissions that are at the direction of Financial
Security. In furtherance and not in limitation of the foregoing, Financial
Security (or its Fiscal Agent) may accept documents that appear on their face to
be in order, without responsibility for further investigation. Each of the Owner
Trustee, the Indenture Trustee and each Western Entity acknowledges that it has
not relied on any information or materials provided by Financial Security in
connection with the issuance of the Notes and the Certificates except
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for the information furnished in writing by Financial Security for inclusion in
the Registration Statement. Each of them also acknowledges that it has not
relied on any investigation by Financial Security of the Collateral or of the
financial statements or other financial statistical data used in connection with
the issuance of the Notes and Certificates.
Section 3.09. Payment of Costs, Fees and Expenses.
(a) WFAL and WFSRC shall pay on demand any and all charges, fees,
costs and expenses which Financial Security may reasonably pay or incur,
including, but not limited to, attorneys' and accountants' fees and expenses, in
connection with (A) the enforcement, defense or preservation of any rights in
respect of any of this Agreement or any other Transaction Agreements, including
defending, monitoring or participating in any litigation or proceeding
(including any bankruptcy proceeding in respect of any transaction participant
or any Affiliate (other than Westcorp) thereof) relating to any of the
Transaction Agreements and this Agreement, any party to any of the Transaction
Agreements and this Agreement, or the transaction, (B) any amendment, waiver or
other action with respect to, or related to, any Transaction Agreements and this
Agreement whether or not executed or completed or (C) any review or approval by
Financial Security in connection with the delivery of any additional or
substitute collateral under any of the Transaction Agreements and this
Agreement. In addition, WFAL and WFSRC shall reimburse Financial Security for
its expenses, including, without limitation, legal fees and disbursements,
incurred in connection with the preparation of this Agreement and the
Transaction Agreements and the consummation of the initial transactions
contemplated hereby and thereby, it being understood that WFAL's and WFSRC's
obligations to reimburse Financial Security pursuant to this sentence shall be
limited in the aggregate to the dollar amount set forth in the letter agreement
between the Sellers and Financial Security referred to in the definition of
"Premium" set forth herein, plus rating agency fees, to the extent paid by
Financial Security.
(b) WFS shall pay on demand any and all charges, fees, costs and
expenses not paid by WFAL and WFSRC which Financial Security may reasonably pay
or incur, including, but not limited to, attorneys' and accountants' fees and
expenses, in connection with (A) the enforcement, defense or preservation of any
rights in respect of this Agreement or any other Transaction Agreements,
including defending, monitoring or participating in any litigation or proceeding
(including any bankruptcy proceeding in respect of any transaction participant
or any Affiliate (other than Westcorp) thereof) relating to this Agreement or
any other Transaction Agreements, any party to any of the Transaction Agreements
and this Agreement, or the transaction, (B) any amendment, waiver or other
action with respect to, or related to, this Agreement or any other Transaction
Agreements, whether or not executed or completed or (C) any review or approval
by Financial Security in connection with the delivery of any additional or
substitute collateral under any of the Transaction Agreements and this
Agreement.
(c) Limited Recourse. Notwithstanding anything to the contrary
contained in this Agreement, the obligations of WFAL and WFSRC under this
Section 3.09 are solely the corporate obligations of each entity, and shall be
payable by WFAL and WFSRC, solely as provided in Section 3.04. WFAL and WFSRC
shall only be required to pay (i) any fees, expenses or other liabilities that
it may incur under this Section 3.09 (y) from funds available pursuant to, and
in accordance with, the payment priorities set forth in Section 5.06 of the Sale
and Servicing Agreement and (z) to the extent either WFAL or WFSRC has
additional funds available (other than funds described in the preceding clause
(y)) that would be in excess of amounts that would be necessary to pay the debt
and other obligations of such entity incurred in accordance with its certificate
of incorporation and all financing documents to which it is a party and (ii) any
expenses, indemnities or other liabilities that it may incur under this Section
3.09 (y) from funds available pursuant to, and in accordance with, the payment
priorities set forth in Section 5.06 of the Sale and Servicing Agreement and (z)
only to the extent it receives additional funds designated for such purposes or
to the extent it has additional funds available (other than funds described in
the preceding clause (y)) that would be in excess of amounts that would be
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necessary to pay its debt and other obligations incurred in accordance with its
certificate of incorporation and all financing documents to which it is a party.
In addition, no amount owing by either WFAL or WFSRC hereunder in excess of the
liabilities that it is required to pay in accordance with the preceding sentence
shall constitute a "claim" (as defined in Section 101(5) of the Bankruptcy Code)
against it. No recourse shall be had for the payment of any amount owing
hereunder or for the payment of any fee hereunder or any other obligation of, or
claim against, WFAL or WFSRC arising out of or based upon this Section 3.09,
against any stockholder, employee, officer, agent, director or authorized person
of the WFAL or WFSRC or Affiliate thereof; provided, however, that the foregoing
shall not relieve any such person or entity of any liability they might
otherwise have as a result of fraudulent actions or omissions taken by them.
Section 3.10. Payment Procedure. All payments made pursuant to
this Agreement shall be made to Financial Security in lawful currency of the
United States of America and in one-day clearing-house funds at Financial
Security's Notice Address before 1:00 p.m. (New York City time) on the date when
due.
Section 3.11. Business Days. In any case where the date of any
payment to Financial Security or the expiration of any time period hereunder
occurs on a day which is not a Business Day, then such payment may be made, or
such expiration shall occur, on the next succeeding Business Day with the same
force and effect as if made on the day of maturity or expiration of such period,
except that interest shall continue to accrue for the period after such date to
the next Business Day.
Section 3.12. Waivers and Consents by Sellers and WFS. WFAL,
WFSRC, WFS and any and all others who are now or may become liable for all or
part of the obligations of WFAL, WFSRC and WFS under this Agreement (all of the
foregoing being referred to collectively in this Section as the "Obligors")
agree to be bound by this Agreement and (a) waive and renounce any and all
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against any amounts to be paid hereunder or any
extension or renewal hereof; (b) waive presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (c) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of the payment hereof except as required by this Agreement; (d)
waive any and all lack of diligence and delays in the enforcement of the payment
hereof; (e) agree that the liability of each of the Obligors shall be
unconditional and without regard to the liability of any other person or entity
for the payment hereof and shall not in any manner be affected by any indulgence
or forbearance granted or consented to by Financial Security with respect
hereto; (f) consent to any and all extensions of time, renewals, waivers or
modifications that may be granted by Financial Security with respect to the
payment or other provisions hereof, and to the release of any security at any
time given for the payment hereof, or any part thereof, with or without
substitution, and to the release of any person or entity liable for the payment
hereof; and (g) consent to the addition of any and all other makers, endorsers,
guarantors and other obligors for the payment hereof, and to the acceptance of
any and all other security for the payment hereof or thereof, and agree that the
addition of any such obligors or security shall not affect the liability of any
of the Obligors for the payment hereof.
ARTICLE IV
PLEDGE OF COLLATERAL
Section 4.01. Obligations Secured Hereby. The agreements
contained in this Article IV are made to provide for and secure repayment of the
following indebtedness and liabilities of WFAL and WFSRC (such indebtedness and
liabilities being herein called the "Obligations") in the order of priority
indicated:
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First, (i) the repayment of all amounts, if any, advanced
or expended by the Collateral Agent, in its capacity as Collateral
Agent, for the account of WFAL and WFSRC hereunder, (ii) the payment of
all reasonable costs and expenses at any time and from time to time
incurred by the Collateral Agent, in its capacity as Collateral Agent,
in connection with the administration or enforcement of this Agreement
or any related document (including, without limitation, the fees and
out-of-pocket expenses of counsel employed by the Collateral Agent in
connection therewith) and (iii) the payment of all indemnities at any
time and from time to time payable hereunder to the Collateral Agent, by
WFAL and WFSRC, and
Second, (i) the repayment of all amounts advanced or paid
by Financial Security under the Policy pursuant to this Agreement and
(ii) the payment of any accrued but unpaid installments of the Premium
and all costs and expenses at any time and from time to time incurred by
Financial Security in connection with the administration or enforcement
of this Agreement or any other Transaction Agreement or any related
document (including, without limitation, the fees and out-of-pocket
expenses of counsel employed by Financial Security in connection
therewith) and under or in connection with this Agreement and the
Policy.
Section 4.02. Granting Clause. i) Conveyance by WFAL. In order to
secure and to provide for the repayment of the Obligations, WFAL hereby sells,
assigns, conveys, transfers, delivers and sets over unto the Collateral Agent,
as collateral agent for Financial Security, and hereby grants the Collateral
Agent, as collateral agent for Financial Security, a security interest in all of
its right, title and interest in the Collateral owned by it, to have and to hold
said Collateral unto the Collateral Agent, its successors and assigns, forever
in pledge and trust for the benefit and security of Financial Security, subject
to the terms and provisions set forth in Article V of this Agreement. The
assignment and security interest so granted to the Collateral Agent shall not
relieve WFAL from the performance of any term, covenant, condition or agreement
on WFAL's part to be performed or observed under or in connection with this
Agreement or any other Transaction Agreement, or impose any obligation on the
Collateral Agent or Financial Security to perform or observe any such term,
covenant, condition or agreement on WFAL's part to be so performed or observed
or impose any liability on the Collateral Agent or Financial Security for any
act or omission on the part of WFAL relative thereto or for any breach of any
representation or warranty on the part of WFAL contained therein, or made in
connection therewith, and WFAL hereby agrees to indemnify and hold harmless the
Collateral Agent and Financial Security from and against any and all losses,
liabilities (including liabilities for penalties), claims, demands, actions,
suits, judgments, costs and expenses arising out of or resulting from the
assignment and security interest granted hereby by virtue of any act or omission
on the part of WFAL (other than an act or omission on the part of such party
pursuant to or in accordance with an express direction from the Collateral Agent
or Financial Security), including, without limitation, the reasonable costs,
expenses and disbursements (including attorneys' fees) incurred by the
Collateral Agent or Financial Security in enforcing this Agreement or any other
Transaction Agreement. The assignment and security interest granted to the
Collateral Agent pursuant to this Section shall become effective prior to the
effectiveness of the Seller Assignments, and the assignment by WFAL to the Trust
under Section 2.01 of the Sale and Servicing Agreement and the assignment by the
Trust to the Indenture Trustee under the Indenture and, upon the effectiveness
of such assignment and security interest, such assignment and security interest
shall be subject to the provisions of Section 5.01(d) hereof.
(a) Conveyance by WFSRC. In order to secure and to provide for
the repayment of the Obligations, WFSRC hereby assigns, conveys, transfers,
delivers and sets over unto the Collateral Agent, as collateral agent for
Financial Security, and hereby grants the Collateral Agent, as collateral agent
for Financial Security, a security interest in all of its right, title and
interest in the Collateral owned by it, to have and to hold said Collateral unto
the Collateral Agent, its successors and assigns, forever in pledge
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and trust for the benefit and security of Financial Security, subject to the
terms and provisions set forth in Article V of this Agreement. The assignment
and security interest so granted to the Collateral Agent shall not relieve WFSRC
from the performance of any term, covenant, condition or agreement on WFSRC's
part to be performed or observed under or in connection with this Agreement or
any other Transaction Agreement, or impose any obligation on the Collateral
Agent or Financial Security to perform or observe any such term, covenant,
condition or agreement on WFSRC 's part to be so performed or observed or impose
any liability on the Collateral Agent or Financial Security for any act or
omission on the part of WFSRC relative thereto or for any breach of any
representation or warranty on the part of WFSRC contained therein, or made in
connection therewith, and WFSRC hereby agrees to indemnify and hold harmless the
Collateral Agent and Financial Security from and against any and all losses,
liabilities (including liabilities for penalties), claims, demands, actions,
suits, judgments, costs and expenses arising out of or resulting from the
assignment and security interest granted hereby by virtue of any act or omission
on the part of WFSRC (other than an act or omission on the part of such party
pursuant to or in accordance with an express direction from the Collateral Agent
or Financial Security), including, without limitation, the reasonable costs,
expenses and disbursements (including attorneys' fees) incurred by the
Collateral Agent or Financial Security in enforcing this Agreement or any other
Transaction Agreement. The assignment and security interest granted to the
Collateral Agent pursuant to this Section shall become effective prior to the
effectiveness of the Seller Assignments, and the assignment by WFSRC to the
Trust under Section 2.01 of the Sale and Servicing Agreement and the assignment
by the Trust to the Indenture Trustee under the Indenture and, upon the
effectiveness of such assignment and security interest, such assignment and
security interest shall be subject to the provisions of Section 5.01(d) hereof.
Section 4.03. Release of Collateral. Financial Security hereby
instructs the Collateral Agent that, at such time as a Contract is reconveyed by
the Trust pursuant to Section 3.10 or Section 9.01 of the Sale and Servicing
Agreement, the Collateral Agent shall release such Contract from the lien of the
security interest created hereby upon receipt by Financial Security of a
Certificate of each Seller that the conditions set forth in Section 9.01 of the
Sale and Servicing Agreement have been satisfied.
ARTICLE V
INTERCREDITOR PROVISIONS
Section 5.01. Financial Security's Direction Upon Servicer
Default.
(a) So long as no Financial Security Insolvency has occurred and
no Financial Security Default has occurred and is continuing, if there exists
any Servicer Default pursuant to Section 8.01 of the Sale and Servicing
Agreement, Financial Security shall, notwithstanding the provisions of Article
VIII of the Sale and Servicing Agreement, have the sole right to direct the
Indenture Trustee as to any and all actions to be taken under the Indenture or
the Sale and Servicing Agreement, as applicable, including, without limitation,
all actions with respect to (i) the giving of directions to the Master Servicer
and any Subservicer with respect to the servicing of the Contracts and any of
the respective obligations of WFAL and WFSRC under the Sale and Servicing
Agreement, (ii) the exercise of all rights, remedies, powers, privileges and
claims against any obligor under the Sale and Servicing Agreement and (iii) the
giving or withholding of all consents, requests, notices, directions, approvals,
extensions or waivers under or with respect to the Indenture or the Sale and
Servicing Agreement, as applicable, in each case to the same extent as the
Noteholders or the Certificateholders might do but for the collateral assignment
and security interests granted to Financial Security hereunder, provided,
however, that the Indenture Trustee, without obtaining the consent or direction
of Financial Security, may at all times take any action permitted or required to
be taken by it under the terms of the Indenture or as a fiduciary in order to
protect the Indenture Trustee's, the Noteholders' and the Certificateholders'
interest in the Trust Estate or to preserve any available claims against WFAL
and WFSRC on behalf of the Noteholders and the
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Certificateholders. Financial Security shall indemnify the Indenture Trustee in
full for any costs and expenses incurred (including the reasonable fees and
expenses of the Indenture Trustee's counsel) in connection with the Indenture
Trustee's due performance of directions pursuant to this subsection (a) or in
connection with any inaction of the Indenture Trustee as a result of a direction
from Financial Security at any time when Financial Security holds the right to
direct the Indenture Trustee as provided for in this paragraph (a).
(b) Financial Security shall not unreasonably withhold any
consent required of it under the Sale and Servicing Agreement or the Indenture,
as applicable, and shall promptly respond when any approval or consent is
required of it under the Sale or Servicing Agreement and the Indenture, as
applicable.
(c) Notwithstanding any provision of the Sale and Servicing
Agreement or the Indenture, as applicable, to the contrary, so long as no
Financial Security Insolvency has occurred and no Financial Security Default has
occurred and is continuing,
(i) without the prior written consent of Financial Security,
the Owner Trustee shall not (A) terminate the rights and powers of the
Master Servicer pursuant to Section 8.01 of the Sale and Servicing
Agreement or (B) waive any Servicer Default thereunder;
(ii) without the prior written consent of Financial Security,
(A) neither WFAL and WFSRC nor the Trust shall cause to be appointed any
successor Indenture Trustee, and, (B) neither the Indenture Trustee nor
the Administrator shall cause to be appointed any Co-Trustee under the
Indenture;
(iii) without the prior written consent of Financial Security,
neither WFAL and WFSRC, or WFS nor the Owner Trustee or the Indenture
Trustee shall appoint new Independent Accountants;
(iv) without the prior written consent of Financial Security,
neither WFAL, WFSRC or WFS nor the Owner Trustee or the Indenture
Trustee shall consent to the amendment of or supplement to any of the
Transaction Agreements; and
(v) Financial Security shall have the power to direct the
actions to be taken by WFAL and WFSRC pursuant to Section 3.02 of the
Sale and Servicing Agreement.
(d) Financial Security agrees that, until such time that all
required payments shall have been made with respect to the Notes, the security
interest in the Collateral granted to Financial Security under this Agreement
shall be junior and subordinate to the interest of the Indenture Trustee and the
Securityholders. Financial Security further agrees that, until such time that
all required payments shall have been made with respect to the Notes, neither
Financial Security nor any Person acting on its behalf may take any action to
foreclose or otherwise pursue remedies with respect to the Collateral other than
in accordance with the Sale and Servicing Agreement and the Indenture.
Section 5.02. Financial Security's Direction of Insolvency
Proceedings. Financial Security shall have the rights provided for in Section
8.06 of the Sale and Servicing Agreement.
ARTICLE VI
THE COLLATERAL AGENT; REMEDIES
Section 6.01. Appointment and Powers of Collateral Agent.
Financial Security hereby appoints Bankers Trust Company as the Collateral
Agent, and Bankers Trust Company accepts such appointment hereunder, and
Financial Security hereby authorizes the Collateral Agent to take such action on
its behalf and to exercise such rights, remedies, powers and privileges
hereunder as Financial Security
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may direct and as are specifically authorized to be exercised by the Collateral
Agent by the terms hereof, together with such rights, remedies, powers and
privileges as are reasonably incidental thereto. The Collateral Agent may
execute any of its duties as agent hereunder by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of such counsel concerning all matters pertaining to the agencies hereby created
and its duties hereunder, and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of counsel
selected by it. The Collateral Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement. The duties of the Collateral
Agent shall be mechanical and administrative in nature. The Collateral Agent
shall not have by reason of this Agreement a fiduciary relationship. Nothing in
this Agreement, express or implied, is intended to or shall be so construed as
to impose upon the Collateral Agent any obligations in respect of this Agreement
except as expressly set forth herein. Neither the Collateral Agent nor Financial
Security, nor any of its or their respective directors, officers or employees,
shall be liable for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith, except for its or their own gross
negligence or willful misconduct; nor shall the Collateral Agent or Financial
Security be responsible for the validity, effectiveness, value, sufficiency or
enforceability against WFAL and WFSRC of this Agreement or any other document
furnished pursuant hereto or in connection herewith, or of the Collateral (or
any part thereof). The Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document believed by it to be genuine
and correct and to have been signed or sent by the proper Person or Persons.
Section 6.02. Successor Collateral Agent. The Collateral Agent
acting hereunder at any time may resign by an instrument in writing addressed
and delivered to WFAL, WFSRC and Financial Security. If the Collateral Agent is
also the Indenture Trustee and, as such, determines that it has a conflicting
interest on account of its acting as Collateral Agent, the Collateral Agent
shall eliminate such conflicting interest by resigning as Collateral Agent
hereunder rather than resigning as Indenture Trustee. Financial Security shall
appoint a successor to the Collateral Agent upon any such resignation by an
instrument of substitution complying with the requirements of applicable law,
or, in the absence of any such requirements, without formality other than
appointment and designation in writing, a copy of which instrument or writing
shall be sent to WFAL and WFSRC; provided, however, that the validity of any
such appointment shall not be impaired or affected by any failure to give any
such notice to WFAL and WFSRC or by any defect therein. Upon the making and
acceptance of such appointment, the execution and delivery by such successor
Collateral Agent of a ratifying instrument pursuant to which such successor
Collateral Agent agrees to assume the duties and obligations imposed on the
Collateral Agent by the terms of this Agreement, and the delivery to such
successor Collateral Agent of the Collateral and related documents then held by
the retiring Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the estate, rights, powers, remedies,
privileges, immunities, indemnities, duties and obligations hereby granted to or
conferred or imposed upon the Collateral Agent named herein, and one such
appointment and designation shall not exhaust the right to appoint and designate
further successor Collateral Agents hereunder. No Collateral Agent shall be
discharged from its duties or obligations hereunder until the Collateral and
related documents then held by such Collateral Agent shall have been transferred
and delivered to the successor Collateral Agent and such retiring Collateral
Agent shall have executed and delivered to the successor Collateral Agent
appropriate instruments establishing the successor Collateral Agent as the
record holder of all liens and security interests in favor of Financial Security
in the Collateral and transferring to such successor Collateral Agent all power
given to it by the Indenture Trustee to act as attorney-in-fact of the Indenture
Trustee for purposes of this Agreement. Each such successor Collateral Agent
shall provide WFAL and WFSRC and Financial Security with its address (which
shall thereupon become such successor Collateral Agent's Notice Address for
purposes of this Agreement), and its telephone, Telex, TWX and telecopier
numbers, to be used for purposes of Section 7.02 hereof, in a notice complying
with the terms of said Section.
Section 6.03. Remedies Available to Collateral Agent.
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(a) To the fullest extent permitted by applicable law and subject
to Article V hereof, if the Master Servicer shall have been terminated upon the
occurrence of any Servicer Default pursuant to Section 8.01 of the Sale and
Servicing Agreement, then in every such case, the Collateral Agent may, to the
extent permitted by applicable law and subject to Article V hereof, exercise the
following rights, privileges and remedies:
(i) Collection of the Collateral. The Collateral Agent shall
have the right to collect all proceeds of the Collateral, to pay all
expenses of such collection, including the reasonable expenses and
compensation of the Collateral Agent, its agents and attorneys, and to
apply the remainder of the moneys so received as provided herein.
(ii) Sale of Collateral. The Collateral Agent may sell, or
cause to be sold, the Collateral or any part thereof or interest
therein, at public auction to the highest bidder for cash or at private
sale or auction with or without demand, advertisement or notice of the
date, time or place of sale or any adjournment thereof, upon such terms
as Financial Security may approve, and upon such sale the Collateral
Agent shall make and deliver to the purchaser or purchasers an
appropriate instrument or instruments of transfer. The Collateral Agent
is hereby irrevocably appointed the true and lawful attorney of the
Indenture Trustee, in its name and stead, to make all necessary
transfers of property thus sold; and for that purpose it may execute all
necessary instruments of transfer, and may substitute one or more
Persons with like power, the Indenture Trustee hereby ratifying and
confirming all that its said attorney, or such substitute or
substitutes, shall lawfully do by virtue hereof. Nevertheless, if so
requested by the Collateral Agent or any purchaser of the Collateral or
any part thereof, the Indenture Trustee shall ratify and confirm any
such sale or transfer by executing and delivering to the Collateral
Agent or such purchaser all proper instruments of transfer and releases
as may be designated in any such request. The Collateral Agent may
proceed at law or in equity to foreclose the lien of this Agreement
against all or any part of the Collateral and to have the same sold
under the judgment or decree of a court having jurisdiction or as
otherwise may be required or permitted by law. Upon any such sale,
whether made under the power of sale hereby given or by virtue of
judicial proceedings, any Noteholder, Certificateholder or Financial
Security may bid for and purchase the Collateral or any part thereof
and, upon compliance with the terms of such sale, may hold, retain,
possess or dispose of such property in its or their own absolute right
without accountability; and any purchaser at any such sale may, in
paying the purchase money, turn in any of the Notes or Certificates, as
applicable, in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon. Said
Notes or Certificates, in case the amounts so payable thereon shall be
less than the amount due thereon, shall be returned to the Holders
thereof after being properly stamped to show partial payment. Upon any
sale, whether made under the power of sale hereby given or by virtue of
judicial proceedings, a receipt of the Collateral Agent, or of the
officer making such sale under judicial proceedings, shall be a
sufficient discharge to the purchaser or purchasers at such sale for its
or their purchase money, and such purchaser or purchasers shall not be
obliged to see to the application thereof. Any such sale, whether under
the power of sale hereby given or by virtue of judicial proceedings,
shall bind the Collateral Agent, WFAL, WFSRC, the Indenture Trustee, the
Noteholders and the Certificateholders, shall operate to divest all
right, title and interest whatsoever, either at law or in equity, of
each of them in and to the property sold, and shall be a perpetual bar,
both at law and in equity, against each of them and their successors and
assigns, and against any and all Persons claiming through or under them.
(iii) Other Actions. The Collateral Agent shall have the right
to cause any other action permitted at law or in equity to be initiated
and prosecuted to enforce this Agreement and any rights granted by
virtue of the pledge of the Collateral hereunder and to collect or
enforce the Notes and the Certificates.
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Section 6.04. Waiver of Stay or Extension Laws; Marshalling of
Assets. Each of WFAL, WFSRC, the Owner Trustee, and the Indenture Trustee (in
each case to the extent permitted by applicable law) covenants that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay, extension or
redemption law wherever enacted, now or at any time hereafter in force, in order
to prevent or hinder the enforcement of this Agreement or the absolute sale of
the Collateral or any part thereof, or the possession thereof by any purchaser
at any sale under this Article; and each of WFAL, WFSRC, and the Indenture
Trustee (in each case to the extent permitted by applicable law), for itself and
all who may claim under it, hereby waives the benefit of all such laws, and
covenants that none of them will hinder, delay or impede the execution of any
power herein granted to the Collateral Agent, but will suffer and permit the
execution of every such power as though no such law had been enacted. Each of
WFAL, WFSRC, the Owner Trustee and the Indenture Trustee, for itself and all who
may claim under it, waives (in each case to the extent permitted by applicable
law) all right to have the Collateral marshalled upon any foreclosure hereof,
and agrees that any court having jurisdiction to foreclose this Agreement may
order the sale of the Collateral as an entirety without the marshalling thereof.
Section 6.05. Restoration of Rights and Remedies. If the
Collateral Agent has instituted any proceeding to enforce any right or remedy
under this Agreement, and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Collateral Agent, then and
in every such case WFAL, WFSRC, the Collateral Agent and the Indenture Trustee
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Collateral Agent shall continue as though no such proceeding
had been instituted.
Section 6.06. Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Collateral Agent is intended to be exclusive
of any other right or remedy, and every right shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law, in equity or otherwise, and each
and every right, power and remedy, whether specifically herein given or
otherwise existing, may be exercised from time to time and as often and in such
order as may be deemed expedient by the Collateral Agent, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy.
Section 6.07. Control by Financial Security. So long as no
Financial Security Insolvency has occurred and no Financial Security Default has
occurred and is continuing, Financial Security shall, upon the occurrence and
during the continuation of any of the Servicer Default described in Section 8.01
of the Sale and Servicing Agreement, subject to Article V hereof, have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Collateral Agent hereunder or otherwise or exercising any trust
or power conferred upon the Collateral Agent hereunder provided that:
(1) such direction shall not be in conflict with any rule
of law or with this Agreement or the Sale and Servicing Agreement; and
(2) such Collateral Agent may take any other action deemed
proper by such Collateral Agent that is not inconsistent with such
direction.
Section 6.08. Proceeds Agent as Custodian and Bailee of
Collateral Agent. In order to facilitate the making of payments under the
Contracts, such payments shall be deposited by the Master Servicer in the
Collection Account or the Holding Account, and certain amounts in the Collection
Account shall be deposited in the Spread Account, in accordance with the Sale
and Servicing Agreement. The Proceeds Agent shall retain all proceeds deposited
in the Collection Account, the Spread Account and Holding Account as custodian
and bailee of the Collateral Agent for Financial Security. Financial
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Security hereby acknowledges that the Proceeds Agent will also hold all such
proceeds for the benefit of the Noteholders and the Certificateholders. Solely
for purposes of perfection under Section 9-305 of the UCC, Financial Security
and the Proceeds Agent hereby acknowledge that the Proceeds Agent is acting as
agent and bailee of the Collateral Agent for Financial Security in holding such
property in the Collection Account, the Spread Account and the Holding Account,
and any other items constituting a part of the Collateral which from time to
time come into the possession of the Proceeds Agent. It is intended that, by the
Proceeds Agent's acceptance of such custodianship and bailment pursuant to this
Agreement, the Collateral Agent for Financial Security, as secured party, will
be deemed to have possession of such Collateral, items, moneys and such other
items for purposes of Section 9-305 of the UCC.
Section 6.09. Indemnification of Collateral Agent. Financial
Security hereby indemnifies and holds the Collateral Agent harmless from and
against any and all judgments, claims, defenses, charges, losses, liabilities,
costs or expenses that the Collateral Agent may incur or that may be claimed
against the Collateral Agent by any Person by reason of any action taken, or any
failure to act, in connection with the duties and responsibilities of the
Collateral Agent under the terms of this Agreement; provided, however, that
Financial Security shall not be required to indemnify the Collateral Agent
pursuant to this Section for any judgments, claims, defenses, charges, losses,
liabilities, costs or expenses to the extent caused by such Collateral Agent's
willful misconduct or gross negligence in any action taken, or any failure to
act, in connection with the duties and responsibilities of the Collateral Agent
under the terms of this Agreement. The Collateral Agent shall have the right to
retain counsel in any action for which indemnification from Financial Security
is provided herein, and the reasonable fees and expenses of such counsel shall
constitute costs and expenses of such Collateral Agent for which indemnification
from Financial Security is provided herein. The Collateral Agent shall be
entitled to submit a written request, with supporting documentation, for any
amounts expended by it for which indemnification is provided herein, as such
amounts are expended or on a periodic basis, as the Collateral Agent shall
choose, and Financial Security shall reimburse to the Collateral Agent the
amount specified in each such written request promptly. The indemnity agreements
contained in this Section shall remain operative and in full force and effect
regardless of the termination of this Agreement.
Section 6.10. Compensation Payable to Collateral Agent. In
consideration of the Collateral Agent's services to be rendered hereunder, the
Master Servicer agrees to pay to the Collateral Agent, on behalf of Financial
Security, the compensation set forth in a separate letter agreement dated as of
the date hereof between the Master Servicer and the Collateral Agent
incorporated herein by this reference. The Collateral Agent acknowledges,
notwithstanding the fact that, in the event that payments from the Collection
Account are insufficient, it shall look solely to the Master Servicer for
payment of its compensation hereunder, that the Collateral Agent is acting
solely as the agent for Financial Security for purposes of this Agreement.
Failure by the Master Servicer to pay the Collateral Agent's compensation
hereunder shall not cause this Agreement to be cancelled, void or voidable or
otherwise terminated or otherwise affect the Collateral Agent's obligations
hereunder.
Section 6.11. Protection of Financial Security's Security
Interest.
(a) Each Seller shall execute and file (or cause to be executed
and filed) such financing statements and execute and file (or cause to be
executed and filed) such continuation statements, against such Seller, all in
such manner and in such places as may be required by law (whether in the event
of a change of such Seller's name, identity or corporate structure, or
otherwise) fully to preserve, maintain, and protect the interest of Financial
Security in the Collateral. Each Seller shall deliver (or cause to be delivered)
to Financial Security file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither Seller shall change its name, identity, or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement filed by such Seller,
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in accordance with paragraph (a) above, seriously misleading within the meaning
of Section 9-402(7) of the UCC, unless it shall have given the Collateral Agent
and Financial Security at least 60 days' prior written notice thereof.
(c) Each Seller shall give Financial Security at least 60 days'
prior written notice of any relocation of either such Seller's principal
executive offices, as applicable if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement. WFS shall at all times maintain each office from which it shall
service the Contracts, and its principal executive office, within the United
States of America.
(d) Each Seller agrees that, upon request by Financial Security,
such Seller shall furnish to Financial Security, within seven Business Days, a
list of the Contracts then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Master Servicer's certificates furnished pursuant to the Sale and Servicing
Agreement before such request; provided, however, that Financial Security shall
not make such request more than four times in any calendar year. None of WFAL,
WFSRC or the Master Servicer shall grant a security interest in, or lien upon,
or in any manner encumber the Collateral, or release or waive the security
interest granted hereunder, except as contemplated herein.
(e) In the event that either the Master Servicer, WFAL or WFSRC
relocates its principal executive office, such party shall provide an Opinion of
Counsel to Financial Security, in form and substance satisfactory to Financial
Security, to the effect that upon the filing of any necessary amendment to any
previously filed financing or continuation statement or a new financing
statement, the Collateral Agent's security interest in the Collateral granted
hereunder shall remain valid and effective.
(f) WFAL and WFSRC shall be obligated, jointly and severally, to
pay all reasonable costs and disbursements in connection with the perfection and
the maintenance of perfection, as against all third parties, of Financial
Security's right, and security interest in and to the Collateral.
Section 6.12. Representations and Warranties of Indenture
Trustee. The representations and warranties of the Indenture Trustee, made as
Indenture Trustee, in Section 6.13 of the Indenture are incorporated by
reference herein as if set forth in full herein and Financial Security may rely
upon such representations and warranties.
Section 6.13. Certain Guaranties. Each of the Indenture Trustee
and the Master Servicer agrees that it (i) shall not treat any ledger account or
deposit account as an "Eligible Account" by reason of a guaranty of the type
described in clause (ii)(a) of the definition of "Eligible Account" in the Sale
and Servicing Agreement unless Financial Security shall have previously approved
in writing the form of such guaranty and (ii) shall not treat any investment as
an "Eligible Investment" by reason of a guaranty of the type described in clause
(iii)(b) or clause (vii) of the definition of "Eligible Investments" in the Sale
and Servicing Agreement unless Financial Security shall have previously approved
in writing the form of such guaranty.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under the Policy;
(b) any representation or warranty made by the Trust, WFAL,
WFSRC, or WFS under any of the Transaction Agreements, or in any certificate or
report furnished under any of the Transaction
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Agreements, shall prove to be untrue or incorrect in any material respect,
provided however, a violation of Section 3.01(b) of the Sale and Servicing
Agreement as to which either Seller shall have in a timely manner cured or
repurchased the Contract as to each such Financed Vehicle pursuant to Section
3.02 of the Sale and Servicing Agreement shall not constitute an Event of
Default hereunder;
(c) (i) the Trust, WFAL, WFSRC or WFS shall fail to pay when due
any amount payable by it under any of the Transaction Agreements (other than
payments of principal and interest on the Notes and the Certificates); (ii) the
Trust, WFAL, WFSRC or WFS shall have asserted that any of the Transaction
Agreements to which it is a party is not valid and binding on the parties
thereto; or (iii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Agreements or
property thereof shall find or rule that any material provision of any of the
Transaction Agreements is not valid and binding on the parties thereto; provided
that as a result of such finding or ruling the rights or remedies of Financial
Security under this Agreement shall have been directly or indirectly impaired in
any material respect;
(d) the Trust, WFAL, WFSRC or WFS shall fail to perform or
observe any other covenant or agreement by it contained in any of the
Transaction Agreements (except for the obligations described under clause (b) or
(c) above) and such failure shall continue for a period of 30 days after written
notice shall have been given to it; provided that, if such failure shall be of a
nature that it cannot be cured within 30 days, such failure shall not constitute
an Event of Default hereunder if within such 30-day period such party shall have
given notice to Financial Security of corrective action it proposes to take,
which corrective action is agreed in writing by Financial Security to be
satisfactory and such party shall thereafter pursue such corrective action
diligently until such default is cured, and provided further as a result of such
failure the rights or remedies of Financial Security under this Agreement shall
have been directly or indirectly impaired in any material respect;
(e) there shall have occurred an "Event of Default" as specified
in Section 5.01 of the Indenture;
(f) the Trust shall adopt a voluntary plan of liquidation or
shall fail to pay its debts generally as they come due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors, or shall institute any proceeding
seeking to adjudicate the Trust insolvent or seeking a liquidation, or shall
take advantage of any insolvency act, or shall commence a case or other
proceeding naming the Trust as debtor under the United States Bankruptcy Code or
similar law, domestic or foreign, or a case or other proceeding shall be
commenced against the Trust under the United States Bankruptcy Code or similar
law, domestic or foreign, or any proceeding shall be instituted against the
Trust seeking liquidation of its assets and the Trust shall fail to take
appropriate action resulting in the withdrawal or dismissal of such proceeding
within 30 days or there shall be appointed or the Trust consent to, or acquiesce
in, the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Trust or the whole or any substantial part of its
properties or assets, or the Trust shall take any corporate action in
furtherance of any of the foregoing or the Trust terminates pursuant to Section
9.02 of the Trust Agreement;
(g) the Trust becomes taxable as an association (or publicly
traded partnership) taxable as a corporation for federal or state income tax
purposes;
(h) on any Distribution Date, the sum of Net Collections with
respect to such Distribution Date and the amounts available in the Spread
Account is less than the sum of the amounts payable on such Distribution Date
pursuant to clauses (i) through (ix) of Section 5.05 of the Sale and Servicing
Agreement; and
Section 7.02. Remedies; Waivers
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(a) Upon the occurrence of an Event of Default, Financial
Security may exercise any one or more of the rights and remedies set forth
below:
(i) declare all indebtedness of every type or description owed
by the Trust, WFAL, WFSRC or WFS to Financial Security, including,
without limitation, the entire outstanding balance of further
installments of the Premium, to be immediately due and payable, and
shall there upon be immediately due and payable; and
(ii) the Collateral Agent, subject to Article V hereof, shall
have the right to take any action or initiate any proceeding at law or
equity available to it to enforce the terms of this Agreement.
(b) Financial Security shall have the right, to be exercised in
its complete discretion, to waive any Event of Default hereunder, by a writing
setting forth terms, conditions, and extent of such waiver signed by Financial
Security and delivered to an Authorized Officer of WFAL and WFSRC. Unless such
writing expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence that gave rise to the Event of Default
so waived and not to any other similar event or occurrence that occurs
subsequent to the date of such waiver.
(c) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Agreements or existing at law or in equity.
No delay or failure to exercise any right or power accruing under any
Transaction Agreements upon the occurrence of any Event of Default or otherwise
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle Financial Security to
exercise any remedy reserved to Financial Security in this Article, it shall not
be necessary to give any notice.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Amendments, Changes and Modifications. This
Agreement may be amended, changed, modified, altered or terminated only by
written instrument or written instruments signed by the parties hereto.
Section 8.02. Notices. All notices, certificates or other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, sent by overnight courier, or sent by
certified or registered mail, postage prepaid, return receipt requested,
addressed to the appropriate Notice Address. A duplicate copy of each notice,
certificate or other communication given hereunder to WFAL, WFSRC, WFS,
Financial Security, the Trust, the Indenture Trustee or the Collateral Agent
shall also be given to each of the others. Each party hereto may, by telecopy
notice or by such other notice described hereunder, designate any further or
different address to which subsequent notices, certificates or other
communications shall be sent without any requirement of execution of any
amendment to this Agreement.
Section 8.03. Method of Payment. Except as otherwise expressly
provided herein, all payments to be made hereunder shall be made by wire
transfer or by certified or bank check payable to the appropriate party.
Section 8.04. Further Assurances and Corrective Instruments.
(a) To the fullest extent permitted by law, the parties hereto
agree that they will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as Financial Security may reasonably request and
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as may be reasonably required in Financial Security's judgment to effectuate the
intention of or facilitate the performance of this Agreement and to protect the
interests of Financial Security and the Collateral Agent, including, without
limitation, the creation and maintenance of Financial Security's security
interest in the Collateral pursuant to this Agreement, subject to the
Intercreditor Agreement. WFAL, WFSRC and the Master Servicer hereby authorize
the Collateral Agent to file, at the direction of Financial Security, financing
statements and amendments thereto relating to all or any part of the Collateral
without the signature of an officer of such entity where permitted by law in
order to maintain and perfect the security interests granted by this Agreement.
(b) In order to facilitate the servicing of the Contracts by the
Master Servicer, the Master Servicer is hereby authorized, in the name and on
behalf of Financial Security, the Trust, the Indenture Trustee, WFAL and WFSRC,
to execute instruments of satisfaction or cancellation, or of partial or full
release or discharge, and other comparable instruments with respect to the
Contracts and with respect to the Financed Vehicles (and the Indenture Trustee
shall execute any such documents on request of the Master Servicer), subject to
the obligations of the Master Servicer under the Sale and Servicing Agreement.
Section 8.05. Term of Agreement. This Agreement shall continue in
effect until the later of (a) the date on which Financial Security has no
further liability under the Policy or (b) the date on which each Western Entity
shall have paid or caused to be paid to Financial Security all amounts to be
paid by such Western Entity hereunder.
Section 8.06. Assignments; Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither WFAL,
WFSRC, WFS, nor the Collateral Agent may assign its rights or obligations under
this Agreement, or delegate any of its duties hereunder, without the prior
written consent of Financial Security. Any assignment made in violation of this
Agreement shall be null and void.
(b) Financial Security shall have the right to give
participations in its rights under this Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
Financial Security may in its discretion determine; provided, however, that no
such participation or reinsurance agreement or arrangement shall relieve
Financial Security of any of its obligations hereunder or under the Policy and
provided further that Financial Security shall reimburse WFAL, WFSRC or WFS, as
the case may be, for any expense incurred by such Western Entity in connection
with the giving by Financial Security of participations or the entering into
such contracts of reinsurance.
(c) In addition, Financial Security shall be entitled to assign
or pledge to any bank or other lender providing liquidity or credit with respect
to the transactions contemplated by the Transaction Agreements or this Agreement
or the obligations of Financial Security in connection therewith any rights of
Financial Security under the Transaction Agreements or this Agreement or with
respect to any real or personal property or other interests pledged to Financial
Security, or in which Financial Security has a security interest, in connection
with the transactions contemplated by the Transaction Agreements or this
Agreement; provided that Financial Security shall reimburse WFAL, WFSRC or WFS,
as the case may be, for any expense incurred by either such Western Entity in
connection with the making by Financial Security of any such assignment or
pledge.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Noteholder or
Certificateholder, other than Financial Security, against WFAL, WFSRC or WFS,
and all the terms, covenants, conditions, promises and agreements contained
herein shall be for
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the sole and exclusive benefit of the parties hereto and their successors
and permitted assigns. Neither the Owner Trustee or the Indenture Trustee nor
any Noteholder or Certificateholder shall have any right to payment from any
premiums paid or payable hereunder or from any other amounts paid by WFAL, WFSRC
or WFS pursuant to Section 3.03 or 3.04 hereof.
Section 8.07. Consent of Financial Security. In the event that
Financial Security's consent is required under the terms hereof, or under the
terms of any other Transaction Agreement, it is understood and agreed that,
except as otherwise provided expressly herein or in any other Transaction
Agreement, the determination whether to grant or withhold such consent shall be
made solely by Financial Security in its absolute discretion.
Section 8.08. Right to Enforce Sale and Servicing Agreement. The
parties hereto acknowledge that Financial Security is a beneficiary of the Sale
and Servicing Agreement, and without limiting or restricting any of the
provisions thereof or hereof, Financial Security shall have the right to enforce
the provisions of the Sale and Servicing Agreement to the extent that it could
if it were a signatory of such agreement.
Section 8.09. WFS as Party Only for Certain Provisions.
Notwithstanding any provision to the contrary contained in this Agreement, the
parties hereto agree that WFS is joined as a party to this Agreement solely for
purposes of Sections 2.06, 2.11, 3.02, 3.06, 3.07, 3.08, 3.09, 3.10, 3.11, 3.12
and 6.13 of this Agreement and the other Sections contained in Article VII of
this Agreement.
Section 8.10. Severability. In the event that any provision of
this Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by Financial Security hereunder is unavailable or unenforceable shall
not affect in any way the ability of Financial Security to pursue any other
remedy available to it.
Section 8.11. Reports. Any report, certificate, statement or
notice which WFAL, WFSRC, WFS as the Master Servicer, and any successor Master
Servicer, is required to provide to the Owner Trustee, Indenture Trustee,
Noteholders or the Certificateholders under the Sale and Servicing Agreement
shall also be provided to Financial Security within the same time period
specified in the Sale and Servicing Agreement.
Section 8.12. Counterparts. This Agreement may be executed in
counterparts by the parties hereto and each such counterpart shall be considered
an original and all such counterparts shall constitute one and the same
instrument.
Section 8.13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 8.14. Headings. The headings of articles and sections and
the table of contents contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its construction
or interpretation. Unless otherwise indicated, all references to articles and
sections in this Agreement refer to the corresponding articles and sections of
this Agreement.
Section 8.15. Trial by Jury Waived. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION AGREEMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREUNDER. EACH PARTY HERETO (A) CERTIFIES
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THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THE TRANSACTION AGREEMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER
THINGS, THIS WAIVER.
Section 8.16. Limited Liability. No recourse under any
Transaction Agreement shall be had against, and no personal liability shall
attach to, any officer, employee, director, affiliate or shareholder of any
party hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Transaction Agreements, the Notes, the Certificates or the Policy, it being
expressly agreed and understood that each Transaction Agreement is solely a
corporate obligation of each party hereto, and that any and all personal
liability, either in common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under any Transaction Agreement is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Agreement.
Section 8.17. Limited Liability of Chase Manhattan Bank Delaware.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Chase Manhattan Bank Delaware not
individually or personally but solely as Owner Trustee on behalf of the Trust,
(b) each of the representations, undertakings and agreements herein made on the
part of the Trust is made and intended not as personal representations,
undertakings and agreements by Chase Manhattan Bank Delaware, but are made and
intended for the purpose of binding only the Trust Estate, (c) nothing herein
contained shall be construed as creating any liability on Chase Manhattan Bank
Delaware, individually or personally, to perform any covenant of the Trust
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any person claiming by, through or
under such parties and (d) under no circumstances shall Chase Manhattan Bank
Delaware be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement.
Section 8.18. Entire Agreement. This Agreement and the Policy set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above mentioned.
WFS FINANCIAL _________ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE
not in its individual capacity, but
solely in its capacity as Owner
Trustee under the Trust Agreement
By:
------------------------------------------
Title:
WFS FINANCIAL AUTO LOANS, INC.
By:
------------------------------------------
Title:
WFS RECEIVABLES CORPORATION
By:
------------------------------------------
Title:
WFS FINANCIAL INC.
By:
------------------------------------------
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------------
Title: Authorized Officer
BANKERS TRUST COMPANY,
as Collateral Agent, Proceeds Agent
and Indenture Trustee
By:
------------------------------------------
Title:
<PAGE> 51
CCR&W DRAFT
3/2/00
INSURANCE, INDEMNITY AND PLEDGE AGREEMENT
Dated as of ________________
among
WFS FINANCIAL _________ OWNER TRUST,
WFS FINANCIAL AUTO LOANS, INC.,
WFS RECEIVABLES CORPORATION,
WFS FINANCIAL INC,
FINANCIAL SECURITY ASSURANCE INC.,
and
BANKERS TRUST COMPANY,
as Collateral Agent, Proceeds Agent and Indenture Trustee
WFS FINANCIAL _________ OWNER TRUST
<PAGE> 52
TABLE OF CONTENTS
<TABLE>
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Page
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INTRODUCTION................................................................................1
AGREEMENTS..................................................................................2
ARTICLE I DEFINITIONS.......................................................................2
Section 1.01. Definitions...........................................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS........................................6
Section 2.01. Representations and Warranties of the Trust...........................6
Section 2.02. Affirmative Covenants of the Trust....................................8
Section 2.03. Negative Covenants of the Trust.......................................9
Section 2.04. Representations and Warranties of WFAL...............................10
Section 2.05. Representations and Warranties of WFSRC..............................13
Section 2.06. Representations and Warranties of WFS................................16
Section 2.07. Affirmative Covenants of WFAL........................................17
Section 2.08. Affirmative Covenants of WFSRC.......................................19
Section 2.09. Negative Covenants of WFAL...........................................21
Section 2.10. Negative Covenants of WFSRC..........................................22
Section 2.11. Affirmative Covenants of WFS.........................................23
ARTICLE III THE POLICIES; INDEMNIFICATION..................................................25
Section 3.01. Agreement to Issue Policy............................................25
Section 3.02. Conditions Precedent to Issuance of Policy...........................25
Section 3.03. Premium..............................................................28
Section 3.04. Reimbursement Obligation.............................................28
Section 3.05. Non-Recourse Obligation..............................................29
Section 3.06. Indemnification......................................................30
Section 3.07. Liability Absolute...................................................34
Section 3.08. Liability of Financial Security......................................34
Section 3.09. Payment of Costs, Fees and Expenses..................................35
Section 3.10. Payment Procedure....................................................36
Section 3.11. Business Days........................................................36
Section 3.12. Waivers and Consents by Sellers and WFS..............................36
ARTICLE IV PLEDGE OF COLLATERAL............................................................36
Section 4.01. Obligations Secured Hereby...........................................36
Section 4.02. Granting Clause......................................................37
</TABLE>
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<TABLE>
<S> <C>
Section 4.03. Release of Collateral................................................38
ARTICLE V INTERCREDITOR PROVISIONS.........................................................38
Section 5.01. Financial Security's Direction Upon Servicer Default.................38
Section 5.02. Financial Security's Direction of Insolvency Proceedings.............39
ARTICLE VI THE COLLATERAL AGENT; REMEDIES..................................................39
Section 6.01. Appointment and Powers of Collateral Agent...........................39
Section 6.02. Successor Collateral Agent...........................................40
Section 6.03. Remedies Available to Collateral Agent...............................40
Section 6.04. Waiver of Stay or Extension Laws; Marshalling of Assets..............41
Section 6.05. Restoration of Rights and Remedies...................................42
Section 6.06. Remedies Cumulative..................................................42
Section 6.07. Control by Financial Security........................................42
Section 6.08. Proceeds Agent as Custodian and Bailee of Collateral Agent...........42
Section 6.09. Indemnification of Collateral Agent..................................43
Section 6.10. Compensation Payable to Collateral Agent.............................43
Section 6.11. Protection of Financial Security's Security Interest.................43
Section 6.12. Representations and Warranties of Indenture Trustee..................44
Section 6.13. Certain Guaranties...................................................44
ARTICLE VII EVENTS OF DEFAULT..............................................................44
Section 7.01. Events of Default....................................................44
Section 7.02. Remedies; Waivers....................................................45
ARTICLE VIII MISCELLANEOUS.................................................................46
Section 8.01. Amendments, Changes and Modifications................................46
Section 8.02. Notices..............................................................46
Section 8.03. Method of Payment....................................................46
Section 8.04. Further Assurances and Corrective Instruments........................46
Section 8.05. Term of Agreement....................................................47
Section 8.06. Assignments; Third-Party Rights; Reinsurance.........................47
Section 8.07. Consent of Financial Security........................................48
Section 8.08. Right to Enforce Sale and Servicing Agreement........................48
Section 8.09. WFS as Party Only for Certain Provisions.............................48
Section 8.10. Severability.........................................................48
Section 8.11. Reports..............................................................48
Section 8.12. Counterparts.........................................................48
Section 8.13. GOVERNING LAW........................................................48
</TABLE>
ii
<PAGE> 54
<TABLE>
<S> <C>
Section 8.14. Headings.............................................................48
Section 8.15. Trial by Jury Waived.................................................48
Section 8.16. Limited Liability....................................................49
Section 8.17. Limited Liability of Chase Manhattan Bank Delaware...................49
Section 8.18. Entire Agreement.....................................................49
</TABLE>
iii
<PAGE> 55
EXHIBITS
EXHIBIT A Forms of WFS Assignment and Collateral Assignment
EXHIBIT B Form of Financial Guaranty Insurance Policy with respect to
the Notes, together with form of Endorsement No. 1 thereto
EXHIBIT C Form of Opinion of Counsel to WFAL, WFSRC and WFS
EXHIBIT D Form of Opinion of Special Tax Counsel to WFS
EXHIBIT E Form of Certificate of the Indenture Trustee and the Collateral Agent
EXHIBIT F Form of Opinion of Counsel to the Indenture Trustee and the
Collateral Agent
EXHIBIT G Form of Opinion of Counsel to the Trust and the Owner Trustee
EXHIBIT H Form of Letter of Independent Accountants
i
<PAGE> 1
EXHIBIT 10.4.1
ENDORSEMENT NO. 1
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
OBLIGOR: WFS Financial ________ Owner Trust
OBLIGATIONS: $_________ ____% Auto Receivable Backed Notes,
Class A-1,
$_________ ____% Auto Receivable Backed Notes,
Class A-2,
$_________ ____% Auto Receivable Backed Notes,
Class A-3, and
$_________ ____% Auto Receivable Backed Notes,
Class A-4
Date of Issuance: _______________
Policy No.: _______________
1. Definitions. For all purposes of this Policy, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used and not defined herein shall have the respective meanings
ascribed to such terms in the Sale and Servicing Agreement, dated as of
_______________, by and among the Trust, WFS Financial Auto Loans, Inc., as
Seller and WFS Financial Inc, as Master Servicer (as amended from time to time
in accordance with its terms, the "Sale and Servicing Agreement") or, if not
defined therein, then in the Indenture, dated as of _______________, by and
between the Trust and Bankers Trust Company, unless the context shall otherwise
require.
"Business Day" means any day other than (i) a Saturday or Sunday,
or (ii) a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to be closed.
"Guaranteed Payments" means, as to each Distribution Date, the
amount equal to the sum of (i) the Guaranteed RIC Payments for such Distribution
Date and (ii) the Scheduled Payments for such Distribution Date less the amount
of any payment under this Policy of the Guaranteed RIC Payments for such
Distribution Date that is required to be applied pursuant to the Sale and
Servicing Agreement to pay such Scheduled Payments; provided, however, that the
aggregate amount of payments guaranteed to be paid under this Policy shall not
exceed the Outstanding Amount of the Notes plus all interest thereon.
"Guaranteed RIC Payments" means (i) with respect to the first
Distribution Date to occur during any period in which Financial Security's
claims-paying ability is not rated Aa2 or higher by Moody's and AAA by Standard
& Poor's and amounts in the Collection Account, Note Distribution Account,
Certificate Distribution Account and the Spread Account shall have been invested
in the RIC pursuant to Section 2(a) thereof, an amount equal to the RIC Payment
Amount for such Distribution Date, (ii) with respect to the second Distribution
Date to occur
<PAGE> 2
during any period in which Financial Security's claims-paying ability is not
rated Aa2 or higher by Moody's and AAA by Standard & Poor's and amounts in the
Collection Account in respect of such second Distribution Date shall have been
invested in the RIC pursuant to Section 2(a) thereof, an amount equal to the
Supplemental RIC Payment Amount for such second Distribution Date, and (iii)
with respect to any other date, zero; provided, however, that with respect to
clauses (i) and (ii) above, the amount payable in respect of the Guaranteed RIC
Payments under this Policy on any Distribution Date shall not exceed the
Scheduled Payments for such Distribution Date.
"Indenture Trustee" means Bankers Trust Company, as trustee under
the Indenture, and any successor in such capacity.
"Policy" means this Financial Guaranty Insurance Policy and
includes each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial
Security and to the Fiscal Agent (as defined below), if any, prior to 12:00
noon, New York City time, on a Business Day; delivery either on a day that is
not a Business Day, or after 12:00 noon, New York City time, shall be deemed to
be receipt on the next succeeding Business Day. If any notice or certificate
given hereunder by the Indenture Trustee is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so notify
the Indenture Trustee and the Indenture Trustee may submit an amended notice.
"RIC" means the Reinvestment Contract, dated as of November 1,
1999, among Western Financial Bank, WFS Financial Auto Loans 2, Inc. and the
Indenture Trustee, as in effect on the date of this Policy and without regard to
any amendment or modification of the RIC except amendments or modifications to
which Financial Security has given its prior written consent.
"RIC Payment Amount" means, as to any Distribution Date, certain
obligations due and owing under the RIC for such Distribution Date in an amount
equal to the sum of (A) the Spread Account Invested Funds (as defined in the
RIC) plus the Holding Account Deposited Funds (as defined in the RIC) and (B)
the amount that is equal to the lesser of (a) the Specified Account Invested
Funds (as defined in the RIC) and (b) the amount by which (i) the sum of (x) the
aggregate amount due and owing on such Distribution Date to the Holders of the
Notes and the Certificates, (y) the amount (if any) required to be deposited out
of Excess Amounts into the Spread Account on such Distribution Date (after
giving effect to distributions and other payments required to have been made on
such date prior to such required deposit and assuming that the Spread Account
Invested Funds were available in the Spread Account for such date), and (z) the
amount of Servicing Fee due and owing to the Master Servicer on such date
exceeds (ii) the Net Collections for such Distribution Date that are otherwise
on deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.
"Scheduled Payments" means, as to each Distribution Date, the
payment to be made to Holders in accordance with the original terms of the
Obligations when issued and without regard to any subsequent amendment or
modification of the Obligations or of the
2
<PAGE> 3
Indenture, except amendments or modifications to which Financial Security has
given its prior written consent, in an amount equal to (i) the Note Interest
Distributable Amount and (ii) the Note Principal Distributable Amount. Scheduled
Payments do not include payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) any election to pay principal on an
accelerated basis, (c) the occurrence of an Event of Default under the Indenture
or (d) any other cause, unless Financial Security elects, in its sole
discretion, to pay in whole or in part such principal due upon acceleration,
together with any accrued interest to the date of acceleration. In the event
Financial Security does not so elect, this Policy will continue to guarantee
payment on the Notes in accordance with their original terms. Scheduled Payments
shall not include any portion of a Note Interest Distributable Amount due to
Noteholders because a notice and certificate in proper form as required by
paragraph 2 hereof was not timely Received by Financial Security, unless, in
each case, Financial Security elects, in its sole discretion, to pay such amount
in whole or in part. Scheduled Payments shall not include any amounts due in
respect of the Obligations attributable to any increase in Interest Rate,
penalty or other sum payable by the Obligor by reason of any default or event of
default in respect of the Obligations, or by reason of any deterioration of the
credit worthiness of the Obligor, nor shall Scheduled Payments include, nor
shall coverage be provided under this Policy in respect of, any taxes,
withholding or other charge with respect to any Holder imposed by any
governmental authority due in connection with the payment of any Scheduled
Payment to a Holder. Notwithstanding the foregoing, the term "Scheduled
Payments" that appears on the face of the Policy (and only on the face of the
Policy) shall mean "Guaranteed Payments" as such term is defined in this
Endorsement No. 1 to the Policy.
"Supplemental RIC Payment Amount" means, as to the first
Distribution Date following the Distribution Date (if any) on which the
Guaranteed RIC Payment shall have been equal to the RIC Payment Amount, the
amount that is equal to the lesser of (A) the amount of remaining Specified
Account Invested Funds (if any) that is required to be a part of the Net
Collections for such Distribution Date and (B) the amount (if any) by which (i)
the sum of (x) the aggregate amount due and owing on such Distribution Date to
Holders of the Notes and the Certificates plus (y) the amount (if any) required
to be deposited out of Excess Amounts into the Spread Account on such
Distribution Date (after giving effect to distributions and other payments
required to have been made on such date prior to such required deposit) exceeds
(ii) the Net Collections for such Distribution Date that are otherwise on
deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.
"Term of this Policy" means the period from and including the
Closing Date to and including the date on which (i) all Scheduled Payments have
been paid that are required to be paid by the Obligor within the meaning of
Section 4.01 of the Indenture, (ii) any period during which any Scheduled
Payment could have been voided in whole or in part as a preference payment under
applicable bankruptcy, insolvency, receivership or similar law has expired, and
(iii) if any proceedings requisite to voidance as a preference payment have been
commenced prior to the occurrence of (i) and (ii), a final and nonappealable
order in resolution of each such proceeding has been entered.
2. Notices and Conditions to Payment in Respect of Guaranteed
Payments. Following Receipt by Financial Security of a notice and certificate
from the Trustee
3
<PAGE> 4
in the form attached as Exhibit A to this Endorsement, Financial Security will
pay any amount payable hereunder in respect of Guaranteed Payments out of the
funds of Financial Security on the later to occur of (a) 12:00 noon, New York
City time, on the fourth Business Day following Receipt of such notice and
certificate and (b) 12:00 noon, New York City time, on the Distribution Date to
which such claim relates. Payments due hereunder, in respect of Guaranteed
Payments, will be disbursed by wire transfer of immediately available funds to
the Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder
in respect of Guaranteed Payments, including any acceleration payment, whether
or not any notice and certificate shall have been Received by Financial Security
as provided above; provided, however, that by acceptance of this Policy the
Indenture Trustee agrees to provide upon request to Financial Security a notice
and certificate in respect of any such payments made by Financial Security.
Financial Security's obligations hereunder in respect of Guaranteed Payments
shall be discharged to the extent funds are disbursed by Financial Security as
provided herein, whether or not such funds are properly applied by the Indenture
Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed
Payments Avoided as Preference Payments. If any Guaranteed Payment is avoided as
a preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Indenture Trustee of (A) a
certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that (x) the Holder is required to return
payments of principal of or interest paid on the Obligations or (y) the
Indenture Trustee is required to return payments of the RIC Payment Amount or
the Supplemental RIC Payment Amount paid under the RIC, during (in each case)
the Term of this Policy because such distributions or payments were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Holder (or, in the case of the RIC, of the Indenture Trustee)
that the Order has been entered and is not subject to any stay and (C) an
assignment duly executed and delivered by the Holder (or, in the case of the
RIC, by the Indenture Trustee), in such form as is reasonably required by
Financial Security and provided by Financial Security to the (x) Holder
irrevocably assigning to Financial Security all rights and claims of the Holder
relating to or arising under the Obligations or (y) to the Indenture Trustee
irrevocably assigning to Financial Security all rights and claims of the
Indenture Trustee relating to or arising under the RIC, to the extent of the RIC
Payment Amount and the Supplemental RIC Payment Amount, as the case may be, in
each case (as to clauses (x) and (y)) against the debtor which made such
preference payment or otherwise with respect to such preference payment or (ii)
the date of Receipt by Financial Security from the Indenture Trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four Business
Days prior to such date of Receipt, Financial Security shall have Received
written notice from the Indenture Trustee that such items were to be delivered
on such date and such date was specified in such notice. Such payment shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order, and not to the Indenture Trustee or any Holder
directly (unless a Holder (or, in the case of the RIC, the Indenture Trustee)
has previously paid such amount to
4
<PAGE> 5
the receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in the Order, in which case such payment shall be disbursed to the Indenture
Trustee for distribution to such Holder (or, in the case of the RIC, for
application in accordance with the Sale and Servicing Agreement) upon proof of
such payment reasonably satisfactory to Financial Security). In connection with
the foregoing, Financial Security shall have the rights provided pursuant to
Section 5.19 of the Indenture.
4. Governing Law. This Policy shall be governed by, and shall be
construed in accordance with, the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Indenture Trustee at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Indenture Trustee, (i) copies of all notices and documents required to be
delivered to Financial Security pursuant to this Policy shall be simultaneously
delivered to the Fiscal Agent and to Financial Security and shall not be deemed
Received until Received by both and (ii) all payments required to be made by
Financial Security under this Policy may be made directly by Financial Security
or by the Fiscal Agent on behalf of Financial Security. The Fiscal Agent is the
agent of Financial Security only and the Fiscal Agent shall in no event be
liable to any Holder for any acts of the Fiscal Agent or any failure of
Financial Security to deposit, or cause to be deposited, sufficient funds to
make payments when due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, set-off or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses
by writing mailed or delivered to the Trustee.
5
<PAGE> 6
8. Priorities. In the event that any term or provision of the
face of this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions from Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event that Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
10.Surrender of Policy. The Indenture Trustee shall, upon
request, surrender this Policy to Financial Security for cancellation upon
expiration of the Term of this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused
this Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By
------------------------------------
Authorized Officer
6
<PAGE> 7
EXHIBIT A
CERTIFICATE OF CLAIM
(Letterhead of Trustee)
Dated:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President
Re: WFS Financial ______Owner Trust
The undersigned, a duly authorized officer of Bankers Trust
Company (the "Indenture Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. _________ dated _______________ (the "Policy") issued by
Financial Security in respect of the $_______________ ____% Auto Receivable
Backed Notes, Class A-1, $_______________ ___% Auto Receivable Backed Notes,
Class A-2, $_______________ ____% Auto Receivable Backed Notes, Class A-3, and
$_______________ ____% Auto Receivable Backed Notes, Class A-4, (collectively,
the "Obligations") that:
(i) The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Collection Account and Spread Account and available for
application in accordance with the Sale and Servicing Agreement will be
$_________ (the "RIC Shortfall") less than the Guaranteed RIC Payment.
Of such RIC Shortfall, $__________ is attributable to the Guaranteed RIC
Payment amount to be paid to the Indenture Trustee for deposit into the
Collection Account and $__________ is attributable to Guaranteed RIC
Payment amount to be paid to the Indenture Trustee as collateral agent
for deposit into the Spread Account.
(iii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Note Distribution Account and available for distribution
to the Holders pursuant to the Indenture will be $ (the "Note
Shortfall") less than the aggregate amount of Scheduled Payments with
respect to [DISTRIBUTION DATE]. Of such Note Shortfall, $__________ is
attributable to Scheduled Payments to be made to Holders of the
Obligations.
(iv) The Indenture Trustee is making a claim under the Policy
[(i) for the RIC Shortfall to be applied to payment of the Guaranteed
RIC Payment and (ii)] for the Note
<PAGE> 8
Shortfall to be applied to distributions of principal or interest or
both with respect to the Obligations.
(v) The Indenture Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Guaranteed Payments; (b) not
apply such funds for any other purpose; (c) not commingle such funds
with other funds held by the Indenture Trustee; and (d) maintain an
accurate record of such payments with respect to each Obligation and
with respect to the RIC and the corresponding claim on the Policy and
proceeds thereof and, if the Obligation is required to be surrendered or
presented for such payment, shall stamp on each such Obligation the
legend $"[insert applicable amount] paid by Financial Security and the
balance hereof has been cancelled and reissued" and then shall deliver
such Obligation to Financial Security.
(vi) The Indenture Trustee, on behalf of the Holders, hereby
assigns to Financial Security the rights of the Holders with respect to
the Obligations to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Holders in respect
of securities law violations arising from the offer and sale of the
Obligations and any amounts due and owing but unpaid under the RIC. The
foregoing assignment is in addition to, and not in limitation of, rights
of subrogation otherwise available to Financial Security in respect of
such payments. Payments to Financial Security in respect of the
foregoing assignment shall in all cases be subject to and subordinate to
the rights of the Holders to receive all Guaranteed Payments in respect
of the Obligations. The Indenture Trustee shall take such action and
deliver such instruments as may be reasonably requested or required by
Financial Security to effectuate the purpose or provisions of this
clause (vi).
(vii) The Indenture Trustee, on its behalf and on behalf of the
Holders, hereby appoints Financial Security as agent and
attorney-in-fact for the Indenture Trustee and each such Holder in any
legal proceeding with respect to the Obligations. The Indenture Trustee
hereby agrees that Financial Security may at any time during the
continuation of any proceeding by or against any debtor with respect to
which a preference claim (as defined below) or other claim with respect
to the Obligations or the RIC is being asserted under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to such Insolvency Proceeding, including
without limitation, (A) all matters relating to any claim in connection
with an Insolvency Proceeding seeking the avoidance as a preferential
transfer of any payment made with respect to the Obligations or the RIC
(a "Preference Claim"), (B) the direction of any appeal of any order
relating to any Preference Claim at the expense of Financial Security
but subject to reimbursement as provided in the Insurance Agreement and
(C) the posting of any surety, supersedeas or performance bond pending
any such appeal. In addition, the Indenture Trustee hereby agrees that
Financial Security shall be subrogated to, and the Indenture Trustee on
its behalf and on behalf of each Holder, hereby delegates and assigns,
to the fullest extent permitted by law, the rights of the Indenture
Trustee and each Holder in the conduct of any Insolvency Proceeding,
including, without limitation, all
2
<PAGE> 9
rights of any party to an adversary proceeding or action with respect to
any court order issued in connection with any such Insolvency
Proceeding.
(viii) Payment should be made by wire transfer directed to
[SPECIFY ACCOUNT].
Unless the context otherwise requires, any capitalized term used
in this Certificate of Claim shall have the meaning assigned thereto in the
Policy, including in the Endorsement thereto.
IN WITNESS WHEREOF, the Indenture Trustee has executed and
delivered this Certificate of Claim as of the day of , 20 .
------------------------------------
not in its individual capacity
but solely as Indenture Trustee
By:
---------------------------------
Name:
Title:
- --------------------------------------------------------------------------------
For Financial Security Assurance Inc. or Fiscal Agent use only. Wire transfer
sent on __________________________ by ____________________Confirmation
Number__________. ------------
3
<PAGE> 1
EXHIBIT 10.4.2
CCR&W DRAFT
3/2/00
ENDORSEMENT NO. 1
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
OBLIGOR: WFS Financial ________ Owner Trust
OBLIGATIONS: $________ ____% Auto Receivable Backed Notes, Class A-1,
$________ ____% Auto Receivable Backed Notes, Class A-2,
$________ ____% Auto Receivable Backed Notes, Class A-3,
and
$________ ____% Auto Receivable Backed Notes, Class A-4
Date of Issuance: _______________
Policy No.: _______________
1. Definitions. For all purposes of this Policy, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used and not defined herein shall have the respective meanings
ascribed to such terms in the Sale and Servicing Agreement, dated as of
_______________, by and among the Trust, WFS Financial Auto Loans, Inc., as a
Seller, WFS Receivables Corporation, as a Seller, and WFS Financial Inc, as
Master Servicer (as amended from time to time in accordance with its terms, the
"Sale and Servicing Agreement") or, if not defined therein, then in the
Indenture, dated as of _______________, by and between the Trust and Bankers
Trust Company, unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday,
or (ii) a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to be closed.
"Guaranteed Payments" means, as to each Distribution Date, the
amount equal to the sum of (i) the Guaranteed RIC Payments for such Distribution
Date and (ii) the Scheduled Payments for such Distribution Date less the amount
of any payment under this Policy of the Guaranteed RIC Payments for such
Distribution Date that is required to be applied pursuant to the Sale and
Servicing Agreement to pay such Scheduled Payments; provided, however, that the
aggregate amount of payments guaranteed to be paid under this Policy shall not
exceed the Outstanding Amount of the Notes plus all interest thereon.
"Guaranteed RIC Payments" means (i) with respect to the first
Distribution Date to occur during any period in which Financial Security's
claims-paying ability is not rated Aa2 or higher by Moody's and AAA by Standard
& Poor's and amounts in the Collection Account, Note Distribution Account,
Certificate Distribution Account and the Spread Account shall have been invested
in the RIC pursuant to Section 2(a) thereof, an amount equal to the RIC Payment
<PAGE> 2
Amount for such Distribution Date, (ii) with respect to the second Distribution
Date to occur during any period in which Financial Security's claims-paying
ability is not rated Aa2 or higher by Moody's and AAA by Standard & Poor's and
amounts in the Collection Account in respect of such second Distribution Date
shall have been invested in the RIC pursuant to Section 2(a) thereof, an amount
equal to the Supplemental RIC Payment Amount for such second Distribution Date,
and (iii) with respect to any other date, zero; provided, however, that with
respect to clauses (i) and (ii) above, the amount payable in respect of the
Guaranteed RIC Payments under this Policy on any Distribution Date shall not
exceed the Scheduled Payments for such Distribution Date.
"Indenture Trustee" means Bankers Trust Company, as trustee under
the Indenture, and any successor in such capacity.
"Policy" means this Financial Guaranty Insurance Policy and
includes each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial
Security and to the Fiscal Agent (as defined below), if any, prior to 12:00
noon, New York City time, on a Business Day; delivery either on a day that is
not a Business Day, or after 12:00 noon, New York City time, shall be deemed to
be receipt on the next succeeding Business Day. If any notice or certificate
given hereunder by the Indenture Trustee is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so notify
the Indenture Trustee and the Indenture Trustee may submit an amended notice.
"RIC" means the Reinvestment Contract, dated as of November 1,
1999, among Western Financial Bank, WFS Financial Auto Loans 2, Inc. and the
Indenture Trustee, as in effect on the date of this Policy and without regard to
any amendment or modification of the RIC except amendments or modifications to
which Financial Security has given its prior written consent.
"RIC Payment Amount" means, as to any Distribution Date, certain
obligations due and owing under the RIC for such Distribution Date in an amount
equal to the sum of (A) the Spread Account Invested Funds (as defined in the
RIC) plus the Holding Account Deposited Funds (as defined in the RIC) and (B)
the amount that is equal to the lesser of (a) the Specified Account Invested
Funds (as defined in the RIC) and (b) the amount by which (i) the sum of (x) the
aggregate amount due and owing on such Distribution Date to the Holders of the
Notes and the Certificates, (y) the amount (if any) required to be deposited out
of Excess Amounts into the Spread Account on such Distribution Date (after
giving effect to distributions and other payments required to have been made on
such date prior to such required deposit and assuming that the Spread Account
Invested Funds were available in the Spread Account for such date), and (z) the
amount of Servicing Fee due and owing to the Master Servicer on such date
exceeds (ii) the Net Collections for such Distribution Date that are otherwise
on deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.
"Scheduled Payments" means, as to each Distribution Date, the
payment to be made to Holders in accordance with the original terms of the
Obligations when issued and
2
<PAGE> 3
without regard to any subsequent amendment or modification of the Obligations or
of the Indenture, except amendments or modifications to which Financial Security
has given its prior written consent, in an amount equal to (i) the Note Interest
Distributable Amount and (ii) the Note Principal Distributable Amount. Scheduled
Payments do not include payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) any election to pay principal on an
accelerated basis, including, specifically, any Repurchase Premium, (c) the
occurrence of an Event of Default under the Indenture or (d) any other cause,
unless Financial Security elects, in its sole discretion, to pay in whole or in
part such principal due upon acceleration, together with any accrued interest to
the date of acceleration. In the event Financial Security does not so elect,
this Policy will continue to guarantee payment on the Notes in accordance with
their original terms. Scheduled Payments shall not include any portion of a Note
Interest Distributable Amount due to Noteholders because a notice and
certificate in proper form as required by paragraph 2 hereof was not timely
Received by Financial Security, unless, in each case, Financial Security elects,
in its sole discretion, to pay such amount in whole or in part. Scheduled
Payments shall not include any amounts due in respect of the Obligations
attributable to any increase in Interest Rate, penalty or other sum payable by
the Obligor by reason of any default or event of default in respect of the
Obligations, or by reason of any deterioration of the credit worthiness of the
Obligor, nor shall Scheduled Payments include, nor shall coverage be provided
under this Policy in respect of, any taxes, withholding or other charge with
respect to any Holder imposed by any governmental authority due in connection
with the payment of any Scheduled Payment to a Holder. Notwithstanding the
foregoing, the term "Scheduled Payments" that appears on the face of the Policy
(and only on the face of the Policy) shall mean "Guaranteed Payments" as such
term is defined in this Endorsement No. 1 to the Policy.
"Supplemental RIC Payment Amount" means, as to the first
Distribution Date following the Distribution Date (if any) on which the
Guaranteed RIC Payment shall have been equal to the RIC Payment Amount, the
amount that is equal to the lesser of (A) the amount of remaining Specified
Account Invested Funds (if any) that is required to be a part of the Net
Collections for such Distribution Date and (B) the amount (if any) by which (i)
the sum of (x) the aggregate amount due and owing on such Distribution Date to
Holders of the Notes and the Certificates plus (y) the amount (if any) required
to be deposited out of Excess Amounts into the Spread Account on such
Distribution Date (after giving effect to distributions and other payments
required to have been made on such date prior to such required deposit) exceeds
(ii) the Net Collections for such Distribution Date that are otherwise on
deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.
"Term of this Policy" means the period from and including the
Closing Date to and including the date on which (i) all Scheduled Payments have
been paid that are required to be paid by the Obligor within the meaning of
Section 4.01 of the Indenture, (ii) any period during which any Scheduled
Payment could have been voided in whole or in part as a preference payment under
applicable bankruptcy, insolvency, receivership or similar law has expired, and
(iii) if any proceedings requisite to voidance as a preference payment have been
commenced prior to the occurrence of (i) and (ii), a final and nonappealable
order in resolution of each such proceeding has been entered.
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<PAGE> 4
2. Notices and Conditions to Payment in Respect of Guaranteed
Payments. Following Receipt by Financial Security of a notice and certificate
from the Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of
Guaranteed Payments out of the funds of Financial Security on the later to occur
of (a) 12:00 noon, New York City time, on the fourth Business Day following
Receipt of such notice and certificate and (b) 12:00 noon, New York City time,
on the Distribution Date to which such claim relates. Payments due hereunder, in
respect of Guaranteed Payments, will be disbursed by wire transfer of
immediately available funds to the Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder
in respect of Guaranteed Payments, including any acceleration payment, whether
or not any notice and certificate shall have been Received by Financial Security
as provided above; provided, however, that by acceptance of this Policy the
Indenture Trustee agrees to provide upon request to Financial Security a notice
and certificate in respect of any such payments made by Financial Security.
Financial Security's obligations hereunder in respect of Guaranteed Payments
shall be discharged to the extent funds are disbursed by Financial Security as
provided herein, whether or not such funds are properly applied by the Indenture
Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed
Payments Avoided as Preference Payments. If any Guaranteed Payment is avoided as
a preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Indenture Trustee of (A) a
certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that (x) the Holder is required to return
payments of principal of or interest paid on the Obligations or (y) the
Indenture Trustee is required to return payments of the RIC Payment Amount or
the Supplemental RIC Payment Amount paid under the RIC, during (in each case)
the Term of this Policy because such distributions or payments were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Holder (or, in the case of the RIC, by the Indenture Trustee)
that the Order has been entered and is not subject to any stay and (C) an
assignment duly executed and delivered by the Holder, in such form as is
reasonably required by Financial Security and provided by Financial Security (x)
to the Holder irrevocably assigning to Financial Security all rights and claims
of the Holder relating to or arising under the Obligations or (y) to the
Indenture Trustee irrevocably assigning to Financial Security all rights and
claims of the Indenture Trustee relating to or arising under the RIC, to the
extent of the RIC Payment Amount and the Supplemental RIC Payment Amount, as the
case may be, in each case (as to clauses (x) and (y)) against the debtor which
made such preference payment or otherwise with respect to such preference
payment or (ii) the date of Receipt by Financial Security from the Indenture
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Indenture Trustee that such items were to be
delivered on such date and such date was specified in such notice. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order, and not to the Indenture
4
<PAGE> 5
Trustee or any Holder directly (unless a Holder (or, in the case of the RIC, the
Indenture Trustee) has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Indenture Trustee for distribution to
such Holder (or, in the case of the RIC, for application in accordance with the
Sale and Servicing Agreement) upon proof of such payment reasonably satisfactory
to Financial Security). In connection with the foregoing, Financial Security
shall have the rights provided pursuant to Section 5.19 of the Indenture.
4. Governing Law. This Policy shall be governed by, and shall be
construed in accordance with, the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Indenture Trustee at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Indenture Trustee, (i) copies of all notices and documents required to be
delivered to Financial Security pursuant to this Policy shall be simultaneously
delivered to the Fiscal Agent and to Financial Security and shall not be deemed
Received until Received by both and (ii) all payments required to be made by
Financial Security under this Policy may be made directly by Financial Security
or by the Fiscal Agent on behalf of Financial Security. The Fiscal Agent is the
agent of Financial Security only and the Fiscal Agent shall in no event be
liable to any Holder for any acts of the Fiscal Agent or any failure of
Financial Security to deposit, or cause to be deposited, sufficient funds to
make payments when due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, set-off or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President - Surveillance
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses
by writing mailed or delivered to the Trustee.
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<PAGE> 6
8. Priorities. In the event that any term or provision of the
face of this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions from Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event that Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
10.Surrender of Policy. The Indenture Trustee shall, upon
request, surrender this Policy to Financial Security for cancellation upon
expiration of the Term of this Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused
this Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By
------------------------------------------
Authorized Officer
6
<PAGE> 7
EXHIBIT A
CERTIFICATE OF CLAIM
(Letterhead of Trustee)
Dated:
------------------------
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President
Re: WFS Financial ______Owner Trust
The undersigned, a duly authorized officer of Bankers Trust
Company (the "Indenture Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. _________ dated _______________ (the "Policy") issued by
Financial Security in respect of the $_______________ ____% Auto Receivable
Backed Notes, Class A-1, $_______________ ___% Auto Receivable Backed Notes,
Class A-2, $_______________ ____% Auto Receivable Backed Notes, Class A-3, and
$_______________ ____% Auto Receivable Backed Notes, Class A-4, (collectively,
the "Obligations") that:
(i) The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
(ii) the sum of all amounts on deposit (or scheduled to be on
deposit) in the Collection Account and Spread Account and available for
application in accordance with the Sale and Servicing Agreement will be
$_________ (the "RIC Shortfall") less than the Guaranteed RIC Payment.
Of such RIC Shortfall, $__________ is attributable to the Guaranteed RIC
Payment amount to be paid to the Indenture Trustee for deposit into the
Collection Account and $__________ is attributable to Guaranteed RIC
Payment amount to be paid to the Indenture Trustee as collateral agent
for deposit into the Spread Account.
(iii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Note Distribution Account and available for distribution
to the Holders pursuant to the Indenture will be $ (the "Note
Shortfall") less than the aggregate amount of Scheduled Payments with
respect to [DISTRIBUTION DATE]. Of such Note Shortfall, $__________ is
attributable to Scheduled Payments to be made to Holders of the
Obligations.
(iv) The Indenture Trustee is making a claim under the Policy
[(i) for the RIC Shortfall to be applied to payment of the Guaranteed
RIC Payment and (ii)] for the Note
<PAGE> 8
Shortfall to be applied to distributions of principal or interest or
both with respect to the Obligations.
(v) The Indenture Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Guaranteed Payments; (b) not
apply such funds for any other purpose; (c) not commingle such funds
with other funds held by the Indenture Trustee; and (d) maintain an
accurate record of such payments with respect to each Obligation and
with respect to the RIC and the corresponding claim on the Policy and
proceeds thereof and, if the Obligation is required to be surrendered or
presented for such payment, shall stamp on each such Obligation the
legend $"[insert applicable amount] paid by Financial Security and the
balance hereof has been cancelled and reissued" and then shall deliver
such Obligation to Financial Security.
(vi) The Indenture Trustee, on behalf of the Holders, hereby
assigns to Financial Security the rights of the Holders with respect to
the Obligations to the extent of any payments under the Policy,
including, without limitation, any amounts due to the Holders in respect
of securities law violations arising from the offer and sale of the
Obligations and any amounts due and owing but unpaid under the RIC. The
foregoing assignment is in addition to, and not in limitation of, rights
of subrogation otherwise available to Financial Security in respect of
such payments. Payments to Financial Security in respect of the
foregoing assignment shall in all cases be subject to and subordinate to
the rights of the Holders to receive all Guaranteed Payments in respect
of the Obligations. The Indenture Trustee shall take such action and
deliver such instruments as may be reasonably requested or required by
Financial Security to effectuate the purpose or provisions of this
clause (vi).
(vii) The Indenture Trustee, on its behalf and on behalf of the
Holders, hereby appoints Financial Security as agent and
attorney-in-fact for the Indenture Trustee and each such Holder in any
legal proceeding with respect to the Obligations. The Indenture Trustee
hereby agrees that Financial Security may at any time during the
continuation of any proceeding by or against any debtor with respect to
which a preference claim (as defined below) or other claim with respect
to the Obligations or the RIC is being asserted under the United States
Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding")
direct all matters relating to such Insolvency Proceeding, including
without limitation, (A) all matters relating to any claim in connection
with an Insolvency Proceeding seeking the avoidance as a preferential
transfer of any payment made with respect to the Obligations or the RIC
(a "Preference Claim"), (B) the direction of any appeal of any order
relating to any Preference Claim at the expense of Financial Security
but subject to reimbursement as provided in the Insurance Agreement and
(C) the posting of any surety, supersedeas or performance bond pending
any such appeal. In addition, the Indenture Trustee hereby agrees that
Financial Security shall be subrogated to, and the Indenture Trustee on
its behalf and on behalf of each Holder, hereby delegates and assigns,
to the fullest extent permitted by law, the rights of the Indenture
Trustee and each Holder in the conduct of any Insolvency Proceeding,
including, without limitation, all
2
<PAGE> 9
rights of any party to an adversary proceeding or action with respect to
any court order issued in connection with any such Insolvency
Proceeding.
(viii) Payment should be made by wire transfer directed to
[SPECIFY ACCOUNT].
Unless the context otherwise requires, any capitalized term used
in this Certificate of Claim shall have the meaning assigned thereto in the
Policy, including in the Endorsement thereto.
IN WITNESS WHEREOF, the Indenture Trustee has executed and
delivered this Certificate of Claim as of the day of , 20 .
------------------------------------
not in its individual capacity
but solely as Indenture Trustee
By:
---------------------------------
Name:
Title:
- --------------------------------------------------------------------------------
For Financial Security Assurance Inc. or Fiscal Agent use only. Wire transfer
sent on _________________ by ____________________________Confirmation Number
____________.
3
<PAGE> 1
EXHIBIT 10.5.1
INDEMNIFICATION AGREEMENT
dated as of ___________
by and among
FINANCIAL SECURITY ASSURANCE INC.
WFS FINANCIAL AUTO LOANS, INC.
WFS FINANCIAL INC
and
-------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions.........................................................................1
2. Representations and Warranties of the Insurer.......................................3
3. Agreements, Representations and Warranties of the Underwriters......................4
4. Representation and Warranty of the Seller and WFS...................................4
5. Indemnifications....................................................................5
6. Insurer Undertaking.................................................................5
7. Notice To Be Given Insurer..........................................................5
8. Notice To Be Given Underwriters.....................................................6
9. Contribution........................................................................7
10. Notices.............................................................................8
11. Governing Law, Etc..................................................................8
12. Insurance Agreement; Underwriter Agreement..........................................8
</TABLE>
<PAGE> 3
INDEMNIFICATION AGREEMENT
This Agreement, effective as of ______________, by and among
FINANCIAL SECURITY ASSURANCE INC. (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy issued in connection with the Notes (as
hereinafter defined), WFS FINANCIAL AUTO LOANS, INC. (the "Seller"), WFS
FINANCIAL INC ("WFS") and _______________________, as representative (the
"Representative") of the several Underwriters named in the Underwriting
Agreement referred to below.
1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings stated below:
"Agreement" means this Indemnification Agreement by and
among the Insurer, the Seller, WFS and the Representative.
"Certificates" means the trust certificates evidencing the
undivided beneficial ownership interests in the Trust.
"Federal Securities Laws" means the Securities Act of 1933
(the "1933 Act"), the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Company Act of 1940, the
Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, all as amended from time to time, and any
rule or regulation in effect from time to time under any such
act.
"Indemnified Party" means any party entitled to any
indemnification pursuant to Section 5 below, as the context
requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 5 below, as the context
requires.
"Indenture" means the Indenture, dated as of the date
hereof, by and between the Trust and Bankers Trust Company, as
Indenture Trustee.
"Insurance Agreement" means the Insurance, Indemnity and
Pledge Agreement, dated as of the date hereof, by and among the
Trust, the Seller, WFS, WFS Investments, Inc. ("WII"), the
Insurer and Bankers Trust Company, as Collateral Agent, Proceeds
Agent and Indenture Trustee.
"Insurance Laws" means any state, local or foreign
statute, and any rule or regulation thereunder, regulating (i)
transactions and dealings in insurance or (ii) any Person or
entity engaging in the business of issuing, selling or otherwise
providing insurance.
"Insurer Party" means any of the Insurer and/or its
parent, subsidiaries and affiliates, and any shareholder,
director, officer, employee, agent or "controlling person" (as
such term is defined under any Federal Securities Law) of any of
the foregoing.
<PAGE> 4
"Losses" means (i) any actual out-of-pocket loss paid by
the party entitled to indemnification or contribution, (ii) any
actual out-of-pocket costs or expenses paid by such party,
including reasonable fees and expenses of its counsel, to the
extent not paid, satisfied or reimbursed from funds provided by
any other Person (provided that the foregoing shall not create or
imply any obligation to pursue recourse against any such other
Person), plus (iii) interest on the amount paid by the party
entitled to indemnification or contribution from the date of such
payment to the date of payment by the party who is obligated to
indemnify or contribute hereunder at the statutory rate
applicable to judgments for breach of contract.
"Notes" means $________ ____% Auto Receivable Backed
Notes, Class A-1, $________ ____% Auto Receivable Backed Notes,
Class A-2, $________ ____% Auto Receivable Backed Notes, Class
A-3 and $__________ ____% Auto Receivable Backed Notes, Class
A-4.
"Offering Documents" means the Prospectus and any
materials or documents delivered by an Underwriter or any
Underwriter Party to any Person in connection with the offer or
sale of the Notes.
"Person" means any individual, partnership, joint venture,
limited liability company, corporation, trust or unincorporated
organization or any government or agency or political subdivision
thereof.
"Policy" means the financial guaranty insurance policy
(including the endorsement thereto) (Policy No. ________) issued
by the Insurer in support of the Notes.
"Prospectus" means the Prospectus dated _____________
relating to the Notes, as supplemented by the Prospectus
Supplement dated ____________ as filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities
Act of 1933, as amended.
"Seller Party" means the Seller and WFS and any director,
officer, employee, agent or "controlling person" (as such term is
defined under any Federal Securities Law) of either the Seller or
WFS.
"Trust" means WFS Financial ______ Owner Trust.
"Trust Agreement" means the Trust Agreement dated as of
___________, by and among the Seller, WII, the Insurer and Chase
Manhattan Bank Delaware, as Owner Trustee.
"Underwriter Party" means any of the Underwriters, their
parents, subsidiaries and affiliates and any shareholder,
director, officer, employee, agent or "controlling person" (as
such term is defined under any Federal Securities Law) of any of
the foregoing.
"Underwriters" means _____________________________.
"Underwriting Agreement" means the Underwriting Agreement
dated ______________, among the Seller, WFS and the
Representative.
2
<PAGE> 5
2. Representations and Warranties of the Insurer. The Insurer
represents and warrants as follows:
(a) Organization and Licensing. The Insurer is a duly
incorporated and existing New York financial guaranty insurance
company licensed to do business in the State of New York.
(b) Corporate Power. The Insurer has the corporate power
and authority to issue the Policy and execute and deliver this
Agreement, the Trust Agreement and the Insurance Agreement and to
perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. The issuance of the Policy
and the execution, delivery and performance of this Agreement,
the Trust Agreement and the Insurance Agreement have been duly
authorized by all necessary corporate proceedings. No further
approvals or filings of any kind, including, without limitation,
any further approvals of or further filing with any governmental
agency or other governmental authority, or any approval of the
Insurer's board of directors or stockholders, are necessary for
the Policy, this Agreement, the Trust Agreement and the Insurance
Agreement to constitute the legal, valid and binding obligations
of the Insurer.
(d) Enforceability. The Policy, when issued, this
Agreement, the Trust Agreement and the Insurance Agreement will
each constitute a legal, valid and binding obligation of the
Insurer, enforceable in accordance with its terms subject, as to
the enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the
Insurer and to general principles of equity.
(e) Financial Information. The consolidated balance sheet
of the Insurer as of December 31, ____ and as of December 31,
____, and the related consolidated statements of income, changes
in shareholder's equity, and cash flows for the three fiscal
years then ended, and the accompanying footnotes, together with
the report thereon of Coopers & Lybrand LLP, independent
auditors, and the unaudited interim consolidated balance sheet of
the Insurer as of June 30, ____ and the related consolidated
statements of income, changes in shareholder's equity and
cashflows for the three-month periods ended June 30, ____ and
June 30, ____, copies of which are included in the Prospectus
(collectively, the "Insurer Financial Statements"), fairly
present in all material respects the financial condition of the
Insurer as of such dates and for the periods covered by such
statements in accordance with generally accepted accounting
principles consistently applied and, since June 30, ____, there
has been no material change in the financial condition of the
Insurer that would materially and adversely affect its ability to
perform its obligations under the Policy.
(f) Insurer. The information in the Prospectus as of the
date hereof under the caption "Financial Security Assurance Inc."
that describes the Insurer and certain aspects of the principal
business in which the Insurer is engaged (collectively, the
"Insurer Information"), is true and correct in all material
respects
3
<PAGE> 6
and does not contain any untrue statement of a fact that is
material to the Insurer's ability to perform its obligations
under the Policy or omit to state a fact (i) required to be
stated therein that is material to the Insurer's ability to
perform its obligations under the Policy or (ii) necessary in
order to make statements therein that are material to the
Insurer's ability to perform its obligations under the Policy, in
light of the circumstances under which such statements are being
made, not materially misleading.
(g) No Litigation. There are no actions, suits,
proceedings or investigations pending, or to the best of the
Insurer's knowledge, threatened against it at law or in equity or
before or by any court, governmental agency, board or commission
or any arbitrator that, if decided adversely, would materially
and adversely affect its condition (financial or otherwise) or
operations or would materially and adversely affect its ability
to perform its obligations under this Agreement, the Trust
Agreement, the Indenture or the Policy.
Nothing in this Agreement shall be construed as a representation
or undertaking by the Insurer concerning the rating currently assigned to its
claims-paying ability by Moody's Investors Service, Inc. ("Moody's") and/or
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or any
other rating agency (collectively, the "Rating Agencies"). The Rating Agencies,
in assigning such rating, may take into account facts and assumptions not
described in the Prospectus and the facts and assumptions that are considered by
the Rating Agencies are subject to change over time. The Insurer has not
attempted to disclose all facts and assumptions that the Rating Agencies deem
relevant in assigning a rating within a particular rating category to the
Insurer's claims-paying ability. Notwithstanding the foregoing, the Insurer is
not aware of any facts that, if disclosed to Moody's or S&P, would be reasonably
expected to result in a downgrade of the rating of the claims-paying ability of
the Insurer by either of such Rating Agencies.
3. Agreements, Representations and Warranties of the
Underwriters. The Underwriters, severally and not jointly, represent, warrant
and agree with the Insurer as follows:
(a) Each of the Underwriters agrees not to use any
information relating to the Insurer (other than the information
contained in the Prospectus) unless such information has been
approved by the Insurer in writing, such approval not to be
unreasonably withheld.
(b) Each of the Underwriters represents and warrants that
all material provided by the Underwriter for inclusion in the
Prospectus (being the information set forth in the second, third
and sixth paragraphs under "Underwriting" in the Prospectus,
including any information in any amendment or supplement to the
Prospectus furnished that amends or supplements such
information), insofar as such information relates to the
Underwriter (all such information being collectively referred to
herein as the "Underwriter Information"), is true and correct in
all material respects.
4. Representation and Warranty of the Seller and WFS. The Seller
and WFS jointly and severally represent and warrant to the Insurer and the
Underwriters that the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the circumstances under which
4
<PAGE> 7
they were made, not misleading (except that no representation or warranty is
made with respect to the Insurer Information, the Insurer Financial Statements
or the Underwriter Information).
5. Indemnifications.
(a) The Insurer hereby agrees, upon the terms and subject
to the conditions of this Agreement, to indemnify, defend and
hold harmless each Seller Party and each Underwriter Party
against any and all Losses incurred by them with respect to the
offer and sale of the Notes and resulting from the Insurer's
breach of any of its representations and warranties set forth in
Section 2 of this Agreement.
(b) Each of the Underwriters hereby agrees, severally and
not jointly, upon the terms and subject to the conditions of this
Agreement, to indemnify, defend and hold harmless each Insurer
Party and each Seller Party against any and all Losses incurred
by them with respect to the offer and sale of the Notes and
resulting from such Underwriter's breach of any of its
representations and warranties set forth in Section 3 of this
Agreement.
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party
shall reimburse the Indemnified Party promptly upon establishment
by the Indemnified Party to the Indemnifying Party of the Losses
incurred.
6. Insurer Undertaking. The Insurer hereby agrees that, for a
period of seven years hereafter, the Insurer will furnish to the Underwriters or
the Seller, upon request and at the expense of the Underwriters or the Seller,
as the case may be, copies of the Insurer's most recent financial statements
(annual or interim, as the case may be) prepared in accordance with generally
accepted accounting principles (subject, as to interim statements, to normal
year-end adjustments) within a reasonable time after they are available. In
addition, until the ninety-first (91st) day following the date of the
Prospectus, the Insurer will promptly provide the Underwriters and the Seller
with any revisions to the Insurer Information that are in the judgment of the
Insurer necessary to prepare an amended Prospectus or a supplement to the
Prospectus or to be incorporated by reference into the Prospectus (as may then
be amended or supplemented) as described in the Prospectus under "Incorporation
of Certain Documents by Reference".
7. Notice To Be Given Insurer. Except as provided in Section 9,
the indemnification provided herein by the Insurer shall be the exclusive remedy
of any Underwriter Party or Seller Party for the Insurer's breach of a
representation or warranty hereunder; provided, however, that any Underwriter
Party or Seller Party shall be entitled to pursue any other remedy at law or in
equity for any such breach so long as the damages sought to be recovered shall
not exceed the Losses incurred thereby resulting from such breach. In the event
that any action or regulatory proceeding shall be commenced or claim asserted
that may entitle an Underwriter Party or Seller Party to be indemnified under
this Agreement, such party shall give the Insurer written or telegraphic notice
of such action or claim reasonably promptly after receipt of written notice
thereof. The Insurer shall be entitled to participate in the defense of any such
action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Seller Party or Underwriter Party, as the case may be. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Insurer, but the fees and expenses of
such counsel will be at the expense of such Indemnified Party, unless (1) the
5
<PAGE> 8
employment of counsel by the Indemnified Party at its expense has been
authorized in writing by the Insurer, (2) the Insurer has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (3) the named parties to
any such action or proceeding (including any impleaded parties) include both the
Insurer and the Indemnified Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the Insurer (it
being understood, however, that the Insurer shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnified Party,
which firm shall be designated in writing by the Indemnified Party), in each of
which cases the fees and expenses of counsel will be at the expense of the
Insurer and all such fees and expenses will be reimbursed promptly as they are
incurred. No settlement of any such claim or action shall be entered into
without the consent of the Seller Party or Underwriter Party, as the case may
be, on the one hand and each Insurer Party who is subject to such claim or
action on the other hand. Any failure by a Seller Party or Underwriter Party, as
the case may be, to comply with the provisions of this Section shall relieve the
Insurer of liability only if such failure is substantially prejudicial to the
Insurer's position and then only to the extent of such prejudice.
8. Notice To Be Given Underwriters. Except as provided in Section
9, the indemnification provided herein by the Underwriters shall be the
exclusive remedy of any Insurer Party for any Underwriter's breach of a
representation, warranty or agreement hereunder; provided, however, that each
Insurer Party shall be entitled to pursue any other remedy at law or in equity
for any such breach so long as the damages sought to be recovered shall not
exceed the Losses incurred thereby resulting from such breach. In the event that
any action or regulatory proceeding shall be commenced or claim asserted that
may entitle an Insurer Party to be indemnified under this Agreement, such party
shall give the Underwriters written or telegraphic notice of such action or
claim reasonably promptly after receipt of written notice thereof. The
Underwriters shall be entitled to participate in the defense of any such action
or claim in reasonable cooperation with, and with the reasonable cooperation of,
the Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Underwriters, but
the fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (1) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Underwriters; (2) the Underwriters
have not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action; or (3)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Insurer and the Indemnified Party, and the Insurer
shall have been advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Indemnified Party (it being understood, however, that the Indemnified Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Insurer, which firm shall be designated in writing by the Insurer),
in each of which cases the fees and expenses of counsel will be at the expense
of the Underwriters and all such fees and expenses will be reimbursed promptly
as they are incurred. No settlement of any such claim or action shall be entered
into without the consent of the Insurer and each Underwriter Party. Any
6
<PAGE> 9
failure by an Insurer Party to comply with the provisions of this Section shall
relieve the Underwriters of liability only if such failure is substantially
prejudicial to the Underwriters' position and then only to the extent of such
prejudice.
9. Contribution. To provide for just and equitable contribution
if the indemnification provided for pursuant to this Agreement is determined to
be unavailable for any Underwriter Party, Insurer Party or Seller Party (other
than due to application of this Section), the Insurer, the Seller, WFS and the
Underwriters, as the case may be, shall contribute to the aggregate costs of
liabilities arising from any breach of a representation or warranty set forth in
this Agreement (i) in such proportion as is appropriate to reflect the relative
benefits received by the Insurer, the Seller and WFS pursuant to the
Underwriting Agreement and the Underwriters from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Insurer, the Seller, WFS and the Underwriters in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Seller and WFS, the Insurer and the
Underwriters shall be deemed to be, respectively, in the same proportions as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Seller, the premiums on the
Policy to be paid to the Insurer and the underwriting discounts and commissions
received by the Underwriters. The relative fault of each Indemnifying Party, on
the one hand, and of each Indemnified Party, on the other, shall be determined
by reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth in Section 2, 3 or 4 of
this Agreement relates to information supplied by, or an action within the
control of, the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and the opportunity to correct
or prevent such breach. The parties agree that the Insurer shall be solely
responsible for the Insurer Information, the Underwriters shall be solely
responsible for the Underwriter Information and the Seller and WFS shall be
jointly and severally responsible for all other information in the Prospectus.
Notwithstanding anything in this Section 9 to the contrary, with
respect to contribution between any Seller Party and any Underwriter Party, the
Underwriter Parties shall not be required to contribute an amount in excess of
the amount by which the total price of the sum of the Notes sold by such
Underwriter Parties exceeds the amount of any damages that such Underwriter
Parties have otherwise been required to pay in respect of such untrue or alleged
untrue statement or omission or alleged omission; provided, however, that the
terms of the contribution between any Seller Party and any Underwriter Party
contained in the Underwriting Agreement shall control to the extent they are
inconsistent with or in addition to the terms of this Section 9. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (a)
any investigation made by or on behalf of any Underwriter Party or any Insurer
Party (b) the issuance of the Notes or the Policy or (c) any termination of this
Agreement. The indemnification provided in this Agreement will be in addition to
any liability that the parties may otherwise have.
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<PAGE> 10
Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution of the Losses
incurred.
10. Notices. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President -
Surveillance
If to the Seller: WFS Financial Auto Loans, Inc.
23 Pasteur
Irvine, California 92618
Attention: Thomas A. Wolfe
If to WFS: WFS Financial Inc
23 Pasteur
Irvine, California 92618
Attention: Guy DuBose, Esq.
If to the Underwriters:
11. Governing Law, Etc. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York. This Agreement
may not be assigned by any party without the express written consent of each
other party. Any assignment made in violation of this Agreement shall be null
and void. Amendments of this Agreement shall be in writing signed by each party.
This Agreement shall not be effective until executed by each of the Insurer, the
Seller, WFS and the Representative.
12. Insurance Agreement; Underwriter Agreement. This Agreement in
no way limits or otherwise affects the indemnification and contribution
obligations of the Seller and WFS under the Insurance Agreement.
8
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
-------------------------------------
Authorized Officer
WFS FINANCIAL AUTO LOANS, INC.
By:
--------------------------------------
Title:
-----------------------------------
WFS FINANCIAL INC
By:
--------------------------------------
Title:
-----------------------------------
as Representative of the several
Underwriters
By:
--------------------------------------
Title:
-----------------------------------
9
<PAGE> 1
EXHIBIT 10.5.2
INDEMNIFICATION AGREEMENT
dated as of ___________
by and among
FINANCIAL SECURITY ASSURANCE INC.
WFS FINANCIAL AUTO LOANS, INC.
WFS RECEIVABLES CORPORATION
WFS FINANCIAL INC
and
-------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions.........................................................................1
2. Representations and Warranties of the Insurer.......................................3
3. Agreements, Representations and Warranties of the Underwriters......................4
4. Representation and Warranty of WFAL, WFSRC..........................................4
5. Indemnifications....................................................................5
6. Insurer Undertaking.................................................................5
7. Notice To Be Given Insurer..........................................................5
8. Notice To Be Given Underwriters.....................................................6
9. Contribution........................................................................7
10. Notices.............................................................................8
11. Governing Law, Etc..................................................................8
12. Insurance Agreement; Underwriter Agreement..........................................8
</TABLE>
<PAGE> 3
INDEMNIFICATION AGREEMENT
This Agreement, effective as of ______________, by and among
FINANCIAL SECURITY ASSURANCE INC. (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy issued in connection with the Notes (as
hereinafter defined), WFS FINANCIAL AUTO LOANS, INC. ("WFAL"), WFS RECEIVABLES
CORPORATION ("WFSRC"), WFS FINANCIAL INC ("WFS") and _______________________, as
representative (the "Representative") of the several Underwriters named in the
Underwriting Agreement referred to below.
1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings stated below:
"Agreement" means this Indemnification Agreement by and
among the Insurer, WFAL, WFSRC, WFS and the Representative.
"Certificates" means the trust certificates evidencing the
undivided beneficial ownership interests in the Trust.
"Federal Securities Laws" means the Securities Act of 1933
(the "1933 Act"), the Securities Exchange Act of 1934, the Trust
Indenture Act of 1939, the Investment Company Act of 1940, the
Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, all as amended from time to time, and any
rule or regulation in effect from time to time under any such
act.
"Indemnified Party" means any party entitled to any
indemnification pursuant to Section 5 below, as the context
requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 5 below, as the context
requires.
"Indenture" means the Indenture, dated as of the date
hereof, by and between the Trust and Bankers Trust Company, as
Indenture Trustee.
"Insurance Agreement" means the Insurance, Indemnity and
Pledge Agreement, dated as of the date hereof, by and among the
Trust, WFAL, WFSRC, WFS, the Insurer and Bankers Trust Company,
as Collateral Agent, Proceeds Agent and Indenture Trustee.
"Insurance Laws" means any state, local or foreign
statute, and any rule or regulation thereunder, regulating (i)
transactions and dealings in insurance or (ii) any Person or
entity engaging in the business of issuing, selling or otherwise
providing insurance.
"Insurer Party" means any of the Insurer and/or its
parent, subsidiaries and affiliates, and any shareholder,
director, officer, employee, agent or "controlling person" (as
such term is defined under any Federal Securities Law) of any of
the foregoing.
<PAGE> 4
"Losses" means (i) any actual out-of-pocket loss paid by
the party entitled to indemnification or contribution, (ii) any
actual out-of-pocket costs or expenses paid by such party,
including reasonable fees and expenses of its counsel, to the
extent not paid, satisfied or reimbursed from funds provided by
any other Person (provided that the foregoing shall not create or
imply any obligation to pursue recourse against any such other
Person), plus (iii) interest on the amount paid by the party
entitled to indemnification or contribution from the date of such
payment to the date of payment by the party who is obligated to
indemnify or contribute hereunder at the statutory rate
applicable to judgments for breach of contract.
"Notes" means $________ ____% Auto Receivable Backed
Notes, Class A-1, $________ ____% Auto Receivable Backed Notes,
Class A-2, and $________ ____% Auto Receivable Backed Notes,
Class A-3 and $ % Auto Receivable Backed Notes, Class A-4.
"Offering Documents" means the Prospectus and any
materials or documents delivered by an Underwriter or any
Underwriter Party to any Person in connection with the offer or
sale of the Notes.
"Person" means any individual, partnership, joint venture,
limited liability company, corporation, trust or unincorporated
organization or any government or agency or political subdivision
thereof.
"Policy" means the financial guaranty insurance policy
(including the endorsement thereto) (Policy No. ________) issued
by the Insurer in support of the Notes.
"Prospectus" means the Prospectus dated _____________
relating to the Notes, as supplemented by the Prospectus
Supplement dated ____________ as filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities
Act of 1933, as amended.
"Seller Party" means WFAL, WFSRC and WFS and any director,
officer, employee, agent or "controlling person" (as such term is
defined under any Federal Securities Law) of either WFAL, WFSRC
or WFS.
"Trust" means WFS Financial ______ Owner Trust.
"Trust Agreement" means the Trust Agreement dated as of
___________, by and among the WFAL, WFSRC, the Insurer and Chase
Manhattan Bank Delaware, as Owner Trustee.
"Underwriter Party" means any of the Underwriters, their
parents, subsidiaries and affiliates and any shareholder,
director, officer, employee, agent or "controlling person" (as
such term is defined under any Federal Securities Law) of any of
the foregoing.
"Underwriters" means _____________________________.
"Underwriting Agreement" means the Underwriting Agreement
dated ______________, among WFAL, WFSRC, WFS and the
Representative.
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<PAGE> 5
2. Representations and Warranties of the Insurer. The Insurer
represents and warrants as follows:
(a) Organization and Licensing. The Insurer is a duly
incorporated and existing New York financial guaranty insurance
company licensed to do business in the State of New York.
(b) Corporate Power. The Insurer has the corporate power
and authority to issue the Policy and execute and deliver this
Agreement, the Trust Agreement and the Insurance Agreement and to
perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. The issuance of the Policy
and the execution, delivery and performance of this Agreement,
the Trust Agreement and the Insurance Agreement have been duly
authorized by all necessary corporate proceedings. No further
approvals or filings of any kind, including, without limitation,
any further approvals of or further filing with any governmental
agency or other governmental authority, or any approval of the
Insurer's board of directors or stockholders, are necessary for
the Policy, this Agreement, the Trust Agreement and the Insurance
Agreement to constitute the legal, valid and binding obligations
of the Insurer.
(d) Enforceability. The Policy, when issued, this
Agreement, the Trust Agreement and the Insurance Agreement will
each constitute a legal, valid and binding obligation of the
Insurer, enforceable in accordance with its terms subject, as to
the enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the
Insurer and to general principles of equity.
(e) Financial Information. The consolidated balance sheet
of the Insurer as of December 31, ____ and as of December 31,
____, and the related consolidated statements of income, changes
in shareholder's equity, and cash flows for the three fiscal
years then ended, and the accompanying footnotes, together with
the report thereon of Coopers & Lybrand LLP, independent
auditors, and the unaudited interim consolidated balance sheet of
the Insurer as of June 30, ____ and the related consolidated
statements of income, changes in shareholder's equity and
cashflows for the three-month periods ended June 30, ____ and
June 30, ____, copies of which are included in the Prospectus
(collectively, the "Insurer Financial Statements"), fairly
present in all material respects the financial condition of the
Insurer as of such dates and for the periods covered by such
statements in accordance with generally accepted accounting
principles consistently applied and, since June 30, ____, there
has been no material change in the financial condition of the
Insurer that would materially and adversely affect its ability to
perform its obligations under the Policy.
(f) Insurer. The information in the Prospectus as of the
date hereof under the caption "Financial Security Assurance Inc."
that describes the Insurer and certain aspects of the principal
business in which the Insurer is engaged (collectively, the
"Insurer Information"), is true and correct in all material
respects
3
<PAGE> 6
and does not contain any untrue statement of a fact that is
material to the Insurer's ability to perform its obligations
under the Policy or omit to state a fact (i) required to be
stated therein that is material to the Insurer's ability to
perform its obligations under the Policy or (ii) necessary in
order to make statements therein that are material to the
Insurer's ability to perform its obligations under the Policy, in
light of the circumstances under which such statements are being
made, not materially misleading.
(g) No Litigation. There are no actions, suits,
proceedings or investigations pending, or to the best of the
Insurer's knowledge, threatened against it at law or in equity or
before or by any court, governmental agency, board or commission
or any arbitrator that, if decided adversely, would materially
and adversely affect its condition (financial or otherwise) or
operations or would materially and adversely affect its ability
to perform its obligations under this Agreement, the Trust
Agreement, the Indenture or the Policy.
Nothing in this Agreement shall be construed as a representation
or undertaking by the Insurer concerning the rating currently assigned to its
claims-paying ability by Moody's Investors Service, Inc. ("Moody's") and/or
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or any
other rating agency (collectively, the "Rating Agencies"). The Rating Agencies,
in assigning such rating, may take into account facts and assumptions not
described in the Prospectus and the facts and assumptions that are considered by
the Rating Agencies are subject to change over time. The Insurer has not
attempted to disclose all facts and assumptions that the Rating Agencies deem
relevant in assigning a rating within a particular rating category to the
Insurer's claims-paying ability. Notwithstanding the foregoing, the Insurer is
not aware of any facts that, if disclosed to Moody's or S&P, would be reasonably
expected to result in a downgrade of the rating of the claims-paying ability of
the Insurer by either of such Rating Agencies.
3. Agreements, Representations and Warranties of the
Underwriters. The Underwriters, severally and not jointly, represent, warrant
and agree with the Insurer as follows:
(a) Each of the Underwriters agrees not to use any
information relating to the Insurer (other than the information
contained in the Prospectus) unless such information has been
approved by the Insurer in writing, such approval not to be
unreasonably withheld.
(b) Each of the Underwriters represents and warrants that
all material provided by the Underwriter for inclusion in the
Prospectus (being the information set forth in the second, third
and sixth paragraphs under "Underwriting" in the Prospectus,
including any information in any amendment or supplement to the
Prospectus furnished that amends or supplements such
information), insofar as such information relates to the
Underwriter (all such information being collectively referred to
herein as the "Underwriter Information"), is true and correct in
all material respects.
4. Representation and Warranty of WFAL, WFSRC. WFAL, WFSRC and
WFS jointly and severally represent and warrant to the Insurer and the
Underwriters that the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the circumstances under which
4
<PAGE> 7
they were made, not misleading (except that no representation or warranty is
made with respect to the Insurer Information, the Insurer Financial Statements
or the Underwriter Information).
5. Indemnifications.
(a) The Insurer hereby agrees, upon the terms and subject
to the conditions of this Agreement, to indemnify, defend and
hold harmless each Seller Party and each Underwriter Party
against any and all Losses incurred by them with respect to the
offer and sale of the Notes and resulting from the Insurer's
breach of any of its representations and warranties set forth in
Section 2 of this Agreement.
(b) Each of the Underwriters hereby agrees, severally and
not jointly, upon the terms and subject to the conditions of this
Agreement, to indemnify, defend and hold harmless each Insurer
Party and each Seller Party against any and all Losses incurred
by them with respect to the offer and sale of the Notes and
resulting from such Underwriter's breach of any of its
representations and warranties set forth in Section 3 of this
Agreement.
(c) Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party
shall reimburse the Indemnified Party promptly upon establishment
by the Indemnified Party to the Indemnifying Party of the Losses
incurred.
6. Insurer Undertaking. The Insurer hereby agrees that, for a
period of seven years hereafter, the Insurer will furnish to the Underwriters,
WFAL or WFSRC, upon request and at the expense of the Underwriters, WFAL or
WFSRC, as the case may be, copies of the Insurer's most recent financial
statements (annual or interim, as the case may be) prepared in accordance with
generally accepted accounting principles (subject, as to interim statements, to
normal year-end adjustments) within a reasonable time after they are available.
In addition, until the ninety-first (91st) day following the date of the
Prospectus, the Insurer will promptly provide the Underwriters, WFAL and WFSRC
with any revisions to the Insurer Information that are in the judgment of the
Insurer necessary to prepare an amended Prospectus or a supplement to the
Prospectus or to be incorporated by reference into the Prospectus (as may then
be amended or supplemented) as described in the Prospectus under "Incorporation
of Certain Documents by Reference".
7. Notice To Be Given Insurer. Except as provided in Section 9,
the indemnification provided herein by the Insurer shall be the exclusive remedy
of any Underwriter Party or Seller Party for the Insurer's breach of a
representation or warranty hereunder; provided, however, that any Underwriter
Party or Seller Party shall be entitled to pursue any other remedy at law or in
equity for any such breach so long as the damages sought to be recovered shall
not exceed the Losses incurred thereby resulting from such breach. In the event
that any action or regulatory proceeding shall be commenced or claim asserted
that may entitle an Underwriter Party or Seller Party to be indemnified under
this Agreement, such party shall give the Insurer written or telegraphic notice
of such action or claim reasonably promptly after receipt of written notice
thereof. The Insurer shall be entitled to participate in the defense of any such
action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Seller Party or Underwriter Party, as the case may be. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Insurer, but the fees and
5
<PAGE> 8
expenses of such counsel will be at the expense of such Indemnified Party,
unless (1) the employment of counsel by the Indemnified Party at its expense has
been authorized in writing by the Insurer, (2) the Insurer has not in fact
employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action or (3) the named
parties to any such action or proceeding (including any impleaded parties)
include both the Insurer and the Indemnified Party, and the Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Insurer (it being understood, however, that the Insurer shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Indemnified Party, which firm shall be designated in writing by the Indemnified
Party), in each of which cases the fees and expenses of counsel will be at the
expense of the Insurer and all such fees and expenses will be reimbursed
promptly as they are incurred. No settlement of any such claim or action shall
be entered into without the consent of the Seller Party or Underwriter Party, as
the case may be, on the one hand and each Insurer Party who is subject to such
claim or action on the other hand. Any failure by a Seller Party or Underwriter
Party, as the case may be, to comply with the provisions of this Section shall
relieve the Insurer of liability only if such failure is substantially
prejudicial to the Insurer's position and then only to the extent of such
prejudice.
8. Notice To Be Given Underwriters. Except as provided in Section
9, the indemnification provided herein by the Underwriters shall be the
exclusive remedy of any Insurer Party for any Underwriter's breach of a
representation, warranty or agreement hereunder; provided, however, that each
Insurer Party shall be entitled to pursue any other remedy at law or in equity
for any such breach so long as the damages sought to be recovered shall not
exceed the Losses incurred thereby resulting from such breach. In the event that
any action or regulatory proceeding shall be commenced or claim asserted that
may entitle an Insurer Party to be indemnified under this Agreement, such party
shall give the Underwriters written or telegraphic notice of such action or
claim reasonably promptly after receipt of written notice thereof. The
Underwriters shall be entitled to participate in the defense of any such action
or claim in reasonable cooperation with, and with the reasonable cooperation of,
the Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Underwriters, but
the fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (1) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Underwriters; (2) the Underwriters
have not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action; or (3)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Insurer and the Indemnified Party, and the Insurer
shall have been advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Indemnified Party (it being understood, however, that the Indemnified Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Insurer, which firm shall be designated in writing by the Insurer),
in each of which cases the fees and expenses of counsel will be at the expense
of the Underwriters and all such fees and expenses will be reimbursed promptly
as they are incurred. No settlement of any such claim or
6
<PAGE> 9
action shall be entered into without the consent of the Insurer and each
Underwriter Party. Any failure by an Insurer Party to comply with the provisions
of this Section shall relieve the Underwriters of liability only if such failure
is substantially prejudicial to the Underwriters' position and then only to the
extent of such prejudice.
9. Contribution. To provide for just and equitable contribution
if the indemnification provided for pursuant to this Agreement is determined to
be unavailable for any Underwriter Party, Insurer Party or Seller Party (other
than due to application of this Section), the Insurer, WFAL, WFSRC, WFS and the
Underwriters, as the case may be, shall contribute to the aggregate costs of
liabilities arising from any breach of a representation or warranty set forth in
this Agreement (i) in such proportion as is appropriate to reflect the relative
benefits received by the Insurer, WFAL, WFSRC and WFS pursuant to the
Underwriting Agreement and the Underwriters from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Insurer, WFAL, WFSRC, WFS and the Underwriters in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by WFAL, WFSRC and WFS, the Insurer and the
Underwriters shall be deemed to be, respectively, in the same proportions as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by WFAL or WFSRC, the premiums on the
Policy to be paid to the Insurer and the underwriting discounts and commissions
received by the Underwriters. The relative fault of each Indemnifying Party, on
the one hand, and of each Indemnified Party, on the other, shall be determined
by reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth in Section 2, 3 or 4 of
this Agreement relates to information supplied by, or an action within the
control of, the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and the opportunity to correct
or prevent such breach. The parties agree that the Insurer shall be solely
responsible for the Insurer Information, the Underwriters shall be solely
responsible for the Underwriter Information and WFAL, WFSRC and WFS shall be
jointly and severally responsible for all other information in the Prospectus.
Notwithstanding anything in this Section 9 to the contrary, with
respect to contribution between any Seller Party and any Underwriter Party, the
Underwriter Parties shall not be required to contribute an amount in excess of
the amount by which the total price of the sum of the Notes sold by such
Underwriter Parties exceeds the amount of any damages that such Underwriter
Parties have otherwise been required to pay in respect of such untrue or alleged
untrue statement or omission or alleged omission; provided, however, that the
terms of the contribution between any Seller Party and any Underwriter Party
contained in the Underwriting Agreement shall control to the extent they are
inconsistent with or in addition to the terms of this Section 9. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (a)
any investigation made by or on behalf of any Underwriter Party or any Insurer
Party (b) the issuance of the Notes or the Policy
7
<PAGE> 10
or (c) any termination of this Agreement. The indemnification provided in this
Agreement will be in addition to any liability that the parties may otherwise
have.
Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution of the Losses
incurred.
10. Notices. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Senior Vice President -
Surveillance
If to WFAL: WFS Financial Auto Loans, Inc.
23 Pasteur
Irvine, California 92618
Attention: Thomas A. Wolfe
If to WFSRC: WFS Receivables Corporation
6655 West Sahara Avenue
Las Vegas, Nevada 89102
Attention: David A. Gray
If to WFS: WFS Financial Inc
23 Pasteur
Irvine, California 92618
Attention: Guy DuBose, Esq.
If to the Underwriters:
11. Governing Law, Etc. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York. This Agreement
may not be assigned by any party without the express written consent of each
other party. Any assignment made in violation of this Agreement shall be null
and void. Amendments of this Agreement shall be in writing signed by each party.
This Agreement shall not be effective until executed by each of the Insurer,
WFAL, WFSRC, WFS and the Representative.
12. Insurance Agreement; Underwriter Agreement. This Agreement in
no way limits or otherwise affects the indemnification and contribution
obligations of WFAL, WFSRC, and WFS under the Insurance Agreement.
8
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
--------------------------------------
Authorized Officer
WFS FINANCIAL AUTO LOANS, INC.
By:
--------------------------------------
Title:
-----------------------------------
WFS RECEIVABLES CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
WFS FINANCIAL INC
By:
--------------------------------------
Title:
-----------------------------------
as Representative of the several
Underwriters
By:
--------------------------------------
Title:
-----------------------------------
9
<PAGE> 1
EXHIBIT 10.6.1
================================================================================
ADMINISTRATION AGREEMENT
among
WFS FINANCIAL 20__-_ OWNER TRUST,
as Issuer,
WFS FINANCIAL INC,
as Administrator,
WFS INVESTMENTS, INC.,
WFS FINANCIAL AUTO LOANS, INC.,
as Seller,
and
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated as of __________ __, 20__
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Duties of the Administrator................................................. 2
Section 2. Records...................................................................... 8
Section 3. Compensation................................................................ 8
Section 4. Additional Information to be Furnished to the Issuer........................ 8
Section 5. Independence of the Administrator............................................ 8
Section 6. No Joint Venture............................................................ 8
Section 7. Other Activities of Administrator........................................... 8
Section 8. Term of Agreement; Resignation and Removal of Administrator................. 8
Section 9. Action upon Termination, Resignation or Removal.............................. 9
Section 10. Notices...................................................................... 10
Section 11. Amendments................................................................... 10
Section 12. Successors and Assigns....................................................... 11
Section 13. Governing Law................................................................ 11
Section 14. Headings..................................................................... 11
Section 15. Counterparts.................................................................. 11
Section 16. Severability................................................................. 11
Section 17. Not Applicable to WFS in Other Capacities.................................... 12
Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee............... 12
Section 19. Third-Party Beneficiary...................................................... 12
Section 20. Capitalized Terms............................................................. 12
Exhibit A [FORM OF POWER OF ATTORNEY]................................................. A-1
</TABLE>
-i-
<PAGE> 3
This ADMINISTRATION AGREEMENT, dated as of __________ __, 20__, is among
WFS FINANCIAL 20__-_ OWNER TRUST (the "Issuer"), WFS FINANCIAL INC ("WFS" or in
its capacity as administrator, the "Administrator"), WFS INVESTMENTS, INC. (the
"Company"), WFS FINANCIAL AUTO LOANS, INC. (the "Seller") and BANKERS TRUST
COMPANY, not in its individual capacity but solely as Indenture Trustee (the
"Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Issuer is issuing ______% Auto Receivable Backed Notes,
Class A-1, ______% Auto Receivable Backed Notes, Class A-2 and ______% Auto
Receivable Backed Notes, Class A-3 (collectively, the "Notes"), pursuant to the
Indenture, dated as of the date hereof (the "Indenture"), between the Issuer and
the Indenture Trustee (capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests of
the Issuer, including (i) the Indenture, (ii) a Sale and Servicing Agreement,
dated as of the date hereof (the "Sale and Servicing Agreement"), among the
Issuer, the Seller and WFS, as servicer (in such capacity, the "Master
Servicer"), and (iii) a Letter of Representations, dated __________, 2000 (the
"Depository Agreement" and, together with the Indenture and the Sale and
Servicing Agreement, the "Related Agreements), among the Issuer, the Indenture
Trustee and The Depository Trust Company ("DTC") relating to the Notes;
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (i) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (ii) the beneficial ownership interests in the Issuer (the registered
holders of such interests being referred to herein as the "Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreement and the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Depository Agreement. In addition,
<PAGE> 4
the Administrator shall consult with the Owner Trustee regarding the
duties of the Issuer or the Owner Trustee under the Indenture and the
Depository Agreement. The Administrator shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary
to comply with the respective duties of the Issuer and the Owner Trustee
under the Indenture and the Depository Agreement. The Administrator
shall prepare for execution by the Issuer, or shall cause the
preparation by other appropriate persons of, all such documents,
reports, filings, instruments, certificates and opinions that it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to the Indenture and the Depository Agreement. In
furtherance of the foregoing, the Administrator shall take (or, in the
case of the immediately preceding sentence, cause to be taken) all
appropriate action that the Issuer or the Owner Trustee is required to
take pursuant to the Indenture including, without limitation, such of
the foregoing as are required with respect to the following matters
under the Indenture (references are to Sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to
give the Indenture Trustee notice of any appointment of a new
Note Registrar and the location, or change in location, of the
Note Register (Section 2.04);
(B) the notification of Noteholders and the Rating
Agencies of the final principal payment on the Notes (Section
2.07(b));
(C) the fixing or causing to be fixed of any special
record date and the notification of the Indenture Trustee and
Noteholders with respect to special payment dates, if any
(Section 2.07(c));
(D) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the
Notes and delivery of the same to the Indenture Trustee (Section
2.02);
(E) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of Collateral (Section 2.12);
(F) the maintenance of an office in the Borough of
Manhattan, The City of New York, for registration of transfer or
exchange of Notes (Section 3.02);
(G) the duty to cause newly appointed Paying Agents, if
any, to deliver to the Indenture Trustee the instrument specified
in the Indenture regarding funds held in trust (Section 3.03);
(H) the direction to the Indenture Trustee to deposit
monies with Paying Agents, if any, other than the Indenture
Trustee (Section 3.03);
(I) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity
and enforceability of the Indenture, the Notes, the Collateral
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<PAGE> 5
and each other instrument and agreement included in the Trust
Estate (Section 3.04);
(J) the preparation of all supplements and amendments to
the Indenture and all financing statements, continuation
statements, instruments of further assurance and other
instruments and the taking of such other action as is necessary
or advisable to protect the Trust Estate (Section 3.05);
(K) the delivery of the Opinion of Counsel on the Closing
Date and the annual delivery of Opinions of Counsel as to the
Trust Estate, and the annual delivery of the Officer's
Certificate and certain other statements as to compliance with
the Indenture (Sections 3.06 and 3.09);
(L) the identification to the Indenture Trustee and
Financial Security Assurance Inc. (the "Insurer") in an Officer's
Certificate of a Person with whom the Issuer has contracted to
perform its duties under the Indenture (Section 3.07(b));
(M) the notification of the Indenture Trustee, the Insurer
and each Rating Agency of a Servicer Default under the Sale and
Servicing Agreement and, if such Servicer Default arises from the
failure of the Master Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect
to the Contracts, the taking of all reasonable steps available to
remedy such failure (Section 3.07(d));
(N) the duty to cause the Master Servicer to comply with
Sections 4.09, 4.10, 4.11 and 5.07 and Article Nine of the Sale
and Servicing Agreement (Section 3.14);
(O) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.10(b));
(P) the delivery of written notice to the Indenture
Trustee, the Insurer and each Rating Agency of each Event of
Default under the Indenture and each default by the Master
Servicer or the Seller under the Sale and Servicing Agreement
(Section 3.18);
(Q) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation
of an Officer's Certificate and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section
4.01);
(R) the compliance with any written directive of the
Controlling Party with respect to the sale of the Trust Estate in
a commercially reasonable manner if an Event of Default shall
have occurred and be continuing (Section 5.04);
-3-
<PAGE> 6
(S) the preparation and delivery of notice to Noteholders
of the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 6.08);
(T) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate
trustee and any written instruments necessary in connection with
the resignation or removal of the Indenture Trustee or any
co-trustee or separate trustee (Sections 6.08 and 6.10);
(U) the furnishing of the Indenture Trustee with the names
and addresses of Noteholders during any period when the Indenture
Trustee is not the Note Registrar (Section 7.01);
(V) the preparation and, after execution by the Issuer,
the filing with the Commission, any applicable state agencies and
the Indenture Trustee of documents required to be filed on a
periodic basis with, and summaries thereof as may be required by
rules and regulations prescribed by, the Commission and any
applicable state agencies and the transmission of such summaries,
as necessary, to the Noteholders (Section 7.03);
(W) the opening of one or more accounts in the Issuer's
name, the preparation and delivery of Issuer Orders, Officer's
Certificates and Opinions of Counsel and all other actions
necessary with respect to investment and reinvestment of funds in
the Trust Accounts (Sections 8.02 and 8.03);
(X) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and
Independent Certificates, if necessary, for the release of the
Trust Estate (Sections 8.04 and 8.05);
(Y) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with
respect to such supplemental indentures (Sections 9.01, 9.02 and
9.03);
(Z) the execution, authentication and delivery of new
Notes conforming to any supplemental indenture (Section 9.06);
(AA) the duty to notify Noteholders and the Rating
Agencies of redemption of the Notes or to cause the Indenture
Trustee to provide such notification (Section 10.02);
(BB) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates
with respect to any requests by the Issuer to the Indenture
Trustee to take any action under the Indenture (Section
11.01(a));
(CC) the preparation and delivery of Officer's
Certificates and the obtaining of Independent Certificates, if
necessary, for the release of property from the lien of the
Indenture (Section 11.01(b));
-4-
<PAGE> 7
(DD) the notification of the Rating Agencies, upon the
failure of the Issuer, the Owner Trustee or the Indenture Trustee
to give such notification, of the information required pursuant
to Section 11.04 of the Indenture (Section 11.04);
(EE) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate
payment and notice provisions (Section 11.06);
(FF) the recording of the Indenture, if applicable
(Section 11.15);
(GG) the preparation of Definitive Notes in accordance
with the instructions of the Clearing Agency (Section 2.11); and
(HH) maintaining the effectiveness of the licenses
required under the Pennsylvania Motor Vehicle Sales Finance Act
(Section 6.14).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee
under the Indenture (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee
of an express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or
made by the Indenture Trustee in accordance with any provision of
the Indenture (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for,
and hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of
the transactions contemplated by the Indenture, including the
reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance
of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and
hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of
the transactions contemplated by the Trust Agreement, including
the reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Trust
Agreement.
-5-
<PAGE> 8
(b) Additional Duties.
(i) In addition to the duties set forth in Section 1(a)(i), the
Administrator shall perform such calculations and shall prepare or shall
cause the preparation by other appropriate persons of, and shall execute
on behalf of the Issuer or the Owner Trustee, all such documents,
reports, filings, instruments, certificates and opinions that the Issuer
or the Owner Trustee are required to prepare, file or deliver pursuant
to the Related Agreements or Section 5.05 of the Trust Agreement, and at
the request of the Owner Trustee shall take all appropriate action that
the Issuer or the Owner Trustee are required to take pursuant to the
Related Agreements. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to
the terms hereof, one or more powers of attorney substantially in the
form of Exhibit A hereto, appointing the Administrator the
attorney-in-fact of the Owner Trustee and the Issuer for the purpose of
executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
Subject to Section 5, and in accordance with the directions of the Owner
Trustee, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by the Owner Trustee
and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Trust's payments (or allocations of income) to an
Owner as contemplated in Section 5.02(c) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to
be withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section
5.05(a), (b), (c) and (d), the penultimate sentence of Section 5.05 and
Section 5.06(a) of the Trust Agreement with respect to, among other
things, accounting and reports to Owners; provided, however, that the
Owner Trustee shall retain responsibility for the distribution of the
Schedule K-1s necessary to enable each Owner to prepare its federal and
state income tax returns.
(iv) The Administrator shall satisfy its obligations with respect
to clauses (ii) and (iii) above by retaining, at the expense of the
Trust payable by the Administrator, a firm of independent public
accountants (the "Accountants") acceptable to the Owner Trustee, which
shall perform the obligations of the Administrator thereunder. In
connection with paragraph (ii) above, the Accountants will provide prior
to December 31, 20__, a letter in form and substance satisfactory to the
Owner Trustee as to whether any tax withholding is then required and, if
required, the procedures to be followed with respect thereto to comply
with the requirements of the Code. The Accountants shall be required to
update the letter in each instance that any additional tax withholding
is subsequently required or any previously required tax withholding
shall no longer be required.
-6-
<PAGE> 9
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement required
to be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed
by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in
the Administrator's opinion, no less favorable to the Issuer than would
be available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take
any action unless within a reasonable time before the taking of such
action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection
of the Contracts);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees pursuant
to the Indenture or the appointment of successor Administrators
or a successor Master Servicer, or the consent to the assignment
by the Note Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
the Administrator shall not be obligated to, and shall not, (A) make any
payments to the Noteholders under the Related Agreements, (B) sell the
Trust Estate pursuant to clause (iv) of Section 5.04 of the Indenture,
(C) take any other action that the Issuer directs the Administrator not
to take on its behalf or (D) take any other action which may be
construed as having the effect of varying the investment of the Holders.
Section 2. Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be
-7-
<PAGE> 10
accessible for inspection by the Issuer and the Company at any time during
normal business hours.
Section 3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to an annual
payment of compensation which shall be solely an obligation of the Company.
Section 4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
Section 5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
Section 6. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
Section 8. Term of Agreement; Resignation and Removal of Administrator.
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(a) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written notice.
(b) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(c) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall
not cure such default within
-8-
<PAGE> 11
ten days (or, if such default cannot be cured in such time, shall not
give within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of its property
or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part of its
property, shall consent to the taking of possession by any such official
of any substantial part of its property, shall make any general
assignment for the benefit of creditors or shall fail generally to pay
its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator acknowledges
that upon the appointment of a Successor Master Servicer pursuant to the Sale
and Servicing Agreement, the Administrator shall immediately resign and such
Successor Master Servicer shall automatically become the Administrator under
this Agreement; provided, however, that this subsection (f) shall not apply at
such times as the Indenture Trustee shall be the Successor Master Servicer.
Section 9. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to the first
sentence of Section 8 or the resignation or removal of the Administrator
pursuant to Section 8(a), (b) or (c), respectively, the Administrator shall be
entitled to be paid all fees and reimbursable expenses accruing to it to the
date of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to the first sentence of Section 8
deliver to the Issuer all property and documents of or relating to the
Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 8(a), (b) or
(c), respectively, the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
-9-
<PAGE> 12
Section 10. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
WFS Financial 20__-_ Owner Trust
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust - Administration Department
(b) if to the Administrator, to:
WFS Financial Inc
23 Pasteur Road
Irvine, California 92618
Attention: Guy Du Bose, Esq.
(c) if to the Indenture Trustee, to:
Bankers Trust Company
Four Albany Street - 10th Floor
New York, New York 10006
Attention: Corporate Trust Department - Asset Backed Group
(d) if to the Insurer, to:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
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.
Section 11. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto, with
the written consent of the Insurer and the Owner Trustee but without the consent
of the Noteholders and the Certificateholders, 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
Certificateholders; provided that such amendment will not, in the Opinion of
Counsel satisfactory to the Indenture Trustee, materially and adversely affect
the interest of any Noteholder or Certificateholder. This Agreement may also be
amended by the parties hereto with the written consent of the Owner Trustee and
the holders of Notes evidencing at least a majority of the Outstanding Amount of
the Notes and the holders of Certificates evidencing at least a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying
-10-
<PAGE> 13
in any manner the rights of Noteholders or the Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that are required to be made for the benefit of the
Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of the
holders of Notes and Certificates which are required to consent to any such
amendment, without the consent of the Insurer and the holders of all outstanding
Notes and Certificates. Notwithstanding the foregoing, the Administrator may not
amend this Agreement without the permission of the Seller, which permission
shall not be unreasonably withheld.
Section 12. Successors and Assigns. This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction of
the Rating Agency Condition in respect thereof. An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee hereunder
in the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer, the Insurer or the Owner Trustee to a corporation or
other organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Insurer, the Owner Trustee and the Indenture
Trustee an agreement, in form and substance reasonably satisfactory to the Owner
Trustee, the Indenture Trustee and the Insurer, in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT
THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
Section 14. Headings. The section and subsection headings hereof have
been inserted for convenience of reference only and shall not be construed to
affect the meaning, construction or effect of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
Section 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. Not Applicable to WFS in Other Capacities. Nothing in this
Agreement shall affect any obligation WFS may have in any other capacity.
-11-
<PAGE> 14
Section 18. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Chase Manhattan Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank Delaware in its individual capacity
or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
Section 20. Capitalized Terms. Except as otherwise specified herein or
as the context may otherwise require, capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Indenture or
the Sale and Servicing Agreement, as the case may be.
-12-
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
-------------------------------
Name:
Title:
WFS INVESTMENTS, INC.
By:
-------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC.,
as Seller
By:
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:
-------------------------------
Name:
Title:
-13-
<PAGE> 16
WFS FINANCIAL INC,
as Administrator
By:
-------------------------------
Name:
Title:
-14-
<PAGE> 17
EXHIBIT A
[FORM OF POWER OF ATTORNEY]
<PAGE> 1
EXHIBIT 10.6.2
================================================================================
ADMINISTRATION AGREEMENT
among
WFS FINANCIAL 2000-A OWNER TRUST,
as Issuer,
WFS FINANCIAL INC,
as Administrator,
WFS FINANCIAL AUTO LOANS, INC.
and
WFS RECEIVABLES CORPORATION,
as Sellers,
and
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated as of _________ 1, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Duties of the Administrator.................................................... 1
Section 2. Records........................................................................ 7
Section 3. Compensation................................................................... 8
Section 4. Additional Information to be Furnished to the Issuer........................... 8
Section 5. Independence of the Administrator.............................................. 8
Section 6. No Joint Venture............................................................... 8
Section 7. Other Activities of Administrator.............................................. 8
Section 8. Term of Agreement; Resignation and Removal of Administrator.................... 8
Section 9. Action upon Termination, Resignation or Removal................................ 9
Section 10. Notices....................................................................... 10
Section 11. Amendments.................................................................... 10
Section 12. Successors and Assigns........................................................ 11
Section 13. Governing Law................................................................. 11
Section 14. Headings...................................................................... 11
Section 15. Counterparts.................................................................. 11
Section 16. Severability.................................................................. 11
Section 17. Not Applicable to WFS in Other Capacities..................................... 11
Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee................ 12
Section 19. Third-Party Beneficiary....................................................... 12
Section 20. Capitalized Terms............................................................. 12
Exhibit A [FORM OF POWER OF ATTORNEY].................................................. A-1
</TABLE>
i
<PAGE> 3
This ADMINISTRATION AGREEMENT, dated as of _________ 1, 2000, is among
WFS FINANCIAL 2000-A OWNER TRUST (the "Issuer"), WFS FINANCIAL INC ("WFS" or in
its capacity as administrator, the "Administrator"), WFS INVESTMENTS, INC. (the
"Company"), WFS FINANCIAL AUTO LOANS, INC. and WFS RECEIVABLES CORPORATION, as
sellers (the "Sellers"), and BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Issuer is issuing ____% Auto Receivable Backed Notes, Class
A-1, ____% Auto Receivable Backed Notes, Class A-2, ____% Auto Receivable Backed
Notes, Class A-3 and ____% Auto Receivable Backed Notes, Class A-4
(collectively, the "Notes"), pursuant to the Indenture, dated as of the date
hereof (the "Indenture"), between the Issuer and the Indenture Trustee
(capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests of
the Issuer, including (i) the Indenture, (ii) a Sale and Servicing Agreement,
dated as of the date hereof (the "Sale and Servicing Agreement"), among the
Issuer, the Sellers and WFS, as servicer (in such capacity, the "Master
Servicer"), and (iii) a Letter of Representations, dated __________, 2000 (the
"Depository Agreement" and, together with the Indenture and the Sale and
Servicing Agreement, the "Related Agreements), among the Issuer, the Indenture
Trustee and The Depository Trust Company ("DTC") relating to the Notes;
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (i) the Notes
and the collateral therefor pledged pursuant to the Indenture and (ii) the
beneficial ownership interests in the Issuer;
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with Respect to the Depository Agreement and the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Depository Agreement. In addition,
<PAGE> 4
the Administrator shall consult with the Owner Trustee regarding the
duties of the Issuer or the Owner Trustee under the Indenture and the
Depository Agreement. The Administrator shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary
to comply with the respective duties of the Issuer and the Owner Trustee
under the Indenture and the Depository Agreement. The Administrator
shall prepare for execution by the Issuer, or shall cause the
preparation by other appropriate persons of, all such documents,
reports, filings, instruments, certificates and opinions that it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to the Indenture and the Depository Agreement. In
furtherance of the foregoing, the Administrator shall take (or, in the
case of the immediately preceding sentence, cause to be taken) all
appropriate action that the Issuer or the Owner Trustee is required to
take pursuant to the Indenture including, without limitation, such of
the foregoing as are required with respect to the following matters
under the Indenture (references are to Sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to
give the Indenture Trustee notice of any appointment of a new
Note Registrar and the location, or change in location, of the
Note Register (Section 2.04);
(B) the notification of Noteholders and the Rating
Agencies of the final principal payment on the Notes (Section
2.07(b));
(C) the fixing or causing to be fixed of any special
record date and the notification of the Indenture Trustee and
Noteholders with respect to special payment dates, if any
(Section 2.07(c));
(D) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the
Notes and delivery of the same to the Indenture Trustee (Section
2.02);
(E) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of Collateral (Section 2.12);
(F) the maintenance of an office in the Borough of
Manhattan, The City of New York, for registration of transfer or
exchange of Notes (Section 3.02);
(G) the duty to cause newly appointed Paying Agents, if
any, to deliver to the Indenture Trustee the instrument specified
in the Indenture regarding funds held in trust (Section 3.03);
(H) the direction to the Indenture Trustee to deposit
monies with Paying Agents, if any, other than the Indenture
Trustee (Section 3.03);
(I) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity
and enforceability of the Indenture, the Notes, the Collateral
2
<PAGE> 5
and each other instrument and agreement included in the Trust
Estate (Section 3.04);
(J) the preparation of all supplements and amendments to
the Indenture and all financing statements, continuation
statements, instruments of further assurance and other
instruments and the taking of such other action as is necessary
or advisable to protect the Trust Estate (Section 3.05);
(K) the delivery of the Opinion of Counsel on the Closing
Date and the annual delivery of Opinions of Counsel as to the
Trust Estate, and the annual delivery of the Officer's
Certificate and certain other statements as to compliance with
the Indenture (Sections 3.06 and 3.09);
(L) the identification to the Indenture Trustee and the
Insurer in an Officer's Certificate of a Person with whom the
Issuer has contracted to perform its duties under the Indenture
(Section 3.07(b));
(M) the notification of the Indenture Trustee, the Insurer
and each Rating Agency of a Servicer Default under the Sale and
Servicing Agreement and, if such Servicer Default arises from the
failure of the Master Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect
to the Contracts, the taking of all reasonable steps available to
remedy such failure (Section 3.07(d));
(N) the duty to cause the Master Servicer to comply with
Sections 4.09, 4.10, 4.11 and 5.07 and Article Nine of the Sale
and Servicing Agreement (Section 3.14);
(O) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.10(b));
(P) the delivery of written notice to the Indenture
Trustee, the Insurer and each Rating Agency of each Event of
Default under the Indenture and each default by the Master
Servicer or the Seller under the Sale and Servicing Agreement
(Section 3.18);
(Q) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation
of an Officer's Certificate and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section
4.01);
(R) the compliance with any written directive of the
Controlling Party with respect to the sale of the Trust Estate in
a commercially reasonable manner if an Event of Default shall
have occurred and be continuing (Section 5.04);
3
<PAGE> 6
(S) the preparation and delivery of notice to Noteholders
of the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 6.08);
(T) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate
trustee and any written instruments necessary in connection with
the resignation or removal of the Indenture Trustee or any
co-trustee or separate trustee (Sections 6.08 and 6.10);
(U) the furnishing of the Indenture Trustee with the names
and addresses of Noteholders during any period when the Indenture
Trustee is not the Note Registrar (Section 7.01);
(V) the preparation and, after execution by the Issuer,
the filing with the Commission, any applicable state agencies and
the Indenture Trustee of documents required to be filed on a
periodic basis with, and summaries thereof as may be required by
rules and regulations prescribed by, the Commission and any
applicable state agencies and the transmission of such summaries,
as necessary, to the Noteholders (Section 7.03);
(W) the opening of one or more accounts in the Issuer's
name, the preparation and delivery of Issuer Orders, Officer's
Certificates and Opinions of Counsel and all other actions
necessary with respect to investment and reinvestment of funds in
the Trust Accounts (Sections 8.02 and 8.03);
(X) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and
Independent Certificates, if necessary, for the release of the
Trust Estate (Sections 8.04 and 8.05);
(Y) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with
respect to such supplemental indentures (Sections 9.01, 9.02 and
9.03);
(Z) the execution, authentication and delivery of new
Notes conforming to any supplemental indenture (Section 9.06);
(AA) the duty to notify Noteholders and the Rating
Agencies of redemption of the Notes or to cause the Indenture
Trustee to provide such notification (Section 10.02);
(BB) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates
with respect to any requests by the Issuer to the Indenture
Trustee to take any action under the Indenture (Section
11.01(a));
(CC) the preparation and delivery of Officer's
Certificates and the obtaining of Independent Certificates, if
necessary, for the release of property from the lien of the
Indenture (Section 11.01(b));
4
<PAGE> 7
(DD) the notification of the Rating Agencies, upon the
failure of the Issuer, the Owner Trustee or the Indenture Trustee
to give such notification, of the information required pursuant
to Section 11.04 of the Indenture (Section 11.04);
(EE) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate
payment and notice provisions (Section 11.06);
(FF) the recording of the Indenture, if applicable
(Section 11.15);
(GG) the preparation of Definitive Notes in accordance
with the instructions of the Clearing Agency (Section 2.11); and
(HH) maintaining the effectiveness of the licenses
required under the Pennsylvania Motor Vehicle Sales Finance Act
(Section 6.14).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee
under the Indenture (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee
of an express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or
made by the Indenture Trustee in accordance with any provision of
the Indenture (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for,
and hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of
the transactions contemplated by the Indenture, including the
reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance
of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and
hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising
out of or in connection with the acceptance or administration of
the transactions contemplated by the Trust Agreement, including
the reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Trust
Agreement.
5
<PAGE> 8
(b) Additional Duties.
(i) In addition to the duties set forth in Section 1(a)(i), the
Administrator shall perform such calculations and shall prepare or shall
cause the preparation by other appropriate persons of, and shall execute
on behalf of the Issuer or the Owner Trustee, all such documents,
reports, filings, instruments, certificates and opinions that the Issuer
or the Owner Trustee are required to prepare, file or deliver pursuant
to the Related Agreements or Section 5.05 of the Trust Agreement, and at
the request of the Owner Trustee shall take all appropriate action that
the Issuer or the Owner Trustee are required to take pursuant to the
Related Agreements. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to
the terms hereof, one or more powers of attorney substantially in the
form of Exhibit A hereto, appointing the Administrator the
attorney-in-fact of the Owner Trustee and the Issuer for the purpose of
executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
Subject to Section 5, and in accordance with the directions of the Owner
Trustee, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by the Owner Trustee
and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Trust's payments (or allocations of income) to an
Owner as contemplated in Section 5.02(c) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to
be withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section
5.05(a), (b), (c) and (d), the penultimate sentence of Section 5.05 and
Section 5.06(a) of the Trust Agreement with respect to, among other
things, accounting and reports to Owners; provided, however, that the
Owner Trustee shall retain responsibility for the distribution of the
Schedule K-1s necessary to enable each Owner to prepare its federal and
state income tax returns.
(iv) The Administrator shall satisfy its obligations with respect
to clauses (ii) and (iii) above by retaining, at the expense of the
Trust payable by the Administrator, a firm of independent public
accountants (the "Accountants") acceptable to the Owner Trustee, which
shall perform the obligations of the Administrator thereunder. In
connection with paragraph (ii) above, the Accountants will provide prior
to December 31, 2000, a letter in form and substance satisfactory to the
Owner Trustee as to whether any tax withholding is then required and, if
required, the procedures to be followed with respect thereto to comply
with the requirements of the Code. The Accountants shall be required to
update the letter in each instance that any additional tax withholding
is subsequently required or any previously required tax withholding
shall no longer be required.
6
<PAGE> 9
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement required
to be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed
by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in
the Administrator's opinion, no less favorable to the Issuer than would
be available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take
any action unless within a reasonable time before the taking of such
action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection
of the Contracts);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees pursuant
to the Indenture or the appointment of successor Administrators
or a successor Master Servicer, or the consent to the assignment
by the Note Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
the Administrator shall not be obligated to, and shall not, (A) make any
payments to the Noteholders under the Related Agreements, (B) sell the
Trust Estate pursuant to clause (iv) of Section 5.04 of the Indenture,
(C) take any other action that the Issuer directs the Administrator not
to take on its behalf or (D) take any other action which may be
construed as having the effect of varying the investment of the Holders.
Section 2. Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be
7
<PAGE> 10
accessible for inspection by the Issuer and the Company at any time during
normal business hours.
Section 3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to an annual
payment of compensation which shall be solely an obligation of the Company.
Section 4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
Section 5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
Section 6. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
Section 8. Term of Agreement; Resignation and Removal of Administrator.
This Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(a) Subject to Section 8(e), the Administrator may resign its duties
hereunder by providing the Issuer with at least 60 days' prior written notice.
(b) Subject to Section 8(e), the Issuer may remove the Administrator
without cause by providing the Administrator with at least 60 days' prior
written notice.
(c) Subject to Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall
not cure such default within
8
<PAGE> 11
ten days (or, if such default cannot be cured in such time, shall not
give within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of its property
or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part of its
property, shall consent to the taking of possession by any such official
of any substantial part of its property, shall make any general
assignment for the benefit of creditors or shall fail generally to pay
its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator acknowledges
that upon the appointment of a Successor Master Servicer pursuant to the Sale
and Servicing Agreement, the Administrator shall immediately resign and such
Successor Master Servicer shall automatically become the Administrator under
this Agreement; provided, however, that this subsection (f) shall not apply at
such times as the Indenture Trustee shall be the Successor Master Servicer.
Section 9. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to the first
sentence of Section 8 or the resignation or removal of the Administrator
pursuant to Section 8(a), (b) or (c), respectively, the Administrator shall be
entitled to be paid all fees and reimbursable expenses accruing to it to the
date of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to the first sentence of Section 8
deliver to the Issuer all property and documents of or relating to the
Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 8(a), (b) or
(c), respectively, the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
9
<PAGE> 12
Section 10. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to:
WFS Financial 2000-A Owner Trust
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust - Administration Department
(b) if to the Administrator, to:
WFS Financial Inc
23 Pasteur
Irvine, California 92618
Attention: Guy Du Bose, Esq.
(c) if to the Indenture Trustee, to:
Bankers Trust Company
Four Albany Street - 10th Floor
New York, New York 10006
Attention: Corporate Trust Department - Asset Backed Group
(d) if to the Insurer, to:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
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.
Section 11. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto, with
the written consent of the Insurer and the Owner Trustee but without the consent
of the Noteholders and the Certificateholders, 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
Certificateholders; provided that such amendment will not, in the Opinion of
Counsel satisfactory to the Indenture Trustee, materially and adversely affect
the interest of any Noteholder or Certificateholder. This Agreement may also be
amended by the parties hereto with the written consent of the Owner Trustee and
the holders of Notes evidencing at least a majority of the Outstanding Amount of
the Notes and the holders of Certificates evidencing at least a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying
10
<PAGE> 13
in any manner the rights of Noteholders or the Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that are required to be made for the benefit of the
Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of the
holders of Notes and Certificates which are required to consent to any such
amendment, without the consent of the Insurer and the holders of all outstanding
Notes and Certificates. Notwithstanding the foregoing, the Administrator may not
amend this Agreement without the permission of the Seller, which permission
shall not be unreasonably withheld.
Section 12. Successors and Assigns. This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer and the Owner Trustee and subject to the satisfaction of
the Rating Agency Condition in respect thereof. An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee hereunder
in the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer, the Insurer or the Owner Trustee to a corporation or
other organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Insurer, the Owner Trustee and the Indenture
Trustee an agreement, in form and substance reasonably satisfactory to the Owner
Trustee, the Indenture Trustee and the Insurer, in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT
THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK.
Section 14. Headings. The section and subsection headings hereof have
been inserted for convenience of reference only and shall not be construed to
affect the meaning, construction or effect of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
Section 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. Not Applicable to WFS in Other Capacities. Nothing in this
Agreement shall affect any obligation WFS may have in any other capacity.
11
<PAGE> 14
Section 18. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Chase Manhattan Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank Delaware in its individual capacity
or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
Section 20. Capitalized Terms. Except as otherwise specified herein or
as the context may otherwise require, capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Indenture or
the Sale and Servicing Agreement, as the case may be.
12
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
WFS FINANCIAL 2000-A OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
-------------------------------
Name:
Title:
WFS FINANCIAL INC., as Administrator
By:
-------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC.,
as Seller
By:
-------------------------------
Name:
Title:
WFS RECEIVABLES CORPORATION,
as Seller
By:
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:
-------------------------------
Name:
Title:
13
<PAGE> 16
EXHIBIT A
[FORM OF POWER OF ATTORNEY]
A-1
<PAGE> 1
EXHIBIT 23.3
[PRICEWATERHOUSECOOPERS LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------
We consent to the incorporation by reference in Amendment No. 1 to Form S-3 of
WFS Financial Auto Loans, Inc. and WFS Receivables Corporation relating to WFS
Financial 2000-A Owner Trust of our report dated January 26, 1999 on our audits
of the consolidated financial statements of Financial Security Assurance Inc.
and Subsidiaries as of December 31, 1998 and 1997, and for each of the three
years in the period ended December 31, 1998. We also consent to the reference to
our Firm under the caption "Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
March 2, 2000
<PAGE> 1
EXHIBIT 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)
--------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent
for service)
--------------------
WFS FINANCIAL 2000-A OWNER TRUST
(Exact name of Registrant as specified in its charter)
WFS FINANCIAL AUTO LOANS, INC.
(Exact name of Co-Registrant as specified in its charter)
CALIFORNIA 33-0149603
(State or other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or organization)
23 PASTEUR
IRVINE, CA 92618
(949) 727-1000
(Address, including zip code of principal executive offices)
WFS RECEIVABLES CORPORATION
(Exact name of Co-Registrant as specified in its charter)
CALIFORNIA Applied For
(State or other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or organization)
6655 West Sahara Avenue
Las Vegas, Nevada 89102
(702) 247-1442
(Address, including zip code of principal executive offices)
WFS FINANCIAL 2000-A OWNER TRUST
AUTO RECEIVABLE BACKED NOTES
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
NAME ADDRESS
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust Company
dated August 6, 1998, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated
September 25, 1998, and Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated
December 16, 1998, and Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated
July 30th, 1999, copies attached.
EXHIBIT 2 - Certificate of Authority to commence business Incorporated
herein by reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 333-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate trust
powers - Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No. 333-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended on
June 22, 1999. Copy attached.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section 321(b)
of the Act. - Incorporated herein by reference to Exhibit 4
filed with Form T-1 Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust Company
dated as of December 31, 1999. Copy attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 1st day
of March, 2000.
BANKERS TRUST COMPANY
By: /s/ PATRICIA MF RUSSO
-------------------------
Patricia MF Russo
Vice President
-4-
<PAGE> 5
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "RESTATED ORGANIZATION
CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION 8007 OF THE BANKING LAW,"
dated August 6, 1998, providing for the restatement of the Organization
Certificate and all amendments into a single certificate.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 31ST day of AUGUST in the Year of our Lord one thousand
nine hundred and NINETY-EIGHT.
Manuel Kursky
--------------------------
DEPUTY Superintendent of Banks
<PAGE> 6
RESTATED
ORGANIZATION
CERTIFICATE
OF
BANKERS TRUST COMPANY
----------------------------
Under Section 8007
Of the Banking Law
----------------------------
Bankers Trust Company
130 Liberty Street
New York, N.Y. 10006
Counterpart Filed in the Office of the Superintendent of Banks, State
of New York, August 31, 1998
<PAGE> 7
RESTATED ORGANIZATION CERTIFICATE
OF
BANKERS TRUST
Under Section 8007 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary and a Vice President and an Assistant
Secretary of BANKERS TRUST COMPANY, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of the corporation was filed by the
Superintendent of Banks of the State of New York on the March 5, 1903.
3. The text of the organization certificate, as amended heretofore, is
hereby restated without further amendment or change to read as herein set forth
in full, to wit:
"Certificate of Organization
of
Bankers Trust Company
Know All Men By These Presents That we, the undersigned, James A.
Blair, James G. Cannon, E. C. Converse, Henry P. Davison, Granville W. Garth, A.
Barton Hepburn, Will Logan, Gates W. McGarrah, George W. Perkins, William H.
Porter, John F. Thompson, Albert H. Wiggin, Samuel Woolverton and Edward F. C.
Young, all being persons of full age and citizens of the United States, and a
majority of us being residents of the State of New York, desiring to form a
corporation to be known as a Trust Company, do hereby associate ourselves
together for that purpose under and pursuant to the laws of the State of New
York, and for such purpose we do hereby, under our respective hands and seals,
execute and duly acknowledge this Organization Certificate in duplicate, and
hereby specifically state as follows, to wit:
I. The name by which the said corporation shall be known is Bankers
Trust Company.
II. The place where its business is to be transacted is the City of New
York, in the State of New York.
III. Capital Stock: The amount of capital stock which the corporation
is hereafter to have is Three Billion One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($3,001,666,670), divided into Two Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven (200,166,667)
shares with a par value of $10 each designated as Common Stock and 1,000 shares
with a par value of One Million Dollars ($1,000,000) each designated as Series
Preferred Stock.
(a) Common Stock
1. Dividends: Subject to all of the rights of the Series Preferred
Stock, dividends may be declared and paid or set apart for payment upon the
Common Stock out of any assets or funds of the corporation legally available for
the payment of dividends.
<PAGE> 8
2. Voting Rights: Except as otherwise expressly provided with respect
to the Series Preferred Stock or with respect to any series of the Series
Preferred Stock, the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, each holder of the Common
Stock being entitled to one vote for each share thereof held.
3. Liquidation: Upon any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, and after the holders of the
Series Preferred Stock of each series shall have been paid in full the amounts
to which they respectively shall be entitled, or a sum sufficient for the
payment in full set aside, the remaining net assets of the corporation shall be
distributed pro rata to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of the Series
Preferred Stock.
4. Preemptive Rights: No holder of Common Stock of the corporation
shall be entitled, as such, as a matter of right, to subscribe for or purchase
any part of any new or additional issue of stock of any class or series
whatsoever, any rights or options to purchase stock of any class or series
whatsoever, or any securities convertible into, exchangeable for or carrying
rights or options to purchase stock of any class or series whatsoever, whether
now or hereafter authorized, and whether issued for cash or other consideration,
or by way of dividend or other distribution.
(b) Series Preferred Stock
1. Board Authority: The Series Preferred Stock may be issued from time
to time by the Board of Directors as herein provided in one or more series. The
designations, relative rights, preferences and limitations of the Series
Preferred Stock, and particularly of the shares of each series thereof, may, to
the extent permitted by law, be similar to or may differ from those of any other
series. The Board of Directors of the corporation is hereby expressly granted
authority, subject to the provisions of this Article III, to issue from time to
time Series Preferred Stock in one or more series and to fix from time to time
before issuance thereof, by filing a certificate pursuant to the Banking Law,
the number of shares in each such series of such class and all designations,
relative rights (including the right, to the extent permitted by law, to convert
into shares of any class or into shares of any series of any class), preferences
and limitations of the shares in each such series, including, buy without
limiting the generality of the foregoing, the following:
(i) The number of shares to constitute such series (which
number may at any time, or from time to time, be increased or decreased
by the Board of Directors, notwithstanding that shares of the series
may be outstanding at the time of such increase or decrease, unless the
Board of Directors shall have otherwise provided in creating such
series) and the distinctive designation thereof;
(ii) The dividend rate on the shares of such series, whether
or not dividends on the shares of such series shall be cumulative, and
the date or dates, if any, from which dividends thereon shall be
cumulative;
(iii) Whether or not the share of such series shall be
redeemable, and, if redeemable, the date or dates upon or after which
they shall be redeemable, the amount or amounts per share (which shall
be, in the case of each share, not less than its preference upon
involuntary liquidation, plus an amount equal to all dividends thereon
accrued and unpaid, whether or not earned or declared) payable thereon
in the case of the redemption thereof, which amount may vary at
different redemption dates or otherwise as permitted by law;
(iv) The right, if any, of holders of shares of such series to
convert the same into, or exchange the same for, Common Stock or other
stock as permitted by law, and the terms and conditions of such
conversion or exchange, as well as provisions for adjustment of the
conversion rate in such events as the Board of Directors shall
determine;
<PAGE> 9
(v) The amount per share payable on the shares of such series
upon the voluntary and involuntary liquidation, dissolution or winding
up of the corporation;
(vi) Whether the holders of shares of such series shall have
voting power, full or limited, in addition to the voting powers
provided by law and, in case additional voting powers are accorded, to
fix the extent thereof; and
(vii) Generally to fix the other rights and privileges and any
qualifications, limitations or restrictions of such rights and
privileges of such series, provided, however, that no such rights,
privileges, qualifications, limitations or restrictions shall be in
conflict with the organization certificate of the corporation or with
the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of which there are shares
outstanding.
All shares of Series Preferred Stock of the same series shall be
identical in all respects, except that shares of any one series issued at
different times may differ as to dates, if any, from which dividends thereon may
accumulate. All shares of Series Preferred Stock of all series shall be of equal
rank and shall be identical in all respects except that to the extent not
otherwise limited in this Article III any series may differ from any other
series with respect to any one or more of the designations, relative rights,
preferences and limitations described or referred to in subparagraphs (I) to
(vii) inclusive above.
2. Dividends: Dividends on the outstanding Series Preferred Stock of
each series shall be declared and paid or set apart for payment before any
dividends shall be declared and paid or set apart for payment on the Common
Stock with respect to the same quarterly dividend period. Dividends on any
shares of Series Preferred Stock shall be cumulative only if and to the extent
set forth in a certificate filed pursuant to law. After dividends on all shares
of Series Preferred Stock (including cumulative dividends if and to the extend
any such shares shall be entitled thereto) shall have been declared and paid or
set apart for payment with respect to any quarterly dividend period, then and
not otherwise so long as any shares of Series Preferred Stock shall remain
outstanding, dividends may be declared and paid or set apart for payment with
respect to the same quarterly dividend period on the Common Stock out the assets
or funds of the corporation legally available therefor.
All Shares of Series Preferred Stock of all series shall be of equal
rank, preference and priority as to dividends irrespective of whether or not the
rates of dividends to which the same shall be entitled shall be the same and
when the stated dividends are not paid in full, the shares of all series of the
Series Preferred Stock shall share ratably in the payment thereof in accordance
with the sums which would by payable on such shares if all dividends were paid
in full, provided, however, that nay two or more series of the Series Preferred
Stock may differ from each other as to the existence and extent of the right to
cumulative dividends, as aforesaid.
3. Voting Rights: Except as otherwise specifically provided in the
certificate filed pursuant to law with respect to any series of the Series
Preferred Stock, or as otherwise provided by law, the Series Preferred Stock
shall not have any right to vote for the election of directors or for any other
purpose and the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes.
4. Liquidation: In the event of any liquidation, dissolution or winding
up of the corporation, whether voluntary or involuntary, each series of Series
Preferred Stock shall have preference and priority over the Common Stock for
payment of the amount to which each outstanding series of Series Preferred Stock
shall be entitled in accordance with the provisions thereof and each holder of
Series Preferred Stock shall be entitled to be paid in full such amount, or have
a sum sufficient for the payment in full set aside, before any payments shall be
made to the holders of the Common Stock. If, upon liquidation, dissolution or
winding up of the corporation, the assets of the corporation or proceeds
thereof, distributable among the holders of the shares of all series of the
Series Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid, then such assets, or the proceeds thereof, shall be
distributed among such holders ratably in accordance with the respective amounts
which would be payable if all amounts payable thereon were paid in full. After
the payment to the holders of Series Preferred Stock of all
<PAGE> 10
such amounts to which they are entitled, as above provided, the remaining assets
and funds of the corporation shall be divided and paid to the holders of the
Common Stock.
5. Redemption: In the event that the Series Preferred Stock of any
series shall be made redeemable as provided in clause (iii) of paragraph 1 of
section (b) of this Article III, the corporation, at the option of the Board of
Directors, may redeem at any time or times, and from time to time, all or any
part of any one or more series of Series Preferred Stock outstanding by paying
for each share the then applicable redemption price fixed by the Board of
Directors as provided herein, plus an amount equal to accrued and unpaid
dividends to the date fixed for redemption, upon such notice and terms as may be
specifically provided in the certificate filed pursuant to law with respect to
the series.
6. Preemptive Rights: No holder of Series Preferred Stock of the
corporation shall be entitled, as such, as a matter or right, to subscribe for
or purchase any part of any new or additional issue of stock of any class or
series whatsoever, any rights or options to purchase stock of any class or
series whatsoever, or any securities convertible into, exchangeable for or
carrying rights or options to purchase stock of any class or series whatsoever,
whether now or hereafter authorized, and whether issued for cash or other
consideration, or by way of dividend.
(c) Provisions relating to Floating Rate Non-Cumulative Preferred
Stock, Series A. (Liquidation value $1,000,000 per share.)
1. Designation: The distinctive designation of the series established
hereby shall be "Floating Rate Non-Cumulative Preferred Stock, Series A"
(hereinafter called "Series A Preferred Stock").
2. Number: The number of shares of Series A Preferred Stock shall
initially be 250 shares. Shares of Series A Preferred Stock redeemed, purchased
or otherwise acquired by the corporation shall be cancelled and shall revert to
authorized but unissued Series Preferred Stock undesignated as to series.
3. Dividends:
(a) Dividend Payments Dates. Holders of the Series A Preferred Stock
shall be entitled to receive non-cumulative cash dividends when, as and if
declared by the Board of Directors of the corporation, out of funds legally
available therefor, from the date of original issuance of such shares (the
"Issue Date") and such dividends will be payable on March 28, June 28, September
28 and December 28 of each year (:Dividend Payment Date") commencing September
28, 1990, at a rate per annum as determined in paragraph 3(b) below. The period
beginning on the Issue Date and ending on the day preceding the firs Dividend
Payment Date and each successive period beginning on a Dividend Payment Date and
ending on the date preceding the next succeeding Dividend Payment Date is herein
called a "Dividend Period". If any Dividend payment Date shall be, in The City
of New York, a Sunday or a legal holiday or a day on which banking institutions
are authorized by law to close, then payment will be postponed to the next
succeeding business day with the same force and effect as if made on the
Dividend Payment Date, and no interest shall accrue for such Dividend Period
after such Dividend Payment Date.
(b) Dividend Rate. The dividend rare from time to time payable in
respect of Series A Preferred Stock (the "Dividend Rate") shall be determined on
the basis of the following provisions:
(i) On the Dividend Determination Date, LIBOR will be determined on the
basis of the offered rates for deposits in U.S. dollars having a maturity of
three months commencing on the second London Business Day immediately following
such Dividend Determination Date, as such rates appear on the Reuters Screen
LIBO Page as of 11:00 A.M. London time, on such Dividend Determination Date. If
at least two such offered rates appear on the Reuters Screen LIBO Page, LIBOR in
respect of such Dividend Determination Dates will be the arithmetic mean
(rounded to the nearest one-hundredth of a percent, with five one-thousandths of
a percent rounded upwards) of such offered rates. If fewer than those offered
rates appear, LIBOR in respect of such Dividend Determination Date will be
determined as described in paragraph (ii) below.
<PAGE> 11
(ii) On any Dividend Determination Date on which fewer than those
offered rates for the applicable maturity appear on the Reuters Screen LIBO Page
as specified in paragraph (I) above, LIBOR will be determined on the basis of
the rates at which deposits in U.S. dollars having a maturity of three months
commending on the second London Business Day immediately following such Dividend
Determination Date and in a principal amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time are offered
by three major banks in the London interbank market selected by the corporation
at approximately 11:00 A.M., London time, on such Dividend Determination Date to
prime banks in the London market. The corporation will request the principal
London office of each of such banks to provide a quotation of its rate. If at
least two such quotations are provided, LIBOR in respect of such Dividend
Determination Date will be the arithmetic mean (rounded to the nearest
one-hundredth of a percent, with five one-thousandths of a percent rounded
upwards) of such quotations. If fewer than two quotations are provided, LIBOR in
respect of such Dividend Determination Date will be the arithmetic mean (rounded
to the nearest one-hundredth of a percent, with five one-thousandths of a
percent rounded upwards) of the rates quoted by three major banks in New York
City selected by the corporation at approximately 11:00 A.M., New York City
time, on such Dividend Determination Date for loans in U.S. dollars to leading
European banks having a maturity of three months commencing on the second London
Business Day immediately following such Dividend Determination Date and in a
principal amount of not less than $1,000,000 that is representative of a single
transaction in such market at such time; provided, however, that if the banks
selected as aforesaid by the corporation are not quoting as aforementioned in
this sentence, then, with respect to such Dividend Period, LIBOR for the
preceding Dividend Period will be continued as LIBOR for such Dividend Period.
(ii) The Dividend Rate for any Dividend Period shall be equal to the
lower of 18% of 50 basis points above LIBOR for such Dividend Period as LIBOR is
determined by sections (I) or (ii) above.
As used above, the term "Dividend Determination Date" shall mean, with resect to
any Dividend Period, the second London Business Day prior to the commencement of
such Dividend Period; and the term "London Business Day" shall mean any day that
is not a Saturday or Sunday and that, in New York City, is not a day on which
banking institutions generally are authorized or required by law or executive
order to close and that is a day on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.
4. Voting Rights: The holders of the Series A Preferred Stock shall
have the voting power and rights set forth in this paragraph 4 and shall have no
other voting power or rights except as otherwise may from time to time be
required by law.
So long as any shares of Series A Preferred Stock remain outstanding,
the corporation shall not, without the affirmative vote or consent of the
holders of at least a majority of the votes of the Series Preferred Stock
entitled to vote outstanding at the time, given in person or by proxy, either in
writing or by resolution adopted at a meeting at which the holders of Series A
Preferred Stock (alone or together with the holders of one or more other series
of Series Preferred Stock at the time outstanding and entitled to vote) vote
separately as a class, alter the provisions of the Series Preferred Stock so as
to materially adversely affect its rights; provided, however, that in the event
any such materially adverse alteration affects the rights of only the Series A
Preferred Stock, then the alteration may be effected with the vote or consent of
at least a majority of the votes of the Series A Preferred Stock; provided,
further, that an increase in the amount of the authorized Series Preferred Stock
and/or the creation and/or issuance of other series of Series Preferred Stock in
accordance with the organization certificate shall not be, nor be deemed to be,
materially adverse alterations. In connection with the exercise of the voting
rights contained in the preceding sentence, holders of all series of Series
Preferred Stock which are granted such voting rights (of which the Series A
Preferred Stock is the initial series) shall vote as a class (except as
specifically provided otherwise) and each holder of Series A Preferred Stock
shall have one vote for each share of stock held and each other series shall
have such number of votes, if any, for each share of stock held as may be
granted to them.
The foregoing voting provisions will not apply if, in connection with
the matters specified, provision is made for the redemption or retirement of all
outstanding Series A Preferred Stock.
5. Liquidation: Subject to the provisions of section (b) of this
Article III, upon any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of the Series A Preferred Stock
shall
<PAGE> 12
have preference and priority over the Common Stock for payment out of the
assets of the corporation or proceeds thereof, whether from capital or surplus,
of $1,000,000 per share (the "liquidation value") together with the amount of
all dividends accrued and unpaid thereon, and after such payment the holders of
Series A Preferred Stock shall be entitled to no other payments.
6. Redemption: Subject to the provisions of section (b) of this Article
III, Series A Preferred Stock may be redeemed, at the option of the corporation
in whole or part, at any time or from time to time at a redemption price of
$1,000,000 per share, in each case plus accrued and unpaid dividends to the date
of redemption.
At the option of the corporation, shares of Series A Preferred Stock
redeemed or otherwise acquired may be restored to the status of authorized but
unissued shares of Series Preferred Stock.
In the case of any redemption, the corporation shall give notice of
such redemption to the holders of the Series A Preferred Stock to be redeemed in
the following manner: a notice specifying the shares to be redeemed and the time
and place or redemption (and, if less than the total outstanding shares are to
be redeemed, specifying the certificate numbers and number of shares to be
redeemed) shall be mailed by first class mail, addressed to the holders of
record of the Series A Preferred Stock to be redeemed at their respective
addressees as the same shall appear upon the books of the corporation, not more
than sixty (60) days and not less than thirty (30) days previous to the date
fixed for redemption. In the event such notice is not given to any shareholder
such failure to give notice shall not affect the notice given to other
shareholders. If less than the whole amount of outstanding Series A Preferred
Stock is to be redeemed, the shares to be redeemed shall be selected by lot or
pro rata in any manner determined by resolution of the Board of Directors to b
fair and proper. From and after the date fixed in any such notice as the date of
redemption (unless default shall be made by the corporation in providing moneys
at the time and place of redemption for the payment of the redemption price) all
dividends upon the Series A Preferred Stock so called for redemption shall cease
to accrue, and all rights of the holders of said Series A Preferred Stock as
stockholders in the corporation, except the right to receive the redemption
price (without interest) upon surrender of the certificate representing the
Series A Preferred Stock so called for redemption, duly endorsed for transfer,
if required, shall cease and terminate. The corporation's obligation to provide
moneys in accordance with the preceding sentence shall be deemed fulfilled if,
on or before the redemption date, the corporation shall deposit with a bank or
trust company (which may e an affiliate of the corporation) having an office in
the Borough of Manhattan, City of New York, having a capital and surplus of at
least $5,000,000 funds necessary for such redemption, in trust with irrevocable
instructions that such funds be applied to the redemption of the shares of
Series A Preferred Stock so called for redemption. Any interest accrued on such
funds shall be paid to the corporation from time to time. Any funds so deposited
and unclaimed at the end of two (2) years from such redemption date shall be
released or repaid to the corporation, after which the holders of such shares of
Series A Preferred Stock so called for redemption shall look only to the
corporation for payment of the redemption price.
IV. The name, residence and post office address of each member of the
corporation are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE POST OFFICE ADDRESS
<S> <C> <C>
James A. Blair 9 West 50th Street, 33 Wall Street,
Manhattan, New York City Manhattan, New York City
James G. Cannon 72 East 54th Street, 14 Nassau Street,
Manhattan New York City Manhattan, New York City
E. C. Converse 3 East 78th Street, 139 Broadway,
Manhattan, New York City Manhattan, New York City
Henry P. Davison Englewood, 2 Wall Street,
New Jersey Manhattan, New York City
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C>
Granville W. Garth 160 West 57th Street, 33 Wall Street
Manhattan, New York City Manhattan, New York City
A. Barton Hepburn 205 West 57th Street 83 Cedar Street
Manhattan, New York City Manhattan, New York City
William Logan Montclair, 13 Nassau Street
New Jersey Manhattan, New York City
George W. Perkins Riverdale, 23 Wall Street,
New York Manhattan, New York City
William H. Porter 56 East 67th Street 270 Broadway,
Manhattan, New York City Manhattan, New York City
John F. Thompson Newark, 143 Liberty Street,
New Jersey Manhattan, New York City
Albert H. Wiggin 42 West 49th Street, 214 Broadway,
Manhattan, New York City Manhattan, New York City
Samuel Woolverton Mount Vernon, 34 Wall Street,
New York Manhattan, New York City
Edward F.C. Young 85 Glenwood Avenue, 1 Exchange Place,
Jersey City, New Jersey Jersey City, New Jersey
</TABLE>
V. The existence of the corporation shall be perpetual.
VI. The subscribers, the members of the said corporation, do, and each
for himself does, hereby declare that he will accept the responsibilities and
faithfully discharge the duties of a director therein, if elected to act as
such, when authorized accordance with the provisions of the Banking Law of the
State of New York.
VII. The number of directors of the corporation shall not be less that
10 nor more than 25."
4. The foregoing restatement of the organization certificate was
authorized by the Board of Directors of the corporation at a meeting held on
July 21, 1998.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
6th day of August, 1998.
James T. Byrne, Jr.
--------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
--------------------------
Lea Lahtinen
Vice President and Assistant
Secretary
Lea Lahtinen
--------------------------
Lea Lahtinen
<PAGE> 14
State of New York )
) ss:
County of New York )
Lea Lahtinen, being duly sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 6th day of August, 1998.
Sandra L. West
--------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September
19, 1998
<PAGE> 15
STATE OF NEW YORK,
BANKING DEPARTMENT
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated September 16, 1998, providing for an increase in
authorized capital stock from $3,001,666,670 consisting of 200,166,667 shares
with a par value of $10 each designated as Common Stock and 1,000 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$3,501,666,670 consisting of 200,166,667 shares with a par value of $10 each
designated as Common Stock and 1,500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 25TH day of SEPTEMBER in the Year of our Lord one
thousand nine hundred and NINETY-EIGHT.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 16
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and Secretary and a Vice President and an Assistant Secretary of
Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($3,001,666,670), divided into Two Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(200,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into
Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (200,166,667) shares with a par value of $10 each
designated as Common Stock and 1500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE> 17
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
25th day of September, 1998
James T. Byrne, Jr.
--------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
--------------------------
Lea Lahtinen
Vice President and Assistant
Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 25th day
of September, 1998
Sandra L. West
--------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September
19, 2000
<PAGE> 18
STATE OF NEW YORK,
BANKING DEPARTMENT
I, P. VINCENT CONLON, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated December 16, 1998, providing for an increase in
authorized capital stock from $3,501,666,670 consisting of 200,166,667 shares
with a par value of $10 each designated as Common Stock and 1,500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$3,627,308,670 consisting of 212,730,867 shares with a par value of $10 each
designated as Common Stock and 1,500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 18TH day of DECEMBER in the Year of our Lord one thousand
nine hundred and NINETY-EIGHT.
P. Vincent Conlon
------------------------------
Deputy Superintendent of Banks
<PAGE> 19
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and Secretary and a Vice President and an Assistant Secretary of
Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($3,501,666,670), divided into
Two Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (200,166,667) shares with a par value of $10 each
designated as Common Stock and 1500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Three Billion, Six Hundred Twenty-Seven Million, Three Hundred
Eight Thousand, Six Hundred Seventy Dollars ($3,627,308,670), divided
into Two Hundred Twelve Million, Seven Hundred Thirty Thousand, Eight
Hundred Sixty- Seven (212,730,867) shares with a par value of $10 each
designated as Common Stock and 1500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred Stock."
<PAGE> 20
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
16th day of December, 1998
James T. Byrne, Jr.
--------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
--------------------------
Lea Lahtinen
Vice President and Assistant
Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 16th day
of December, 1998
Sandra L. West
--------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September
19, 2000
<PAGE> 21
STATE OF NEW YORK,
BANKING DEPARTMENT
I, P. VINCENT CONLON, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated September 3, 1999, providing for a reduction in
the minimum number of directors required from ten to seven, and a reduction in
the maximum number of directors from twenty-five to fifteen.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 3rd day of September in the Year of our Lord one thousand
nine hundred and NINETY-NINE.
P. Vincent Conlon
------------------------------
Deputy Superintendent of Banks
<PAGE> 22
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and Secretary and a Vice President and an Assistant Secretary of
Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to reduce the minimum number of directors required from 10 to 7, and to reduce
in the maximum number of directors from 25 to 15.
4. Article VII of the organization certificate with reference to number
of directors, which reads as follows:
"VII. The number of directors of the corporation shall be not less than
10 nor more than 25"
is hereby amended to read as follows:
"VII. The number of directors of the corporation shall be not less than
7 nor more than 15"
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
30th day of July 1999
James T. Byrne, Jr.
--------------------------
James T. Byrne, Jr.
Managing Director and Secretary
Lea Lahtinen
--------------------------
Lea Lahtinen
Vice President and Assistant
Secretary
State of New York )
) ss:
County of New York )
<PAGE> 23
Lea Lahtinen, being fully sworn, deposes and says that she is a Vice
President and an Assistant Secretary of Bankers Trust Company, the corporation
described in the foregoing certificate; that she has read the foregoing
certificate and knows the contents thereof, and that the statements herein
contained are true.
Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 30th day
of July, 1999
Sandra L. West
--------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September
19, 2000
<PAGE> 24
STATE OF NEW YORK,
BY-LAWS
JUNE 22, 1999
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 25
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than seven nor more than fifteen, as may from time to time be fixed by
resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE> 26
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time provided, however, that there shall be at least ten regular monthly
meetings during a calendar year. Special meetings of the Board of Directors may
be called upon at least two day's notice whenever it may be deemed proper by the
Chairman of the Board or, the Chief Executive Officer or, in their absence, by
such other director as the Board of Directors may have designated pursuant to
Section 3 of this Article, and shall be called upon like notice whenever any
three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
<PAGE> 27
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
<PAGE> 28
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be
<PAGE> 29
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of
<PAGE> 30
action so adjudicated, or (ii) he personally gained in fact a financial profit
or other advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or
provided by, the New York Banking Law or other rights created by (i) a
resolution of stockholders, (ii) a resolution of directors, or (iii) an
agreement providing for such indemnification, it being expressly intended that
these By-Laws authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter
<PAGE> 31
bring suit against the Company to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled also to be paid
the expenses of prosecuting such claim. Neither the failure of the Company
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of or reimbursement or advancement of expenses to
the claimant is proper in the circumstance, nor an actual determination by the
Company (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant is not entitled to indemnification or to the
reimbursement or advancement of expenses, shall be a defense to the action or
create a presumption that the claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
<PAGE> 32
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
I, Susan Johnson, Assistant Vice President of Bankers Trust Company, New York,
New York, hereby certify that the foregoing is a complete, true and correct copy
of the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
----------------
Susan Johnson
Assistant Vice President
DATED: March 1, 2000
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/99 State#: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D Cert#: 00623 Page RC-1
City, State ZIP: New York, NY 10006 Transit#: 21001003
</TABLE>
11
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER, 31 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
Dollar Amounts C400
in Thousands RCFD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin (1) ............ 0081 3,205,000 1.a.
b. Interest-bearing balances (2) ..................................... 0071 1,850,000 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ........ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)....... 1773 3,129,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell.... 135 9,239,000 3.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 17,491,000 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses........................RCFD 3123 477,000 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ...........................RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) ............... 2125 17,014,000 4.d.
5. Trading Assets (from schedule RC-D) ..................................... 3545 12,551,000 5.
6. Premises and fixed assets (including capitalized leases) ................. 2145 625,000 6.
7. Other real estate owned (from Schedule RC-M) ............................. 2150 85,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 564,000 8.
9. Customers' liability to this bank on acceptances outstanding ............. 2155 262,000 9.
10. Intangible assets (from Schedule RC-M) ................................... 2143 82,000 10.
11. Other assets (from Schedule RC-F) ........................................ 2160 2,550,000 11.
12. Total assets (sum of items 1 through 11) ................................. 2170 51,156,000 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 34
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/99 State#: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D Cert#: 00623 Page RC-2
City, State ZIP: New York, NY 10006 Transit#: 21001003
</TABLE>
12
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
13. Deposits: //////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule
RC-E, part I) RCON 2200 13,534,000 13.a.
(1) Noninterest-bearing(1) ....................................... RCON 6631 2,815,000 13.a.(1)
(2) Interest-bearing .............................................. RCON 6636 10,719,000 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from //////////////////
Schedule RC-E part II) RCFN 2200 12,755,000 13.b.
(1) Noninterest-bearing .......................................... RCFN 6631 2,404,000 13.b.(1)
(2) Interest-bearing ............................................. RCFN 6636 10,351,000 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 5,483,000 14.
15. a. Demand notes issued to the U.S. Treasury ............................. RCON 2840 500,000 15.a.
b. Trading liabilities (from Schedule RC-D).............................. RCFD 3548 2,950,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases): //////////////////
a. With a remaining maturity of one year or less ........................ RCFD 2332 2,341,000 16.a.
b. With a remaining maturity of more than one year through three years.. A547 1,798,000 16.b.
c. With a remaining maturity of more than three years.................... A548 128,000 16.c
17. Not Applicable. ////////////////// 17.
18. Bank's liability on acceptances executed and outstanding ................ RCFD 2920 262,000 18.
19. Subordinated notes and debentures (2).................................... RCFD 3200 328,000 19.
20. Other liabilities (from Schedule RC-G) .................................. RCFD 2930 4,888,000 20.
21. Total liabilities (sum of items 13 through 20) .......................... RCFD 2948 44,967,000 21.
22. Not Applicable //////////////////
////////////////// 22.
EQUITY CAPITAL //////////////////
23. Perpetual preferred stock and related surplus ........................... RCFD 3838 1,500,000 23.
24. Common stock ............................................................ RCFD 3230 2,127,000 24.
25. Surplus (exclude all surplus related to preferred stock) ................ RCFD 3839 542,000 25.
26. a. Undivided profits and capital reserves ............................... RCFD 3632 2,055,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities RCFD 8434 (2,000) 26.b.
c. Accumulated net gains (losses) on cash flow hedges RCFD 4336 0 26c.
27. Cumulative foreign currency translation adjustments ..................... RCFD 3284 (33,000) 27.
28. Total equity capital (sum of items 23 through 27) ....................... RCFD 3210 6,189,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28)............ RCFD 3300 51,156,000 29
</TABLE>
Memorandum
<TABLE>
<S> <C> <C>
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for Number
the bank by independent external auditors as of any date during 1997 ..... RCFD 6724 N/A
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- -----------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
