<PAGE>   1
                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

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                          SALE AND SERVICING AGREEMENT


                                      among


                        WFS FINANCIAL 2001-C OWNER TRUST,
                                   as Issuer,


                          WFS RECEIVABLES CORPORATION,
                                   as Seller,


                                       and


                               WFS FINANCIAL INC,
                               as Master Servicer



                           Dated as of August 1, 2001



================================================================================





<PAGE>   2


                                TABLE OF CONTENTS


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                                   ARTICLE ONE

                                   DEFINITIONS

Section 1.01. Definitions................................................................    1
Section 1.02. Usage of Terms.............................................................   25
Section 1.03. Section References.........................................................   25
Section 1.04. Calculations...............................................................   25
Section 1.05. Accounting Terms...........................................................   26

                                   ARTICLE TWO

                             CONVEYANCE OF CONTRACTS

Section 2.01. Conveyance of Contracts....................................................   27

                                  ARTICLE THREE

                                  THE CONTRACTS

Section 3.01. Representations and Warranties of the Seller...............................   29
Section 3.02. Purchase of Certain Contracts..............................................   34
Section 3.03. Custody of Contract Files..................................................   35
Section 3.04. Duties of Master Servicer as Custodian.....................................   36
Section 3.05. Instructions; Authority to Act.............................................   37
Section 3.06. Indemnification............................................................   37
Section 3.07. Effective Period and Termination...........................................   38
Section 3.08. Nonpetition Covenant.......................................................   38
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date...............   38
Section 3.10. Optional Repurchase of Contracts by the Certificateholders.................   39

                                  ARTICLE FOUR

                    ADMINISTRATION AND SERVICING OF CONTRACTS

Section 4.01. Duties of Master Servicer..................................................   40
Section 4.02. Collection of Contract Payments............................................   44
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts..............   44
Section 4.04. Insurance..................................................................   45
Section 4.05. Maintenance of Security Interests in Financed Vehicles.....................   45
Section 4.06. Covenants, Representations and Warranties of the Master Servicer...........   45
Section 4.07. Repurchase of Contracts upon Breach of Covenant............................   47
Section 4.08. Servicing Compensation.....................................................   47

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Section 4.09. Reporting by the Master Servicer...........................................   48
Section 4.10. Annual Statement as to Compliance..........................................   50
Section 4.11. Annual Independent Certified Public Accountants' Report....................   51
Section 4.12. Access to Certain Documentation and Information Regarding Contracts........   51
Section 4.13. Fidelity Bond..............................................................   52
Section 4.14. Indemnification; Third Party Claims........................................   52
Section 4.15. Maintenance of Interest Rate Swap Agreement................................   52

                                  ARTICLE FIVE

                 DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS

Section 5.01. Establishment of Trust Accounts............................................   53
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits....................   55
Section 5.03. Application of Collections.................................................   56
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts...................   57
Section 5.05. Distributions..............................................................   58
Section 5.06. Spread Account.............................................................   59
Section 5.07. Statements to Securityholders..............................................   59
Section 5.08. Calculation of the Class A-3 Rate..........................................   60

                                   ARTICLE SIX

                                   THE SELLER

Section 6.01. Corporate Existence........................................................   62
Section 6.02. Liability of Seller; Indemnities...........................................   62
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of,
                 the Seller; Certain Limitations.........................................   63
Section 6.04. Limitation on Liability of Seller and Others...............................   64
Section 6.05. Seller Not to Resign.......................................................   65
Section 6.06. Seller May Own Securities..................................................   65

                                  ARTICLE SEVEN

                               THE MASTER SERVICER

Section 7.01. Liability of Master Servicer; Indemnities..................................   66
Section 7.02. Corporate Existence; Status as Master Servicer; Merger.....................   67
Section 7.03. Performance of Obligations.................................................   67
Section 7.04. Master Servicer Not to Resign; Assignment..................................   67
Section 7.05. Limitation on Liability of Master Servicer and Others......................   68

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                                  ARTICLE EIGHT

                                     DEFAULT

Section 8.01. Servicer Default...........................................................   70
Section 8.02. Indenture Trustee to Act; Appointment of Successor.........................   71
Section 8.03. Repayment of Advances......................................................   72
Section 8.04. Notification to Noteholders and Certificateholders.........................   72
Section 8.05. Waiver of Past Defaults....................................................   72
Section 8.06. Insurer Direction of Insolvency Proceedings................................   72

                                  ARTICLE NINE

                                   TERMINATION

Section 9.01. Optional Purchase of All Contracts.........................................   74
Section 9.02. Transfer to the Insurer....................................................   75

                                   ARTICLE TEN

                                  MISCELLANEOUS

Section 10.01. Amendment.................................................................   77
Section 10.02. Protection of Title to Trust..............................................   78
Section 10.03. Governing Law.............................................................   80
Section 10.04. Notices...................................................................   80
Section 10.05. Severability of Provisions................................................   80
Section 10.06. Assignment................................................................   80
Section 10.07. Third Party Beneficiaries.................................................   80
Section 10.08. Insurer Default or Insolvency.............................................   81
Section 10.09. Counterparts..............................................................   81
Section 10.10. Headings..................................................................   81
Section 10.11. Assignment by Issuer......................................................   81
Section 10.12. Limitation of Liability of Owner Trustee..................................   81
Section 10.13. Effect of Policy Expiration Date..........................................   81
Section 10.14. Limitation on Recourse Against WFSRC......................................   82
Section 10.15. Replacement Interest Rate Swap Agreement..................................   82


                                    SCHEDULES

Schedule A     Schedule of Contracts...................................................    SA-1
Schedule B     Location of Contract Files..............................................    SB-1
Schedule C     Charge-Off Percentage Triggers..........................................    SC-1

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                                    EXHIBITS

Exhibit A      Form of Insurance Agreement.............................................    A-1
Exhibit B      Form of Note Policy.....................................................    B-1
Exhibit C      Form of RIC.............................................................    C-1
Exhibit D      Form of Subservicing Agreement..........................................    D-1
Exhibit E      Form of Distribution Date Statement.....................................    E-1

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<PAGE>   6

        This SALE AND SERVICING AGREEMENT, dated as of August 1, 2001, is among
WFS Financial 2001-C Owner Trust, as issuer (the "Issuer"), WFS Receivables
Corporation, as seller (the "Seller"), and WFS Financial Inc ("WFS"), as master
servicer (the "Master Servicer").

        WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;

        WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and

        WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                   ARTICLE ONE

                                   DEFINITIONS

        Section 1.01. Definitions. (a) Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:

        "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 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



<PAGE>   7

the last Due Date in such Due Period exceeds (ii) the Net Liquidation Proceeds
for such Contract.

        "Aggregate Repurchase Amount" means, with respect to the purchase of
Contracts pursuant to Section 9.01(a), an amount equal to the outstanding
principal amount of the Notes and all unpaid interest (including any overdue
interest) thereon that has accrued through the related Interest Period.

        "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 Issuer (or in the case of any Contract acquired by the Seller
from another Person, from such other Person to the Seller and from the Seller to
the Issuer), and (ii) the original instrument granting a security interest in
such Contract and other documents made by the Issuer to the Insurer, which, in
the case of clause (i) above, is in a form sufficient under the laws of the
jurisdiction under which the security interest in the related Financed Vehicle
arises to permit the assignee to exercise all rights granted by the Obligor
under such Contract and such other documents and all rights available under
applicable law to the Obligee under such Contract and such other documents and,
in the case of clause (ii) above, is in a form sufficient under the laws of the
jurisdiction under which the security interest in the related Financed Vehicle
arises to permit the Insurer, as a secured party, to exercise, upon default, all
rights granted by the Obligor under such Contract and such other documents and
all rights available under applicable law to the Obligee under such Contract and
which, in the case of either clause (i) or (ii) above, may, to the extent
permitted by the laws of such jurisdiction, be a blanket instrument of
assignment covering other Contracts as well and which may also, to the extent
permitted by the laws of the jurisdiction governing such Contract, be an
instrument of assignment running directly from the related Seller to the Issuer
and the Insurer.

        "Bank" means Western Financial Bank, and its successors.

        "Base Price" means, with respect to any Repurchase Distribution Date,
the lesser of (i) the sum of the Scheduled Balances of the Contracts purchased
pursuant to Section 3.10 on


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<PAGE>   8

such Repurchase Distribution Date or (ii) the sum of the outstanding principal
amount on the Notes and all unpaid interest thereon that has accrued through the
related Interest Period on such Repurchase Distribution Date.

        "Basic Documents" shall have the meaning specified in the Indenture.

        "Business Day" means any day that is not a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Newark, Delaware,
London, England or New York, New York are authorized or obligated by law,
executive order or government decree to remain closed.

        "Calculation Day" means the last day of each calendar month.

        "Certificate Distributable Amount" means the aggregate amount of the
Excess Spread Amount distributed to Certificateholders pursuant to Section
5.06(b).

        "Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.

        "Certificate Final Scheduled Distribution Date" means March 2009.

        "Certificateholders" shall have the meaning specified in the Trust
Agreement.

        "Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Issuer. The initial Certificate Percentage Interest held by
the Seller shall be 100%.

        "Certificate Register" shall have the meaning specified in the Trust
Agreement.

        "Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).

        "Charge-Off Percentage" means, with respect to any Calculation Day, a
fraction, expressed as a percentage, the numerator of which is equal to (A) the
sum of (i) the Principal Balance of each Contract which is 120 days or more
delinquent, excluding Contracts which are subject to a Chapter 13 bankruptcy
proceeding, (ii) the difference between the Principal Balance of each Contract
which is less than 120 days delinquent but as to which the Financed Vehicle has
been repossessed and the estimated fair value of the Financed Vehicle as
determined in good faith by the Master Servicer and (iii) the difference between
the Principal Balance of each Contract which is subject to a bankruptcy court
approved Chapter 13 plan and the principal amount due under that approved plan,
less (B) all Net Liquidation Proceeds received with respect to the Financed
Vehicle and any other proceeds or other payments received from or for the
benefit of the Obligor as to any Contract subject to part (A), provided,
however, if the Net Liquidation Proceeds received with respect to the Financed
Vehicle is less than the estimated fair value of the Financed Vehicle used in
clause (ii), that difference shall be deducted from the amount otherwise
calculated pursuant to this part (B) and if the Net Liquidation Proceeds
received with respect to the Financed Vehicle is greater than the estimated fair
value of the



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<PAGE>   9

Financed Vehicle used in clause (ii), that difference shall be added to the
amount otherwise calculated pursuant to this part (B), and the denominator of
which is the Cut-Off Date Aggregate Scheduled Balance. For purposes of this
paragraph, "Principal Balance" means, (x) as to a Simple Interest Contract, its
actual principal balance and (y) as to a Rule of 78's Contract, its actual
principal balance net of unearned interest.

        "Charge-Off Percentage Trigger" means, with respect to any Calculation
Day, the percentage set forth in Schedule C.

        "Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.

        "Class A-1 Final Scheduled Distribution Date" means the June 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 3.63625% per annum.

        "Class A-2 Final Scheduled Distribution Date" means the June 2004
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 3.97% per annum.

        "Class A-3 Final Scheduled Distribution Date" means the March 2006
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 a percentage equal to the sum of (i) the LIBOR
Rate and (ii) 0.14% per annum.

        "Class A-4 Final Scheduled Distribution Date" means the March 2009
Distribution Date.

        "Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.

        "Class A-4 Rate" means 5.18% 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 August 8, 2001.



                                       4


<PAGE>   10

        "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.

        "Commercial Paper" means commercial paper given the highest rating by
each Rating Agency at the time of such investment; provided that the issuer of
such commercial paper must have a long-term unsecured debt rating of at least
"Aaa" from Moody's and "AAA" from Standard & Poor's or have a short-term
unsecured debt rating of at least "Prime-1" from Moody's and "A-1+" from
Standard & Poor's.

        "Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Issuer pursuant to this Agreement.

        "Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.

        "Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.

        "Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.

        "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.

        "Contracts" means the Contracts sold to the Issuer by the Seller.



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<PAGE>   11

        "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 August 1, 2001.

        "Cut-Off Date Aggregate Scheduled Balance" means $1,200,000,000, 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 60 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.

        "Delinquent Contract" means any Contract that is 60 days or more
delinquent.

        "Delivery" means, when used with respect to Trust Account Property:

                (i) with respect to certificated securities, bankers'
        acceptances, commercial paper, negotiable certificates of deposit and
        any other obligations which evidence a right to the payment of money and
        is not itself a security agreement or lease and is of a type which is in
        ordinary course of business transferred by delivery with necessary
        endorsement or assignment (collectively, "Physical Property"): (A) the
        Indenture Trustee or the Owner Trustee, as the case may be, or its
        Financial Intermediary acquires possession of






                                       6


<PAGE>   12


        the Physical Property, and evidence that any such Physical Property that
        is in registerable form has been registered in the name of the Trustee,
        its Financial Intermediary, its custodian or its nominee; (B) the
        Financial Intermediary, not a clearing corporation, sends the Indenture
        Trustee or the Owner Trustee, as the case may be, confirmation of the
        transfer and also by book entry or otherwise identifies as belonging to
        the Indenture Trustee or the Owner Trustee, as the case may be, the
        Physical Property in the Financial Intermediary's possession; or (C)
        with respect to a clearing corporation, appropriate entries to the
        account of the Indenture Trustee or the Owner Trustee, as the case may
        be, or a Person designated by him or her and, if certificated, it is
        both, in the custody of the clearing corporation or another clearing
        corporation, a custodian bank or a nominee of any of them and, in bearer
        form or endorsed in blank by the appropriate person or registered in the
        name of the clearing corporation, custodian bank, or a nominee of any of
        them;

                (ii) with respect to any Trust Account Property that is a
        book-entry security held through the Federal Reserve System pursuant to
        Federal book-entry regulations, the following procedures, all in
        accordance with applicable law, including applicable Federal regulations
        and Articles 8 and 9 of the UCC: (A) book-entry registration of such
        property to an appropriate book-entry account maintained with a Federal
        Reserve Bank by the Indenture Trustee or the Owner Trustee, as the case
        may be, of a deposit advice or other written confirmation of such
        book-entry registration, (B) the making by any such custodian of entries
        in its books and records identifying such book-entry security held
        through the Federal Reserve System pursuant to federal book-entry
        regulations as belonging to the Indenture Trustee or the Owner Trustee,
        as the case may be, and indicating that such custodian holds such Trust
        Account Property solely as agent for the Indenture Trustee or the Owner
        Trustee, as the case may be, and the making by the Indenture Trustee or
        the Owner Trustee, as the case may be, of entries in its books and
        records establishing that it holds such Trust Account Property solely as
        trustee pursuant to Section 5.01, and (C) such additional or alternative
        procedures as may hereafter become necessary to effect complete transfer
        of ownership of any such Trust Account Property to the Indenture Trustee
        or the Owner Trustee, as the case may be, consistent with changes in
        applicable law or regulations or the interpretation thereof; and

                (iii) with respect to any Trust Account Property that is an
        uncertificated security under Article 8 of the UCC and that is not
        governed by clause (ii) above, registration of the transfer to, and
        ownership of such Trust Account Property by, the Indenture Trustee or
        the Owner Trustee, as the case may be, its custodian or its nominee by
        the issuer of such Trust Account Property.

        "Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.

        "Distribution Date" means each March 20, June 20, September 20 and
December 20, or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing December 20, 2001.





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<PAGE>   13

        "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 period
commencing on the first day of the third month preceding the month in which such
Distribution Date occurs (or from the Cut-Off Date in the case of the first
Distribution Date) to the last day of the month immediately preceding the month
in which such Distribution Date occurs.

        "Eligible Account" means (i) a segregated trust account in the corporate
trust department that is maintained with a depository institution or trust
company, commercial paper or other short-term debt obligations of which have
credit ratings from Standard & Poor's at least equal to "A-1" and from Moody's
equal to "Prime-1", which account is fully insured up to applicable limits by
the FDIC or (ii) a general ledger account or deposit account that is (A)
guaranteed by an entity the long-term unsecured debt obligations of which are
rated "Aa2" by Moody's and "AAA" by Standard & Poor's or the commercial paper or
other short-term debt obligations of which have credit ratings from Standard &
Poor's at least equal to "A-1+" and from Moody's equal to "Prime-1" or (B) that
otherwise will not result in the qualification, reduction or withdrawal by any
Rating Agency of its then-applicable rating on any Class of Notes (without
giving effect to the guaranty under the Note Policy of payments owing to the
Noteholders). If any Eligible Account falls below the ratings specified in (i)
or (ii) above, all monies in such Eligible Account will be moved within 15 days
to an account meeting the requirements of an Eligible Account.

        "Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:

                (i) direct obligations of, and obligations fully guaranteed as
        to timely payment of principal and interest by, the United States or any
        agency or instrumentality of the United States the obligations of which
        are backed by the full faith and credit of the United States;

                (ii) general obligations of or obligations guaranteed as to
        timely payment of principal and interest by FNMA, FHLMC or any state of
        the United States, the District of Columbia or the Commonwealth of
        Puerto Rico then rated the highest available credit rating of each
        Rating Agency for such obligations;



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<PAGE>   14

                (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 "Prime-1" by Moody's or
        (B) the investment is guaranteed by an entity the long-term, unsecured
        debt obligations of which have been rated "AAA" by Standard & Poor's and
        at least "Aa2" by Moody's or otherwise will not result in the
        qualification, reduction or withdrawal by Moody's or Standard & Poor's
        of its then-applicable rating on any Class of Notes (without giving
        effect to the guaranty under the Note Policy of payments owing to the
        Noteholders); if the investments in this paragraph (iii) fall below the
        specified ratings, the invested monies shall be moved to Eligible
        Investments as soon as the investment matures; however, no new monies
        may be invested in any instrument that is not currently an Eligible
        Investment;

                (iv) repurchase obligations with respect to (A) any security
        described in clause (i) above or (B) any other security issued or
        guaranteed as to timely payment of principal and interest by an agency
        or instrumentality of the United States, in either case entered into
        with a depository institution or trust company (including the Indenture
        Trustee or the Owner Trustee), acting as principal and the counterparty,
        the long-term unsecured debt obligations of which are rated "AAA" by
        Standard & Poor's and at least "Aa2" by Moody's and commercial paper or
        other short-term debt obligations are rated at least "A-1+" by Standard
        & Poor's and "Prime-1" by Moody's;

                (v) securities bearing interest or sold at a discount issued by
        any corporation incorporated under the laws of the United States or any
        state thereof which at the time of such investment or contractual
        commitment providing for such investment have long-term, unsecured debt
        obligations rated "AAA" by Standard & Poor's and at least "Aa2" by
        Moody's or better and shall have commercial paper or other short-term
        debt obligations rated at least "A-1+" by Standard & Poor's and
        "Prime-1" by Moody's; provided, however, that securities issued by any
        corporation will not be Eligible Investments to the extent that
        investment therein will cause the then outstanding principal amount of
        securities issued by such corporation and held as part of the Issuer to
        exceed 10% of the sum of the aggregate 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
        "A-1" from Moody's and "AAA" from Standard & Poor's;

                (vii) the RIC, if guaranteed by an entity which has long-term,
        unsecured debt obligations rated "AAA" by Standard & Poor's and at least
        "Aa2" by Moody's or other-



                                       9

<PAGE>   15

        wise will not result in a qualification, reduction or withdrawal by
        Moody's or Standard & Poor's of its then-applicable rating on any Class
        of Notes or the Certificates (without giving effect to the guaranty
        under either Policy of payments owing to Securityholders); if the
        investments in this paragraph (vii) fall below the specified ratings,
        the invested monies shall be moved to Eligible Investments on the fifth
        Business Day preceding the next succeeding Distribution Date; however,
        no new monies may be invested in the RIC until the RIC once again
        becomes an Eligible Investment; and

                (viii) any other investments which meet the criteria of each
        Rating Agency as being consistent with their then-current rating of each
        Class of Notes.

        "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 Scheduled Distribution Date" means the Class A-1 Final Scheduled
Distribution Date, the Class A-2 Final Scheduled Distribution Date, the Class
A-3 Final Scheduled Distribution Date or the Class A-4 Final Scheduled
Distribution Date, as the case may be.

        "Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.

        "Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.

        "Fiscal Agent" shall have the meaning set forth in the Note Policy.

        "Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract", together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with the purchase of a Contract pursuant to Section 3.02 or 4.07, or payment by
the Seller or the Certificateholder, as the case may be, of the purchase price
of a Contract in connection with the purchase of all Contracts pursuant to
Section 9.01 or 3.10.



                                       10


<PAGE>   16

        "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 August 1, 2001, between the
Issuer and the Indenture Trustee.

        "Indenture Trustee" means the Person acting as trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture and, initially, will be Bankers Trust Company.

        "Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Seller, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of the
Issuer, the Seller, WFS or any of their respective Affiliates and (v) is not
connected with the Issuer, the Seller or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.

        "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).

        "Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer and the Indenture Trustee, the form of which is
attached hereto as Exhibit A.





                                       11



<PAGE>   17

        "Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.

        "Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.

        "Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.

        "Insurer" means Financial Security Assurance Inc., and its successors.

        "Insurer Insolvency" means (i) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the Insurer
in an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bankruptcy, insolvency,
rehabilitation or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Insurer or of
any substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Insurer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days, or (ii) the
commencement by the Insurer of a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any other present or future federal or
state bankruptcy, insolvency, rehabilitation or similar law, or the consent by
the Insurer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Insurer or of any substantial part of its property or the making by the
Insurer of an assignment for the benefit of creditors or the failure by the
Insurer generally to pay its debts as such debts become due or the taking of
corporate action by the Insurer in furtherance of any of the foregoing.

        "Interest Period" means, with respect to any Distribution Date and (i)
the Class A-1 Notes and the Class A-3 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 August 8, 2001) to but
excluding such Distribution Date and (ii) the Class A-2 Notes and the Class A-4
Notes, the period from and including the 20th day of the month immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including August 8, 2001) to but excluding the 20th day of the
month of the current Distribution Date.

        "Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate or the Class A-4 Rate, as applicable.

        "Interest Rate Swap Agreement" means the interest rate swap agreement,
dated as of July 27, 2001, between the Issuer and the Swap Counterparty.

        "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).




                                       12


<PAGE>   18


        "Issuer" means the WFS Financial 2001-C Owner Trust.

        "LDI Policy" means the limited dual interest policy providing coverage
for physical damage to, or loss of, a Financed Vehicle.

        "LIBOR Determination Date" means the second London Business Day prior to
the Closing Date with respect to the first Distribution Date and, as to each
subsequent Distribution Date, the second London Business Day prior to the
immediately preceding Distribution Date.

        "LIBOR Rate" means, with respect to any Interest Period, the London
interbank offered rate for deposits in U.S. dollars having a maturity of three
months (or, with respect to the first Distribution Date, four months) commencing
on the related LIBOR Determination Date which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such LIBOR Determination Date; provided, however,
that if such rate does not appear on the Telerate Page 3750, the LIBOR Rate will
equal the Reference Bank Rate.

        "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.

        "London Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in London, England are authorized or obligated
by law or government decree to be closed.

        "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.




                                       13


<PAGE>   19

        "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 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) Net Swap Receipts excluding any Swap Termination Payments paid
by the Swap Counterparty to the extent such amounts are used to enter into a
replacement interest rate swap agreement; and (vi) 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.

        "Net Swap Payment" means any net amount owed by the Issuer to the Swap
Counterparty pursuant to the Interest Rate Swap Agreement including Swap
Termination Payments.



                                       14


<PAGE>   20

        "Net Swap Receipt" means any amount paid by the Swap Counterparty to the
Issuer pursuant to the Interest Rate Swap Agreement including any Swap
Termination Payments.

        "Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.

        "Note" has the meaning set forth in the Indenture.

        "Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes, in each case as of the immediately
preceding Distribution Date (after giving effect to any distributions of
principal made on such preceding Distribution Date). Notwithstanding the
foregoing, any payments of the Repurchase Premium shall not reduce the Note
Balance.

        "Note Deficiency Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the amount of Net Collections actually deposited in
the Note Distribution Account on such Distribution Date in accordance with
Section 5.05.

        "Note Distributable Amount" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.

        "Note Distribution Account" means the account established and maintained
as such pursuant to Section 5.01.

        "Note Final Scheduled Distribution Date" means the Class A-1 Final
Scheduled Distribution Date, the Class A-2 Final Scheduled Distribution Date,
the Class A-3 Final Scheduled Distribution Date and the Class A-4 Final
Scheduled Distribution Date, as the case may be.

        "Note Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date over the amount in respect of interest that is actually
deposited in the Note Distribution Account with respect to such Class on such
preceding Distribution Date, plus, to the extent permitted by applicable law,
interest on the amount of interest due but not paid to Noteholders of such Class
on the preceding Distribution Date at the related Interest Rate for the related
Interest Period.

        "Note Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount for such Class of Notes for such Distribution Date and the
Note Interest Carryover Shortfall for such Class of Notes for such Distribution
Date. For all purposes of this Agreement and the other Basic Documents, interest
with respect to the (i) Class A-1 Notes and Class A-3 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


                                       15



<PAGE>   21

August 8, 2001) and (ii) Class A-2 Notes and Class A-4 Notes shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.

        "Note Policy" means the financial guaranty insurance policy issued by
the Insurer to the Indenture Trustee on behalf of the Noteholders, the form of
which is attached as Exhibit B hereto.

        "Note Policy Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the sum of (i) the amount of Net Collections actually
deposited in the Note Distribution Account on such Distribution Date in
accordance with Section 5.05 and (ii) the amount of the Note Deficiency Claim
Amount, if any, paid to the Note Distribution Account from the Spread Account
pursuant to a Deficiency Notice delivered for such Distribution Date.

        "Note Pool Factor" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after giving effect to any reductions thereof to
be made on such Distribution Date) divided by the original outstanding principal
amount of such Class of Notes.

        "Note Principal Carryover Shortfall" means, as of any Distribution Date,
the excess of the sum of the Note Quarterly Principal Distributable Amount for
such Distribution Date and any outstanding Note Principal Carryover Shortfall
for the immediately preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on the
related Distribution Date.

        "Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount,
the Accelerated Principal Distributable Amount, if any, for such Distribution
Date and the Note Principal Carryover Shortfall for the immediately preceding
Distribution Date; provided, however, that the Note Principal Distributable
Amount with respect to a Class of Notes shall not exceed the outstanding
principal amount of such Class of Notes; and provided, further, that the Note
Principal Distributable Amount on each Note Final Scheduled Distribution Date
shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the related Class of Notes to zero.

        "Note Quarterly Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of all interest accrued for the related Interest
Period on each Class of Notes at the related Interest Rate for such Class on the
outstanding principal amount of the Notes of such Class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
the Noteholders of such Class on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the original principal amount of such
Class of Notes).

        "Note Quarterly Principal Distributable Amount" means, with respect to
any Distribution Date, the Aggregate Scheduled Balance Decline for such
Distribution Date.

        "Note Register" shall have the meaning specified in the Indenture.


                                       16


<PAGE>   22

        "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.

        "Optional Repurchase" means the repurchase of Contracts by the
Certificateholders pursuant to Section 3.10.

        "Optional Repurchase Payment" means, with respect to the repurchase by
the Seller of Contracts pursuant to Section 3.10, an amount equal to the sum of
accrued but unpaid interest on such Contracts, the Base Price and the Repurchase
Premium; provided, however, on any Repurchase Distribution Date on which the
Aggregate Scheduled Balance is less than $240,000,000, the Optional Repurchase
Payment will equal the greater of (i) an amount equal to the sum of accrued but
unpaid interest on such Contracts, the Base Price and the Repurchase Premium and
(ii) an amount equal to the sum of the outstanding principal on the Notes and
all unpaid interest thereon that has accrued through the related Interest
Period.

        "Original Class A-1 Note Balance" means $180,000,000.

        "Original Class A-2 Note Balance" means $300,000,000.

        "Original Class A-3 Note Balance" means $410,000,000.

        "Original Class A-4 Note Balance" means $310,000,000.

        "Original Pool Balance" means $1,200,000,000.

        "Outstanding" means, with respect

                (i) to a Contract and as of time of reference thereto, a
        Contract that has not reached its Maturity Date, has not been fully
        prepaid, has not become a Liquidated Contract and has not been
        repurchased pursuant to Section 3.02, 3.10, 4.07 or 9.01; and




                                       17


<PAGE>   23

                (ii) to the Securities, as of the date of determination, all
        Notes of one Class or of all Classes, all Certificates or all Notes and
        Certificates, as the case may be, theretofore authenticated and
        delivered except:

                        (A) Securities theretofore cancelled by the applicable
                Registrar or delivered to the applicable Registrar for
                cancellation;

                        (B) Securities or portions thereof the payment for which
                money in the necessary amount has been theretofore deposited
                with the applicable Trustee or any Paying Agent, as the case may
                be, in trust for the Holders of such Securities (provided,
                however, that if such Securities are to be redeemed or
                repurchased, notice of such redemption or repurchase has been
                duly given or provision for such notice has been made,
                satisfactory to the applicable Trustee); and

                        (C) Securities in exchange for or in lieu of other
                Securities which have been authenticated and delivered unless
                proof satisfactory to the applicable Trustee is presented that
                any such Securities are held by a bona fide purchaser;

provided, however, that Securities which have been paid with proceeds of the
Note Policy shall continue to remain Outstanding until the Insurer has been paid
as subrogee hereunder or reimbursed pursuant to the Insurance Agreement as
evidenced by a written notice from the Insurer delivered to the applicable
Trustee, and the Insurer shall be deemed to be the Holder thereof to the extent
of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of a specified Outstanding Amount of Securities
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any other Basic Document, Securities owned by the
Issuer, any other obligor upon the Securities, the Seller, WFS or any of their
respective Affiliates shall be disregarded and deemed not to be Outstanding
prior to the Policy Expiration Date, except that, in determining whether the
applicable Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
applicable Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the applicable Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Issuer, any other obligor upon the Securities, the Seller, WFS or any of their
respective Affiliates.

        "Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.

        "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 August 1, 2001 less any
unearned interest as of the Due Date for such Contract next preceding August 1,
2001, computed in accordance with the Rule of 78's, less all amounts received on
or in respect of such Contract on or after August 1, 2001 that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.


                                       18


<PAGE>   24

        "Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement and, initially, will be Chase Manhattan Bank USA, National
Association.

        "Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.

        "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".

        "Policy Expiration Date" means the date on which the Notes have been
paid in full and all outstanding Reimbursement Obligations and other amounts due
to the Insurer have been paid in full and the Term Of this Policy (as defined in
the Note Policy) has expired.

        "Pool Balance" as of the time of determination means the Aggregate
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.

        "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.



                                       19


<PAGE>   25

        "Reference Bank Rate" means with respect to any Interest Period, the
arithmetic mean to the nearest 1/100,000 of 1% (0.0000001), with five
one-millionths of a percentage point rounded upward, of the rates, as of 11:00
A.M., London time, on the related LIBOR Determination Date, at which deposits in
United States dollars, having a maturity of three months and a principal amount
of not less than $1,000,000, offered by the Reference Banks from which the
Indenture Trustee has received quotations; provided however, in the event that
the Indenture Trustee has not received quotations from at least two Reference
Banks, the Reference Bank Rate will be the arithmetic mean to the nearest
1/100,000 of 1% (0.0000001), with five one-millionths of a percentage point
rounded upward, of the rates quoted by two or more major banks in New York City,
selected by the Indenture Trustee, as of 11:00 A.M., New York City time, on the
LIBOR Determination Date for loans in United States dollars to leading European
Banks having a maturity of three months and a principal in amounts not less than
$1,000,000; provided, further, if less than two such quotations can be obtained,
the Reference Bank Rate shall be the Reference Bank Rate for the preceding
Interest Period.

        "Reference Banks" means four major banks that are engaged in the London
interbank market that are selected by the Indenture Trustee.

        "Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.

        "Related Contracts" means, with respect to a particular Seller, the
Contracts sold to the Issuer by such Seller.

        "Replacement Interest Rate Swap Agreement" has the meaning set forth in
Section 3.13 of the Insurance Agreement.

        "Repurchase Amount" means, with respect to any Contract, the amount, as
of the date of repurchase, required to prepay in full the principal of and
accrued interest on such Contract to the last Due Date in the Due Period in
which such repurchase occurs.

        "Repurchase Distribution Date" means any Distribution Date on which
Contracts are purchased pursuant to Section 3.10.

        "Repurchase Premium" means an amount equal to:

                (i) on any Distribution Date on or prior to the September 2002
        Distribution Date, the product of the Base Price and 15%;

                (ii) on a Distribution Date from, but excluding, the September
        2002 Distribution Date to, and including, the September 2003
        Distribution Date, the product of the Base Price and 10%;

                (iii) on a Distribution Date from, but excluding, the September
        2003 Distribution Date to, and including, the September 2004
        Distribution Date, the product of the Base Price and 7%; and




                                       20



<PAGE>   26

                (iv) on a Distribution Date from, but excluding, the September
        2004 Distribution Date to, and including, the March 2009 Distribution
        Date, the product of the Base Price and 4%.

        Notwithstanding the foregoing, the Repurchase Premium shall equal zero
if the Aggregate Scheduled Balance of the Contracts is less than or equal to
$120,000,000.

        "Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.

        "Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group) of the Indenture Trustee including any
Vice President, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.

        "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-4 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-4 Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each delinquent Contract).


                                       21



<PAGE>   27

        "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 the Cut-Off Date, computed in accordance with the definition of
the term "Scheduled Balance," shall be contained on a computer disk or tape (the
"Disk") that shall be delivered by the Seller 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



                                       22


<PAGE>   28


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 WFSRC, in its capacity as the Seller of Contracts under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 6.03.

        "Servicer Default" means an event specified in Section 8.01.

        "Servicing Fee" means, as to any Distribution Date, the fee payable to
the Master Servicer for services rendered during the related Due Period, which
shall equal an amount equal to, for each month in such Due Period, the product
of the Servicing Fee Percent and the 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.

        "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, 4.0% of the Aggregate Scheduled Balance on
such Calculation Day, except



                                       23


<PAGE>   29

that if on any Calculation Day (i) the Charge-Off Percentage for the related
Calculation Day exceeds the Charge-Off Percentage Trigger or (ii) the
Delinquency Percentage for the three calendar month period ending on such
Calculation Day exceeds 2.5%, then the Specified Spread Account Balance shall
equal 9.0% of the Aggregate Scheduled Balance on such 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 shall the Specified Spread Account Balance be greater
than $108,000,000 or less than $21,600,000; provided, however, the Specified
Spread Account Balance shall not be greater than the Outstanding Amount of the
Securities if such amount is less $21,600,000.

        "Spread Account" means the account established and maintained as such
pursuant to Section 5.01.

        "Spread Account Balance" means the amount on deposit in the Spread
Account.

        "Spread Account Initial Deposit" means $24,000,000, 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 D hereto.

        "Swap Counterparty" means Credit Suisse First Boston International, as
the swap counterparty under the Interest Rate Swap Agreement.

        "Swap Termination Payments" means payment due to the Swap Counterparty
by the Issuer or to the Issuer by the Swap Counterparty due to the termination
of the Interest Rate Swap Agreement pursuant to the occurrence of an event of
default or termination event under the Interest Rate Swap Agreement or as
otherwise agreed between the parties to the Interest Rate Swap Agreement and
consented to by the Insurer.

        "Telerate Page 3750" is the display page named that on the Dow Jones
Telerate Services (or any other page that replaces that page on that service for
the purpose of displaying comparable name or rates).

        "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.




                                       24

<PAGE>   30

        "Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.

        "Trust Accounts" shall have the meaning specified in Section 5.01(a).

        "Trust Agreement" means the Trust Agreement, dated July 25, 2001, as
amended and restated as of August 8, 2001, among the Depositor, the Insurer and
the Owner Trustee.

        "Trust Estate" shall have the meaning specified in the Trust Agreement.

        "UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.

        "United States" means the United States of America.

        "Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Note Policy for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.

        "Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).

        "Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.

        "WFAL2" means WFS Financial Auto Loans 2, Inc., a wholly owned
subsidiary of WFS, and its successors and assigns.

        "WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.

        "WFSRC" means WFS Receivables Corporation, a wholly-owned subsidiary of
WFS, and its successors and assigns.

        (b) Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Indenture.

        Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."





                                       25


<PAGE>   31

        Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.

        Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date or August 8, 2001, in the case of the first
Distribution Date (or, in the case of the Class A-2 Notes and Class A-4 Notes,
on the basis of a 360-day year and twelve 30-day months) and will be carried out
to at least six decimal places. Collections of interest on Rule of 78's
Contracts shall be calculated as if such Contracts were actuarial contracts the
scheduled principal balances of which are the 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.



                                       26



<PAGE>   32

                                   ARTICLE TWO

                             CONVEYANCE OF CONTRACTS

        Section 2.01. Conveyance of Contracts.

        (a) In consideration of the Issuer's delivery to or upon the order of
the Seller of the Certificates and $1,200,000,000 aggregate principal balance of
Notes, the Seller hereby grants, transfers, assigns and otherwise conveys to the
Issuer, without recourse (subject to the obligations herein), all of its right,
title and interest (exclusive of (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 August 1, 2001 (excluding the amount allocable to principal and interest
due prior to August 1, 2001); all Net Liquidation Proceeds and Net Insurance
Proceeds with respect to any Financed Vehicle to which a Contract relates
received on or after August 1, 2001 and all other proceeds received on or in
respect of such Contracts (other than payments of Monthly P&I due prior to
August 1, 2001) 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
August 1, 2001 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.

        (b) The Bank has caused the filing of UCC-1 financing statements, naming
the Bank as debtor and WFS as secured party and describing the Contracts
originated by the Bank and transferred to WFS on or prior to the Closing Date as
collateral with the Office of the Secretary of State of the State of California.
WFS has caused the filing of UCC-1 financing statements naming WFS as debtor and
the Seller as secured party and describing the Contracts as collateral with the
office of the Secretary of State of the State of California. The Seller has
caused the filing of UCC-1 financing statements, naming the Seller as debtor and
the Collateral Agent, on behalf of the Insurer, as secured party and describing
the Contracts as collateral, with the Office of the Secretary of State of the
State of California. The grant of a security interest to the Collateral Agent on
behalf of the Insurer and the rights of the Collateral Agent and the Insurer in
respect of such security interest shall be governed by the Insurance Agreement.
The Seller has caused the filing of UCC-1 financing statements, naming the
Seller as debtor and the Trust as secured party and describing the Contracts
being sold by it to the Trust as collateral, with the Office of the Secretary of
State of the State of California. The Trust has caused the filing of UCC-1
financing statements, naming the Trust as debtor and the Indenture Trustee, on
behalf of the Noteholders, as secured party and describing the Contracts as
collateral, with the office of the Secretary of State of the State of Delaware.
The grant of a security interest to the Indenture Trustee and the rights of the
Indenture Trustee in the Contracts shall be governed by the Indenture. From time
to time, the Master Servicer shall cause to be taken such actions as are
necessary to continue the perfection of the respective interests of the
Indenture Trustee, the Trust



                                       27

<PAGE>   33

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.




                                       28


<PAGE>   34


                                  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



                                       29

<PAGE>   35


        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, the Seller has
        taken all steps necessary to perfect its security interest against the
        Obligors in the Financed Vehicles securing the Contracts and such
        Contract granted a valid and enforceable first priority security
        interest in favor of WFS (or to the Bank, a Dealer or a Third Party
        Lender, which security interest has been assigned to WFS) in the related
        Financed Vehicle, and such security interest has been duly perfected and
        is prior to all other liens upon and security interests in such Financed
        Vehicle which now exist or may hereafter arise or be created (except, as
        to priority, for any lien for unpaid taxes or unpaid storage or repair
        charges which may arise after the Closing Date). The Seller has caused
        the filing of all appropriate financing statements in the proper filing
        office in the appropriate jurisdictions under applicable law in order to
        perfect the security interest in the Contracts granted to the Issuer
        hereunder. All financing statements filed against the Seller in favor of
        the Issuer in connection herewith describing the Contracts contain a
        statement to the following effect: "A purchase of or security interest
        in any collateral described in this financing statement will violate the
        rights of the Issuer unless the Issuer authorizes it."

                (iii) Title Documents. (A) If the related Financed Vehicle was
        originated in a state in which notation of a security interest on the
        Title Document is required or permitted to perfect such security
        interest, the Title Document for such Financed Vehicle shows, or if a
        new or replacement Title Document is being applied for with respect to
        such Financed Vehicle the Title Document will be received within 180
        days of the Closing Date and will show WFS named as the original secured
        party under the related Contract as the holder of a first priority
        security interest in such Financed Vehicle, and


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<PAGE>   36

        (B) if the related Financed Vehicle was originated in a state
        in which the filing of a financing statement under the UCC is required
        to perfect a security interest in motor vehicles, such filings or
        recordings have been duly made and show WFS named as the original
        secured party under the related Contract, and in either case, the
        Indenture Trustee and the Owner Trustee have the same rights as such
        secured party has or would have (if such secured party were still the
        owner of the Contract) against all parties claiming an interest in such
        Financed Vehicle. With respect to each Contract for which the Title
        Document has not yet been returned from the Registrar of Titles, WFS has
        received written evidence from the related Dealer that such Title
        Document showing WFS as first lienholder has been applied for.

                (iv) Title to the Contracts. Immediately prior to the issuance
        of the Notes and the Certificates, the Seller had good and indefeasible
        title to and was the sole owner of each Contract to be transferred to
        the Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
        and rights of any Person and, upon transfer of such Contract to the
        Issuer pursuant to Section 2.01, the Issuer will have good and
        indefeasible title to and will be the sole owner of such Contract free
        of liens, claims, encumbrances and rights of any Person, except for the
        Lien of the Indenture Trustee under the Indenture and the security
        interest granted to the Insurer under the Insurance Agreement.

                (v) Current in Payment. As of the 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




                                       31


<PAGE>   37

        the Issuer and the receipt of interest by the Securityholders,
        will not involve the violation of any applicable state or federal law.

                (x) Valid and Binding. Such Contract is the legal, valid and
        binding obligation of the Obligor thereunder and is enforceable in
        accordance with its terms, except as enforcement may be limited by
        bankruptcy, insolvency or similar laws affecting the enforcement of
        creditors' rights generally; all parties to such Contract had full legal
        capacity to execute and deliver such Contract and all other documents
        related thereto and to grant the security interest purported to be
        granted thereby; and the terms of such Contract have not been waived or
        modified in any respect, except by instruments that are part of the
        Contract Documents.

                (xi) Enforceability. Such Contract contains customary and
        enforceable provisions such as to render the rights and remedies of the
        holder or assignee thereof adequate for the realization against the
        collateral of the benefits of the security, subject, as to
        enforceability, to bankruptcy, insolvency, reorganization or similar
        laws affecting the enforcement of creditors' rights generally.

                (xii) No Default. As of the Cut-Off Date, there was no default,
        breach, violation or event permitting acceleration existing under such
        Contract (except payment delinquencies permitted by subparagraph (v)
        above) and no event which, with notice and the expiration of any grace
        or cure period, would constitute such a default, breach, violation or
        event permitting acceleration under such Contract, and the Seller has
        not waived any such default, breach, violation or event permitting
        acceleration except payment delinquencies permitted by subparagraph (v)
        above.

                (xiii) Insurance. At the Closing Date, the related Financed
        Vehicle will be covered by (A) a comprehensive and collision insurance
        policy (1) in an amount at least equal to the lesser of (a) its actual
        cash value or (b) the principal amount due from the Obligor under the
        related Contract, (2) naming WFS as a loss payee and (3) insuring
        against loss and damage due to fire, theft, transportation, collision
        and other risks generally covered by comprehensive and collision
        coverage or (B) a LDI Policy; provided, however, that if such Financed
        Vehicle has an unpaid principal balance of less than $4,000.00 or the
        related Contract has six or fewer months remaining before its Maturity
        Date, it will not be required to be covered by the insurance described
        in this subparagraph. Each of the Seller, WFS and the Master Servicer
        shall at all times comply with all of the provisions of such insurance
        policies and the LDI Policy applicable to such Financed Vehicle.

                (xiv) Acquisition of Contract. Such Contract was either acquired
        by WFS (or its predecessor in interest) from a Dealer or a Third Party
        Lender with which it ordinarily does business or the Bank or originated
        directly by WFS in the ordinary course of its business, and no adverse
        selection procedures have been utilized in selecting such Contract from
        all other similar contracts purchased by the Seller.

                (xv) Scheduled Payments. As of the Cut-Off Date, scheduled
        payments under such Contract are applied in accordance with the Rule of
        78's method or the simple


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<PAGE>   38

        interest method and are due monthly in level payments through its
        Maturity Date sufficient to fully amortize the principal balance of such
        Contract by its Maturity Date, assuming timely payment by Obligors on
        Simple Interest Contracts, except that the payment in the first or last
        month in the life of the Contract may be minimally different from the
        level payment.

                (xvi) One Original. There is only one original of such Contract
        and such original, together with all other Contract Documents, is being
        held by the Master Servicer pursuant to Section 3.04. The Seller has
        received a written acknowledgement from the Master Servicer that the
        Master Servicer is holding the Contract Documents that constitute or
        evidence the Contracts solely on behalf and for the benefit of the
        Issuer. None of the Contract Documents that constitute or evidence each
        Contract has any marks or notations indicating that it has been pledged,
        assigned or otherwise conveyed to any Person other than the Issuer. Each
        original Contract has been segregated and marked to show the Issuer as
        owner thereof, unless the Insurer has waived the requirement for such
        segregation and marking by notice in writing to the Owner Trustee, the
        Indenture Trustee and the Master Servicer.

                (xvii) Characteristics. As of the Cut-Off Date such Contract had
        (A) an Outstanding Principal Balance of not less than $526.71 nor more
        than $96,439.38, (B) an original term of not less than 12 months nor
        greater than 84 months, (C) a remaining maturity of not less than three
        months nor greater than 84 months and (iv) an APR of not less than
        5.90%.

                (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 Scheduled 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. With respect to each Contract, such
        Contract provides for the payment of a finance charge calculated at its
        APR based on the Rule of 78's or the simple interest method and such APR
        shall be equal to or greater than 6.75% for Rule of 78's Contracts and
        equal to or greater than 5.90% for Simple Interest Contracts.

                (xxiii) WFS, Bank and Third Party Lender Originations. With
        respect to the Contracts, the aggregate Scheduled Balance as of the
        Cut-Off Date of such Contracts purchased by WFS from the Bank and Third
        Party Lenders or originated directly by WFS is not more than
        approximately 1.19% of the Cut-Off Date Aggregate Scheduled Balance.


                                       33



<PAGE>   39

                (xxiv) Simple Interest Contracts. As of the Cut-Off Date,
        approximately 97.31% of the aggregate Scheduled Balances of the
        Contracts shall be Simple Interest Contracts and approximately 2.66% of
        the aggregate Scheduled Balances of the Contracts shall be Rule of 78's
        Contracts.

                (xxv) New or Used Vehicles. At least 26.65% of the Contracts by
        Cut-Off Date Aggregate Scheduled Balance shall be new vehicles and not
        greater than 73.35% shall be used vehicles.

                (xxvi) States of Origination. Approximately 37.20% of the
        Contracts by Cut-Off Date Aggregate Scheduled Balance were originated or
        purchased by WFS or the Bank in California and approximately 62.80% 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.

                (xxviii) Chattel Paper. Each Contract constitutes "chattel
        paper" within the meaning of the applicable UCC.

                (xxix) Priority of Interest. This Agreement creates a valid and
        continuing security interest (as defined in the UCC) in the Contracts in
        favor of the Issuer, which security interest is prior to all other
        Liens, and is enforceable as such as against creditors of and purchasers
        from the Seller. Other than the security interest granted to the Issuer
        pursuant to this Agreement and subject to the Insurance Agreement, the
        Seller has not pledged, assigned, sold, granted a security interest in,
        or otherwise conveyed any of the Contracts. The Seller has not
        authorized the filing of and is not aware of any financing statements
        against the Seller that include a description of collateral covering the
        Contracts other than any financing statement relating to the security
        interest granted to the Issuer hereunder, the security interest granted
        to the Indenture Trustee under the Indenture and the security interest
        granted to the Insurer under the Insurance Agreement or that has been
        terminated.

        Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 3.01 shall survive delivery of the
Contract Documents to the Owner Trustee and shall continue until the termination
of this Agreement. Upon discovery by the Seller, the Master Servicer or the
Owner Trustee, as the case may be, that any of such representations and
warranties was incorrect as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Owner
Trustee, such Person making such discovery shall give prompt notice to the other
such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee, the Issuer or the Insurer, the Seller
shall, within 90 days after discovery thereof or receipt of notice thereof, cure
the defect or eliminate or otherwise cure the circumstances or condition in
respect of which such representation or warranty was incorrect as of the time
made. If the Seller is unable to do so, it shall purchase such Contract on the
Master Servicer Report Date next succeeding the end of such


                                       34


<PAGE>   40

90-day period from the Issuer for an amount equal to the related Repurchase
Amount in the manner set forth in Section 5.04. Upon any such purchase, the
Owner Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
Seller title to any Contract purchased hereunder. The sole remedy of the Issuer,
the Owner Trustee, the Indenture Trustee or the Securityholders with respect to
a breach of the Seller's representations and warranties pursuant to Section 3.01
shall be to enforce the Seller's obligation to repurchase Contracts pursuant to
this Section; provided, however, that the Seller shall indemnify the Owner
Trustee, the Indenture Trustee, the Insurer, the Issuer and the Securityholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third-party claims arising out of the
events or facts giving rise to such breach.

        Section 3.03. Custody of Contract Files.

        (a) Subject to Sections 3.07, 7.04 and 8.01, the Owner Trustee hereby
irrevocably appoints the Master Servicer, and the Master Servicer hereby accepts
such appointment, to act as the agent of the Owner Trustee as custodian of the
Contract Documents and any and all other documents that the Master Servicer
shall keep on file, in accordance with its customary procedures, relating to a
Contract, Obligor or Financed Vehicle, which are hereby constructively delivered
to the Owner Trustee with respect to each Contract:

                (i) the original of the Contract;

                (ii) documents evidencing the existence of physical damage
        insurance covering the Financed Vehicles;

                (iii) the original credit application fully executed by the
        Obligor; and

                (iv) the original certificate of title or such documents that
        the Master Servicer shall keep on file, in accordance with its customary
        procedures, evidencing the security interest of the Master Servicer in
        the Financed Vehicle.

        (b) The Master Servicer shall maintain the Contract Documents held by it
(by itself or through one or more Subservicers) in a file area physically
separate from the other installment sales contracts and installment loans owned
or serviced by it or any of its Affiliates, which area shall be clearly marked
to indicate the Issuer as the owner of, and the security interest of the
Indenture Trustee and the Insurer in, the Contract Documents and shall 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 Issuer and shall not in any way assert or claim an ownership
interest in the Contracts. It is intended by the Master Servicer's and the
Seller's agreement pursuant to this Section that the Owner Trustee shall be




                                       35

<PAGE>   41

deemed to have possession of the Contract Documents for purposes of Section
9-313 of the UCC of the state in which the Contract Documents are located.

        Section 3.04. Duties of Master Servicer as Custodian.

        (a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the use
and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.

        (b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall be specified to the Owner Trustee, the
Indenture Trustee and the Insurer by 30 days' prior written notice. The Master
Servicer shall permit the Owner Trustee, the Indenture Trustee and the Insurer
or their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Master Servicer at such times as such Persons may
request.

        (c) Release of Documents. Upon instruction from the Indenture Trustee (a
copy of which shall be furnished to the Owner Trustee and the Insurer), the
Master Servicer shall release any Contract File to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.

        (d) Monthly Reports. On the tenth Business Day of each month, other than
a month in which a Distribution Date occurs, commencing with the month next
succeeding the month of the Closing Date, the Master Servicer shall mail to the
Indenture Trustee and the Owner Trustee, by first class mail, a certificate of a
Servicing Officer stating (i) the Contract Number and outstanding principal
balance of each Contract that has become a Liquidated Contract since the
Business Day next preceding the date of the last certificate delivered pursuant
to this subsection (or since the Closing Date in the case of the first such
certificate); (ii) that all proceeds received in respect of such Contract have
been deposited in or credited to the Collection Account or Holding Account as
required by Section 5.02; (iii) that, if such Contract has been the subject of a
Full Prepayment pursuant to 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



                                       36

<PAGE>   42

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 Issuer, the Owner Trustee, the Indenture Trustee,
the Insurer and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Issuer, the Owner Trustee, the Indenture
Trustee, the Insurer, the Noteholders or the Certificateholders as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Master Servicer of the Contract Files, or the failure of the Master
Servicer to perform its duties and service the Contracts in compliance with the
terms of this Agreement; provided, however, that the Master Servicer shall not
be liable to the Owner Trustee for any portion of any such amount resulting from
the willful misfeasance, bad faith or negligence of the Owner Trustee and the
Master Servicer shall not be liable to the Indenture Trustee for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Indenture Trustee. The Master Servicer shall also indemnify and hold
harmless the Issuer, the Trust Estate and the Securityholders against any taxes
that may be asserted at any time against any of them with respect to the
Contracts, including any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but exclusive of federal or other income
taxes arising out of payments on the Contracts) and the costs and expenses in
defending against such taxes. The Master Servicer shall immediately notify the
Owner Trustee and the Indenture Trustee if a claim is made by a third party with
respect to the Contracts, shall assume, with the consent of the Owner Trustee
and the


                                       37

<PAGE>   43


Indenture Trustee, the defense of any such claim, pay all expenses in connection
therewith, including counsel fees, and shall promptly pay, discharge and satisfy
any judgment or decree which may be entered against it or the Issuer.

        Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under this Section, upon the
termination of the Issuer or the repurchase of all of the Contracts by the
Seller, whichever is first to occur. If the Master Servicer shall resign in
accordance with the provisions of this Agreement or if all of the rights and
obligations of the Master Servicer shall have been terminated pursuant to
Section 8.01, the appointment of the Master Servicer as custodian shall be
terminated by the Indenture Trustee, by the Holders of Notes evidencing not less
than 51% of the Outstanding Amount of the Notes, by the Owner Trustee, by
Certificateholders evidencing not less than 51% of the aggregate Certificate
Percentage Interest, or by the Insurer, in the same manner as the Indenture
Trustee, the Owner Trustee, the Insurer or such Holders may terminate the rights
and obligations of the Master Servicer pursuant to Section 8.01. As soon as
practicable after any termination of such appointment, the Master Servicer
shall, at its own expense, deliver the Contract Files to the Owner Trustee or
its agent or as designated by the Owner Trustee at such place or places as the
Owner Trustee may reasonably designate and shall cooperate in good faith to
effect such delivery.

        Section 3.08. Nonpetition Covenant.

        (a) Neither the Seller nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.

        (b) The Master Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.

        Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.






                                       38



<PAGE>   44

        Section 3.10. Optional Repurchase of Contracts by the
Certificateholders.

        (a) On each Distribution Date, the Certificateholders shall have the
option to repurchase Contracts randomly selected by the Master Servicer from the
Issuer; provided, however, such option shall only be exercised once during the
term of this Agreement. The sum of the Scheduled Balances of the Contracts
purchased pursuant to this Section may not exceed $240,000,000. Notice of the
exercise of such option shall be given by the Certificateholders to the Owner
Trustee, the Indenture Trustee and the Insurer not later than 15 days prior to
such Distribution Date. To exercise such option, the Certificateholders shall,
on the Business Day immediately preceding the related Distribution Date, pay to
the Indenture Trustee for the benefit of the Securityholders, by deposit in the
Collection Account, the Optional Repurchase Payment. Upon such deposit of the
Optional Repurchase Payment, the Owner Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be requested by the Certificateholder to vest in such Certificateholder title to
any Contract purchased hereunder.

        (b) The Optional Repurchase Payment other than the Repurchase Premium
shall constitute Net Collections and shall be distributed in accordance with
Section 5.05(a); provided, however, if, upon the exercise of its right to
repurchase pursuant to Section 3.10(a), the Certificateholders repurchase all
remaining Contracts, the Optional Repurchase Payment will be distributed
pursuant to Section 9.01(e).

        (c) Upon instruction of the Master Servicer, the Indenture Trustee shall
deposit the Repurchase Premium into the Note Distribution Account for
distribution on the related Distribution Date to each Class of Notes, pro rata,
based on the outstanding principal balance of each Class of Notes after making
the distributions (other than the distribution of the Base Price) described in
Section 5.05(a); provided, however, if, upon the exercise of its right to
repurchase pursuant to Section 3.10(a), the Certificateholders repurchase all
remaining Contracts, the Repurchase Premium will be distributed pursuant to
Section 9.01(e).




                                       39

<PAGE>   45

                                  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 Scheduled Distribution Date
and (ii) during each three-month period between Distribution Dates (or in the
case of the first Distribution Date, from the Cut-Off Date to such Distribution
Date) shall not affect Contracts having an aggregate Scheduled Balance greater
than one-tenth of one percent of the Pool Balance at the beginning of such
period. Any such modifications or reductions exceeding such limits may be made
only with the consent of the Insurer and each Rating Agency. The Master Servicer
may also extend the Maturity Date on a Contract in accordance with Section 4.02.
The Master Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee, the Owner Trustee and the Insurer with respect to
distributions and filing applicable U.S. tax returns for the Issuer on an annual
basis, based on a tax year for the Issuer that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Insurer, the Noteholders, the Certificateholders, the Indenture Trustee, the
Owner Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Owner


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<PAGE>   46

Trustee shall furnish the Master Servicer all documents necessary or appropriate
to enable the Master Servicer to carry out its servicing and administrative
duties hereunder.

        On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.

        The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit 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


                                       41


<PAGE>   47

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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<PAGE>   48

Account as required above, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken; provided,
however, that the Master Servicer must provide such certificate within three
months of such Nonrecoverable Advance or Advances. The foregoing requirements
for deposit in the Collection Account are exclusive, it being understood that
collections in the nature of late payment charges or extension fees or
collections allocable to payments to be made by the Master Servicer on behalf of
Obligors for payment of insurance premiums or similar items need 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



                                       43


<PAGE>   49

Indenture Trustee, the Owner Trustee or the Insurer, as the case may be, all
data (including, without limitation, computerized records and, to the extent
transferable, related operating software) necessary for the servicing of the
Contracts and all monies collected by it and required to be deposited in or
credited to the Collection Account or the Holding Account, as the case may be.

        Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided, however, the Master Servicer shall not defer
payments more than three times over the life of such Contract; provided,
further, that in the case of any extension granted pursuant to clause (ii) the
Master Servicer makes an Advance in respect of such extension and in no event
can the last payment on such Contract be extended beyond the last day of the Due
Period ending immediately prior to the Class A-4 Final Scheduled Distribution
Date. The Master Servicer shall not extend the Maturity Date of a Contract
except as provided in clause (ii) of the preceding sentence and shall not modify
any Contracts except in accordance with the criteria and limitations specified
in Section 4.01.

        Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the


                                       44

<PAGE>   50


rights of the Issuer. The Master Servicer shall be responsible for all other
costs and expenses incurred by it in connection with any action taken in respect
of a defaulted Contract; provided, however, that it shall be entitled to
reimbursement of such costs and expenses to the extent they constitute
Liquidation Expenses or expenses recoverable under an applicable Insurance
Policy. All Net Liquidation Proceeds, Net Insurance Proceeds and proceeds of the
sale of Contracts hereunder shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 5.02.

        Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $4,000 or the related
Contract has six or fewer months remaining before its Maturity Date.

        Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Contracts. The Owner Trustee and the Indenture Trustee each hereby authorizes
the Master Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Issuer in the event of the relocation of a
Financed Vehicle or for any other reason.

        Section 4.06. Covenants, Representations and Warranties of the Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which (i) the Issuer is deemed to have relied
in acquiring the Contracts and (ii) the Insurer is deemed to have relied in
issuing the Note Policy. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

        (a) The Master Servicer covenants as to the Contracts:

                (i) Lien in Force. The Financed Vehicle securing each Contract
        shall not be released from the lien granted by the Contract in whole or
        in part, except as contemplated herein.

                (ii) Impairment. The Master Servicer shall not impair the rights
        of the Noteholders and Certificateholders in the Contracts.



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<PAGE>   51

                (iii) Amendments. The Master Servicer shall not amend the terms
        of any Contract, except that extensions or modifications may be granted
        in accordance with Section 4.02.

                (iv) Transfers. The Master Servicer may consent to the sale or
        transfer by an Obligor of any Financed Vehicle if the original Obligor
        under the related Contract remains liable under such Contract and the
        transferee assumes all of the Obligor's obligations thereunder.

                (v) Security Interest. The Master Servicer shall maintain the
        perfection and priority of the Issuer's and the Indenture Trustee's
        security interests in the Contracts.

        (b) The Master Servicer represents, warrants and covenants:

                (i) Organization and Good Standing. The Master Servicer (A) has
        been duly organized and is validly existing as a corporation in good
        standing under the laws of the State of California, (B) has qualified to
        do business as a foreign corporation and is in good standing in each
        jurisdiction where the character of its properties or the nature of its
        activities makes such qualification necessary and (C) has full power,
        authority and legal right to own its property, to 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).



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<PAGE>   52

                (v) No Proceedings. There are no actions, suits or proceedings
        pending or, to the knowledge of the Master Servicer, threatened against
        or affecting the Master Servicer, before or by any court, administrative
        agency, arbitrator or governmental body with respect to any of the
        transactions contemplated by this Agreement, or which will, if
        determined adversely to the Master Servicer, materially and adversely
        affect it or its business, assets, operations or condition, financial or
        otherwise, or adversely affect the Master Servicer's ability to perform
        its obligations hereunder. The Master Servicer is not in default with
        respect to any order of any court, administrative agency, arbitrator or
        governmental body so as to materially and adversely affect the
        transactions contemplated by the above-mentioned documents.

                (vi) Other Consents. The Master Servicer has obtained or made
        all necessary consents, approvals, waivers and notifications of
        creditors, lessors and other nongovernmental persons, in each case in
        connection with the execution and delivery of, and the consummation of
        the transactions contemplated by, this Agreement.

        Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have
been cured within 30 days following such discovery, the Master Servicer shall
purchase any Contract materially and adversely affected by such breach. In
consideration of the purchase of such Contract, the Master Servicer shall remit
the Repurchase Amount in the manner specified in Section 5.04. The sole remedy
of the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
or the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or
4.06 shall be to require the Master Servicer to purchase Contracts pursuant to
this Section; provided, however, that the Master Servicer shall indemnify the
Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach. The Owner Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Contract pursuant to this
Section.

        Section 4.08. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement and subject to the terms of
this Section, the Master Servicer shall be entitled to receive on each
Distribution Date the Servicing Fee in respect of each Contract that was
Outstanding at the beginning of the Due Period ending immediately prior to such
Distribution Date, to the extent the related payment of Monthly P&I has been
collected or advanced pursuant to Section 5.04. As servicing compensation in
addition to the Servicing Fee, the Master Servicer shall be entitled (i) to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts and (ii) to receive, in respect of each Rule of 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


                                       47



<PAGE>   53

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, the
Swap Counterparty and the Insurer a statement, substantially in the form of
Exhibit E hereto (the "Distribution Date Statement"), setting forth with respect
to the next succeeding Distribution Date:

                (i) the Note Interest Distributable Amount for such Distribution
        Date;

                (ii) the Note Principal Distributable Amount for such
        Distribution Date and the portion thereof constituting the Accelerated
        Principal Distributable Amount;

                (iii) the Net Collections for such Distribution Date;

                (iv) the amount otherwise distributable to each Class of
        Noteholders that will be distributed to a different Class of Noteholders
        on such Distribution Date;

                (v) the amount to be on deposit in the Spread Account on such
        Distribution Date, before and after giving effect to deposits thereto
        and withdrawals therefrom to be made in respect of such Distribution
        Date;

                (vi) the Servicing Fee with respect to the related Due Period;

                (vii) the amount of any Note Interest Carryover Shortfall and
        Note Principal Carryover Shortfall on such Distribution Date and the
        change in such amounts from those with respect to the immediately
        preceding Distribution Date;

                (viii) the aggregate amount of Monthly P&I which was due on the
        Contracts during the related Due Period and was delinquent as of the end
        of the related Due Period (any such payment of Monthly P&I being
        presumed to be delinquent to the extent that it was not deposited in or
        credited to the Collection Account during such Due Period);

                (ix) the amount set forth in clause (viii) above which is being
        advanced concurrently with such Distribution Date Statement by the
        Master Servicer pursuant to Section 5.04, the amount of any such Advance
        being deposited in or credited to the Collection Account on such Master
        Servicer Report Date;

                (x) the aggregate amount of any Nonrecoverable Advances deducted
        by the Master Servicer from amounts otherwise required to be deposited
        by the Master Servicer in the Collection Account during the related Due
        Period;

                (xi) the aggregate amount of Retained Yield for the related Due
        Period;

                (xii) the Aggregate Net Liquidation Losses for the related Due
        Period;







                                       48


<PAGE>   54

                (xiii) the Delinquency Percentage and the Charge-Off Percentage
        for the most recent Calculation Day;

                (xiv) the amount of Contracts which have had their APR or
        principal amount modified pursuant to Section 4.01 and the percentage
        that amount constitutes of the Original Principal Balance on a
        cumulative basis; in addition the aggregate Scheduled Balance of
        Contracts so modified as a percentage of the Pool Balance for the most
        recent Distribution Date;

                (xv) the 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) with respect to Contracts repurchased pursuant to
        Section 3.10, the Base Price, the accrued but unpaid interest on such
        Contracts, the Repurchase Spread Account Amount and the Repurchase
        Premium;

                (xix) the amount otherwise distributable to the
        Certificateholders;

                (xx) if the data becomes available, the principal amount of
        Contracts originated by WFS in respect of clauses (viii) and (xii)
        above; and

                (xxi) the Net Swap Receipts and Net Swap Payments, if any.

Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.

        (b) On each Master Servicer Report Date, the Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a report, in respect of the immediately preceding Due Period, setting
forth the following:

                (i) the aggregate amount, if any, paid by or due from it for the
        purchase of Contracts which the Seller or the Master Servicer has become
        obligated to purchase pursuant to Section 3.02 or 4.07, the Seller has
        elected to purchase pursuant to Section 9.01 or the Certificateholder
        has elected to purchase pursuant to Section 3.10;

                (ii) the net amount of funds which have been deposited in or
        credited to the Collection Account 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;



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<PAGE>   55

                (iii) with respect to each Contract that became a Liquidated
        Contract during such Due Period, the following information:

                        (A) its Contract Number;

                        (B) the effective date as of which such Contract became
                a Liquidated Contract;

                        (C) its Monthly P&I and Scheduled Balance as of the
                immediately preceding Distribution Date (or as of the Cut-Off
                Date in the case of the first Distribution Date); and

                        (D) if less than 100% of the outstanding principal
                balance of and accrued and unpaid interest was recovered on such
                Liquidated Contract, the amount of the Net Liquidation Proceeds
                or Net Insurance Proceeds;

                (iv) with respect to each Contract which was the subject of a
        Partial Prepayment during such Due Period, the following information:

                        (A) its Contract Number;

                        (B) the date of such Partial Prepayment;

                        (C) its new Maturity Date;

                        (D) the total amount received with respect to such
                Partial Prepayment; and

                        (E) its Scheduled Balance as of the prior Distribution
                Date (or as of the Cut-Off Date in the case of the first
                Distribution Date) and its Scheduled Balance for each
                Distribution Date having a Due Period prior to the Due Period of
                its Maturity Date, computed on the basis set forth under the
                definition of the term "Scheduled Balance";

                (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,
the Swap Counterparty and the


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<PAGE>   56

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, 2001, an Officers'
Certificate of the Master Servicer stating that (i) a review of the activities
of the Master Servicer during the preceding fiscal year (or since the Closing
Date in the case of the first such Officers' Certificate) and of its performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under this Agreement throughout such year and
that no default under this Agreement has occurred and is continuing, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. A
copy of such certificate and the report referred to in Section 4.11 may be
obtained by any Certificateholder, Certificate Owner, Noteholder or Note Owner
by a request in writing to the Owner Trustee addressed to the Owner Trustee
Corporate Trust Office. Upon the telephone request of the Owner Trustee, the
Indenture Trustee will promptly furnish the Owner Trustee a list of Noteholders
as of the date specified by the Owner Trustee.

        Section 4.11. Annual Independent Certified Public Accountants' Report.
On or before 90 days after the end of the first fiscal year of the Master
Servicer which ends more than three months after the Closing Date and each
fiscal year thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee, each Rating Agency and the Insurer to the
effect that (i) they have audited the balance sheet of the Master Servicer as of
the last day of said fiscal year and the related statements of operations,
retained earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as they considered
necessary in the circumstances and (iv) their audits described under clauses (i)
and (ii) above disclosed no exceptions which, in their opinion, were material,
relating to the servicing of such Contracts in accordance with this Agreement
and the making 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.


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<PAGE>   57

        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.

        Section 4.15. Maintenance of Interest Rate Swap Agreement. As long as
the Class A-3 Notes are Outstanding, the Master Servicer shall cause the Trust
to maintain in effect an interest rate swap agreement acceptable to the Insurer
with respect to the Class A-3 Notes; provided, that, the issuance of the Note
Policy on the Closing Date shall demonstrate the Insurer's approval of the
Interest Rate Swap Agreement.





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<PAGE>   58

                                  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, Commercial Paper or
Proprietary Funds. Unless and until the RIC is no longer an Eligible Investment,
all funds in such Trust Accounts, in each case that are available


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<PAGE>   59

for investment in Eligible Investments in Proprietary Funds or Commercial Paper,
shall be invested in the RIC, Commercial Paper 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, Commercial
Paper or Proprietary Funds other than the RIC; provided that in the absence of
such directions from the Master Servicer, the Insurer may so direct the
Indenture Trustee. All such investments shall be in the name of the Indenture
Trustee for the benefit of the Noteholders and the Certificateholders, as
applicable. All income or other gain from investment of monies deposited in or
credited to the Collection Account (including without limitation the RIC
Reinvestment Earnings) shall be 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 Commercial
Paper or Proprietary Funds that mature on the Distribution Date for a period not
to exceed one Business Day. No investment in Eligible Investments may be sold
prior to its maturity and all investments in Proprietary Funds shall be for a
period not to exceed one Business Day.

        (c) 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


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<PAGE>   60

        to exceed 30 calendar days, as to which each Rating Agency may
        consent) establish a new Trust Account as an Eligible Account and shall
        transfer any cash and/or any investments to such new Trust Account.

                (ii) With respect to the Trust Account Property, the Indenture
        Trustee agrees, by its acceptance hereof, that:

                        (A) any Trust Account Property that is held in deposit
                accounts shall be held solely in the Eligible Accounts, subject
                to the last sentence of Section 5.01(d)(i); and each such
                Eligible Account shall be subject to the exclusive custody and
                control of the Indenture Trustee, and the Indenture Trustee
                shall have sole signature authority with respect thereto;

                        (B) any Trust Account Property that constitutes Physical
                Property shall be delivered to the Indenture Trustee in
                accordance with paragraph (i) of the definition of the term
                "Delivery" and shall be held, pending maturity or disposition,
                solely by the Indenture Trustee or a Financial Intermediary
                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



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<PAGE>   61

Advances in respect of such Contract made pursuant to Section 5.04. Amounts
otherwise required to be deposited in or credited to the Collection Account
pursuant to the immediately preceding sentence shall instead be deposited in or
credited to the Holding Account to the extent that such amounts are installments
of Monthly P&I which are due in a Due Period for a Distribution Date subsequent
to the Distribution Date immediately succeeding the date of receipt.

        (b) Notwithstanding anything in this Agreement to the contrary, the
Retained Yield will be collected by the Master Servicer and paid out on a
monthly basis to the Seller without ever becoming part of the Trust's assets.

        (c) Not later than 12:00 p.m., New York City time, on the fifth Business
Day prior to each Distribution Date, based on the information set forth in the
related Distribution Date Statement to the extent that there are insufficient
funds to make the distributions required to be made to each Class of Notes as
described in Sections 5.05 and 5.06, the Master Servicer shall deliver to the
Indenture Trustee, with a copy to the Insurer, the Owner Trustee and the Fiscal
Agent, if any, by hand delivery, telex or facsimile transmission, a written
notice (a "Deficiency Notice") specifying the Note Deficiency Claim Amount, if
any, for such Distribution Date, separately identifying the amount of the
applicable Note Deficiency Claim Amount payable in respect of each Class of
Notes. Such Deficiency Notice shall direct the Indenture Trustee to remit such
Note Deficiency Claim Amount (to the extent of funds then on deposit in the
Spread Account are insufficient) to the Indenture Trustee for deposit in the
Note Distribution Account.

        (d) Not later than 12:00 p.m., New York City time, on the fourth
Business Day prior to each Distribution Date, the Indenture Trustee shall make a
claim under the Note Policy for any Note Policy Claim Amount for such
Distribution Date by delivering to the Insurer and the Fiscal Agent, if any,
with a copy to the Master Servicer, by hand delivery, telex or facsimile
transmission, a claim for the related Note Policy Claim Amount, as the case may
be. In making any such claim, the Owner Trustee or the Indenture Trustee shall
comply with all the terms and conditions of the related Policy. The notice of
such claim shall direct the Insurer to remit such Note Policy Claim Amount to
the Owner Trustee or the Indenture Trustee for deposit in the Note Distribution
Account.

        (e) So long as the Master Servicer is WFS, the Master Servicer shall
have the right, on a basis not more frequently than once per month (although
deposits shall be made into the Collection Account within two Business Days
pursuant to Section 4.01), to deduct from amounts received that are otherwise
required to be deposited in or credited to the Collection Account and, to the
extent such amounts are insufficient, to require that the Indenture Trustee
withdraw and deliver to it from the Collection Account, amounts due to be paid
hereunder to the Master Servicer or to the Seller after giving effect to
application of the payment priorities specified in this Article for the month
(or other applicable period), and to pay such amounts to itself as Master
Servicer or to the Seller, as the case may be. Notwithstanding the foregoing,
the Master Servicer shall maintain the records and accounts for such deposits
and credits on a gross basis.

        Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third




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<PAGE>   62

to principal due on the Contract and fourth to administrative charges, if any.
Any excess shall be applied to prepay the principal balance of the Contract.

        Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.

        (a) If, as of the end of any Due Period, one or more payments of Monthly
P&I due under any Contract (other than a Liquidated Contract) Outstanding at the
end of such Due Period shall not have been received by the Master Servicer and
deposited in or credited to the Collection Account pursuant to Section 5.02(a),
the Master Servicer shall make, concurrently with the furnishing of the related
Distribution Date Statement to the Indenture Trustee and the Owner Trustee, the
Advance for such Due Period by depositing in or crediting to the Collection
Account (i) with respect to a Rule of 78's Contract, the amount of delinquent
Monthly P&I and (ii) with respect to a Simple Interest Contract, 30 days of
interest on the Outstanding Principal Balance of such Contract at a rate equal
to the sum of (A) the 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; provided,
however, that the Master Servicer must provide such certificate within three
months of such Nonrecoverable Advance or Advances.

        (c) The Master Servicer or the Seller, as the case may be, shall remit
or credit to the Collection Account the aggregate Repurchase Amount with respect
to Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts.

        (d) The Certificateholders shall remit or credit to the Collection
Account the Optional Repurchase Payment for the Seller Contracts repurchased
pursuant to Section 3.10 and the Master Servicer and the Seller shall deposit or
caused to be deposited into the Collection Account the Aggregate Repurchase
Amount of Contracts purchased pursuant to Section 9.01(a).



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<PAGE>   63

        Section 5.05. Distributions.

        (a) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Master Servicer or deposit in the applicable account by 11:00 a.m. (New York
time), to the extent of the Net Collections for such Distribution Date, in the
following order of priority:

                (i) to the Master Servicer, the Servicing Fee, including any
        unpaid Servicing Fees with respect to one or more prior Due Periods;

                (ii) from Net Collections (after giving effect to the reduction
        in Net Collections described in clause (i) above), to the Swap
        Counterparty, the Net Swap Payment;

                (iii) from Net Collections (after giving effect to the reduction
        in Net Collections described in clause (i) and (ii) above), to the
        Indenture Trustee, any accrued and unpaid fees and expenses payable to
        the Indenture Trustee and to the Owner Trustee, any accrued and unpaid
        fees and expenses payable to the Owner Trustee, in each case to the
        extent such fees and expenses have not been previously paid by the
        Master Servicer;

                (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 Interest Distributable
        Amount;

                (v) to the Note Distribution Account, from Net Collections
        (after giving effect to the reduction in Net Collections described in
        clauses (i) through (iv) above), the Note Principal Distributable
        Amount, (which amount includes, if such Distribution Date is a Note
        Final Scheduled Distribution Date, the remaining principal amount of the
        related Class of Notes) first to the holders of the Class A-1 Notes
        until the principal amount of the Class A-1 Notes has been reduced to
        zero, second to the holders of the Class A-2 Notes until the principal
        amount of the Class A-2 Notes has been reduced to zero, third to the
        holders of the Class A-3 Notes until the principal amount of the Class
        A-3 Notes has been reduced to zero; and fourth to the holders of the
        Class A-4 Notes until the principal amount of the Class A-4 Notes has
        been reduced to zero; and

                (vi) from Net Collections (after giving effect to the reduction
        in Net Collections described in clauses (i) through (v) above), to the
        Insurer, any Unreimbursed Insurer Amounts.

        (b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Net Collections
after making the distributions described in Section 5.05(a) ("Excess Amounts")
to the Spread Account. On each Distribution Date, the Master Servicer shall
instruct the Indenture Trustee to distribute the Excess Spread Amount pursuant
to Section 5.06(b).


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<PAGE>   64

        (c) To the extent that on any Distribution Date the amount on deposit in
the Note Distribution Account (after giving effect to any deposits thereto on
such Distribution Date) is less than the Note Distributable Amount, Noteholders
shall be entitled to receive distributions in respect of such deficiency first,
from amounts on deposit in the Spread Account pursuant to a Deficiency Notice;
and second, if such amounts are still insufficient, from a claim made under the
Note Policy for the Note Policy Claim Amount pursuant to Section 5.02(d).

        Section 5.06. Spread Account.

        (a) On or prior to the Closing Date, WFSRC shall deposit the Spread
Account Initial Amount into the Spread Account. The Spread Account will be held
for the benefit of the Securityholders and the Insurer in order to effectuate
the subordination of the rights of the Securityholders to the extent described
above.

        (b) On each Calculation Day and Distribution Date, the Master Servicer
shall instruct the Indenture Trustee to distribute the Excess Spread Amount, (i)
first, to the Insurer, to the extent of any Unreimbursed Insurer Amounts, (ii)
second, to WFSRC until WFSRC has received full payment of the Spread Account
Initial Deposit and (iii) third, on a Calculation Day that is not a Distribution
Date, all remaining funds to the Certificateholders in accordance with their
Certificate Percentage Interests and in the case of a Distribution Date, to the
Certificate Distribution Account for distribution to Certificateholders in
accordance with Section 5.02 of the Trust Agreement. Upon any such distribution
to the Insurer, neither the Seller nor the Securityholders will have further
rights in, or claims to, such amounts.

        (c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.

        (d) Upon termination of the Issuer pursuant to Section 3.10 or 9.01, any
amounts on deposit in the Spread Account, after payments of amounts due to the
Securityholders and the Insurer (if there exists any Unreimbursed Insurer
Amounts), will be distributed first, to WFSRC until WFSRC has received full
repayment of the Spread Account Initial Deposit and second, to the Certificate
Distribution Account for distribution to Certificateholders in accordance with
the Section 5.02 of the Trust Agreement.

        Section 5.07. Statements to Securityholders.

        (a) On each Distribution Date, (i) the Indenture Trustee shall include
with each distribution to each Noteholder of record as of the related Record
Date and (ii) the Owner Trustee shall include with each distribution to each
Certificateholder of record as of the related Record Date a statement, prepared
by the Master Servicer, based on the information in the Distribution Date
Statement furnished pursuant to Section 4.09, setting forth for such




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<PAGE>   65

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 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 the Optional Repurchase Payment payable on
        such Distribution Date.

Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 original principal amount of a
Note.

        (b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Indenture Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of a Note a statement or statements, prepared by the Master
Servicer, which in the aggregate contain the sum of the amounts set forth in
clauses (i), (ii), (iv) and (v) above for such calendar year or, in the event
such Person shall have been a Holder of a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.

        Section 5.08. Calculation of the Class A-3 Rate. With respect to the
Class A-3 Notes, on each LIBOR Determination Date, the Indenture Trustee shall
determine the LIBOR Rate for the Interest Period commencing on such Distribution
Date and inform the Master Servicer (at the



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facsimile number given to the Indenture Trustee in writing) of such rates. If
necessary to calculate the LIBOR Rate, the Indenture Trustee will, in a timely
manner, request the principal London office of each Reference Bank to provide a
quotation of its rates. On or prior to each Determination Date, the Indenture
Trustee shall determine the Interest Rate for the Class A-3 Notes for the
related Distribution Date.













































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                                   ARTICLE SIX

                                   THE SELLER

        Section 6.01. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.

        Section 6.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by such Seller under this Agreement.

        The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Master Servicer from and against
any taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Basic Documents,
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Contracts to the Issuer or the issuance and original sale of the Securities,
or asserted with respect to ownership of the Contracts, or federal or other
income taxes arising out of distributions on the Certificates or the Notes) and
costs and expenses in defending against the same.

        The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Securityholders from and against
any loss, liability or expense incurred by reason of such Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.

        The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.

        Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are




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made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to such Seller, without interest.

        Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller; Certain Limitations.

        (a) The Seller shall not consolidate with nor merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which such Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer, the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer, which contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Seller under this
Agreement. The Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and will deliver to
the Insurer, the Owner Trustee and the Indenture Trustee a letter from each
Rating Agency to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of its then-current
ratings of each Class of Notes. The Seller and WFS each shall maintain separate
corporate offices.

        (b)

                (i) Subject to paragraph (ii) below, the purpose of the Seller
        shall be to engage in any lawful activity for which a corporation may be
        organized under the laws of California Revised Statutes.

                (ii) Notwithstanding paragraph (b)(i) above, the actual business
        activities of the Seller shall be limited to those activities incident
        to and necessary or convenient to accomplish the following purposes: (A)
        to acquire, own, hold, sell, transfer, assign, pledge, finance,
        refinance and otherwise deal with, retail installment sales contracts
        and installment loans secured by automobiles and light duty trucks (the
        "Vehicle Receivables"); (B) to authorize, issue, sell and deliver one or
        more series of obligations, consisting of one or more classes of notes,
        certificates or other securities (the "Offered Securities") that are
        collateralized by or evidence an interest in Vehicle Receivables and are
        rated in an investment grade category by at least one nationally
        recognized statistical rating agency; and (C) to negotiate, authorize,
        execute, deliver and assume the obligations of any agreement relating to
        the activities set forth in clauses (A) and (B) above, including but not
        limited to any pooling and servicing agreement, indenture, reimbursement
        agreement, credit support agreement, receivables purchase agreement or
        underwriting agreement or to engage in any lawful activity which is
        incidental to the activities contemplated by any such agreement. So long
        as any outstanding debt of the Seller or Offered Securities are rated by
        any nationally recognized statistical rating organization, such Seller
        shall not issue notes or otherwise incur debt unless (1) the Seller has
        made a written request to the related nationally recognized statistical
        rating organization to issue notes or incur borrowings which notes or
        borrowings are rated by



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        the related nationally recognized statistical rating organization the
        same as or higher than the rating afforded such debt or securities or
        (2) such notes or borrowings (a) are fully subordinated (and which shall
        provide for payment only after payment in respect of all outstanding
        rated debt and/or Offered Securities) or are nonrecourse against any
        assets of the Seller other than the assets pledged to secure such notes
        or borrowings, (b) do not constitute a claim against the Seller in the
        event such assets are insufficient to pay such notes or borrowings and
        (c) where such notes or borrowings are secured by the rated debt or
        Offered Securities, are fully subordinated (and which shall provide for
        payment only after payment in respect of all outstanding rated debt
        and/or Offered Securities) to such rated debt or Offered Securities.

        (c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:

                (i) engage in any business or activity other than as set forth
        in clause (b) above;

                (ii) without the affirmative vote of a majority of the members
        of the Board of Directors of the Seller (which must include the
        affirmative vote of at least two duly appointed Independent directors)
        (A) dissolve or liquidate, in whole or in part, or institute proceedings
        to be adjudicated bankrupt or insolvent, (B) consent to the institution
        of bankruptcy or insolvency proceedings against it, (C) file a petition
        seeking or consent to reorganization or relief under any applicable
        federal or state law relating to bankruptcy, (D) consent to the
        appointment of a receiver, liquidator, assignee, trustee, sequestrator
        (or other similar official) of the corporation or a substantial part of
        its property, (E) make a general assignment for the benefit of
        creditors, (F) admit in writing its inability to pay its debts generally
        as they become due or (G) take any corporate action in furtherance of
        the actions set forth in clauses (A) through (F) above; provided,
        however, that no director may be required by any shareholder of the
        Seller to consent to the institution of bankruptcy or insolvency
        proceedings against the Seller so long as it is solvent; or

                (iii) merge or consolidate with any other corporation, company
        or entity or sell all or substantially all of its assets or acquire all
        or substantially all of the assets or capital stock or other ownership
        interest of any other corporation, company or entity (except for the
        acquisition of Vehicle Receivables and the sale of Vehicle Receivables
        to one or more trusts in accordance with the terms of clause (b)(ii)
        above, which shall not be otherwise restricted by this Section 6.03(c)).

        Section 6.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to




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appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement.

        Section 6.05. Seller Not to Resign. Subject to the provisions of Section
6.03, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller hereunder.

        Section 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not such Seller
or an Affiliate thereof, except as expressly provided herein or in any Basic
Document. Securities so owned by or pledged to the Seller or an Affiliate
thereof shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority or distinction as among all of the
Notes.

























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<PAGE>   71

                                  ARTICLE SEVEN

                               THE MASTER SERVICER

        Section 7.01. Liability of Master Servicer; Indemnities. Subject to
Section 8.02, the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Master Servicer
under this Agreement. Such obligations shall include the following:

                (a) The Master Servicer shall indemnify, defend and hold
        harmless the Issuer, the Owner Trustee, the Indenture Trustee, the
        Securityholders and the Insurer from and against any and all costs,
        expenses, losses, damages, claims and liabilities, arising out of or
        resulting from the use, ownership or operation by the Master Servicer,
        any Subservicer or any of their respective Affiliates of a Financed
        Vehicle.

                (b) The Master Servicer shall indemnify, defend and hold
        harmless the Issuer, the Owner Trustee, the Indenture Trustee and the
        Insurer from and against any taxes that may at any time be asserted
        against the Owner Trustee, the Indenture Trustee or the Issuer with
        respect to the transactions contemplated herein, including, without
        limitation, any sales, gross receipts, general corporation, tangible
        personal property, privilege or license taxes (but not including any
        taxes asserted with respect to, and as of the date of, the sale of the
        Contracts to the Issuer or the issuance and original sale of the
        Securities, or asserted with respect to ownership of the Contracts, or
        federal or other income taxes arising out of distributions on the
        Securities) and costs and expenses in defending against the same.

                (c) The Master Servicer shall indemnify, defend and hold
        harmless the Issuer, the Owner Trustee, the Indenture Trustee, the
        Insurer and the Securityholders from and against any and all costs,
        expenses, losses, claims, damages and liabilities to the extent that
        such cost, expense, loss, claim, damage or liability arose out of, or
        was imposed upon any such Person through, the negligence, willful
        misfeasance or bad faith of the Master Servicer in the performance of
        its duties under this Agreement or by reason of reckless disregard of
        its obligations and duties under this Agreement.

                (d) The Master Servicer shall indemnify, defend and hold
        harmless the Owner Trustee, the Indenture Trustee and the Insurer from
        and against any and all costs, expenses, losses, claims, damages and
        liabilities arising out of or incurred in connection with the acceptance
        or performance of the trusts and duties herein or the Trust Agreement
        contained, except to the extent that such cost, expense, loss, claim,
        damage or liability (i) shall be due to the willful misfeasance, bad
        faith or negligence (except for errors in judgment) of the Owner Trustee
        or the Indenture Trustee, as the case may be; (ii) relates to any tax
        other than the taxes with respect to which either the Seller or Master
        Servicer shall be required to indemnify the Owner Trustee and the
        Indenture Trustee; (iii) shall arise from the Owner Trustee's or the
        Indenture Trustee's breach of any of their respective representations or
        warranties set forth herein, in the Trust Agreement or in the Indenture;
        or (iv) shall be one as to which the Seller is required to indemnify the
        Owner Trustee or the Indenture Trustee, as the case may be.





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                (e) The Master Servicer shall pay the Owner Trustee
        compensation, reimbursement or other payments owed to it by the Seller
        pursuant to Sections 8.01 and 8.02 of the Trust Agreement if the Seller
        fails to remit such compensation, reimbursement or payment in a timely
        manner.

        Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement of the Trust Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Master Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Master Servicer, without interest.

        Section 7.02. Corporate Existence; Status as Master Servicer; Merger.
The Master Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person unless the corporation formed by such consolidation
or into which the Master Servicer has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Master
Servicer as an entirety can lawfully perform the obligations of the Master
Servicer hereunder and executes and delivers to the Indenture Trustee and the
Owner Trustee an agreement in form and substance reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance or
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Agreement. Notice shall be sent to each Rating Agency
by the Master Servicer of any consolidation, merger or succession pursuant to
this Section.

        Section 7.03. Performance of Obligations.

        (a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.

        (b) The Master Servicer shall not take any action, or permit any action
to be taken by others, which would excuse any person from any of its covenants
or obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.

        Section 7.04. Master Servicer Not to Resign; Assignment.

        (a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its Board of Directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture Trustee, to such




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effect. No such resignation shall become effective unless and until (i) a new
servicer acceptable to the Owner Trustee, the Indenture Trustee and the Insurer
is willing to service the Contracts and enters into a servicing agreement with
the Issuer and the Insurer in form and substance substantially similar to this
Agreement and satisfactory to the Owner Trustee, the Indenture Trustee and the
Insurer and (ii) each Rating Agency confirms that the selection of such new
servicer will not result in the qualification, reduction or withdrawal of its
then-current rating of each Class of Notes assigned by such Rating Agency. No
such resignation shall affect the obligation of the Master Servicer to
repurchase Contracts pursuant to Section 4.07.

        (b) Except as specifically permitted in this Agreement, the Master
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.

        (c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Issuer shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.

        (d) The resignation of the Master Servicer in accordance with this
Section shall not affect the rights of the Seller hereunder. If the Master
Servicer resigns pursuant to this Section, its appointment as custodian can be
terminated pursuant to Section 3.07.

        Section 7.05. Limitation on Liability of Master Servicer and Others.

        (a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.

        (b) The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.







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        Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Securityholders under the Basic Documents.












































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<PAGE>   75

                                  ARTICLE EIGHT

                                     DEFAULT

        Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:

                (a) a claim being made under the Note Policy;

                (b) any failure by the Master Servicer or the Issuer, to deposit
        or credit, or to deliver to the Indenture Trustee for deposit, in any of
        the Trust Accounts any amount required hereunder to be as deposited,
        credited or delivered or to direct the Indenture Trustee to make any
        required distributions therefrom, that shall continue unremedied for a
        period of three Business Days after written notice of such failure is
        received from the Owner Trustee, the Indenture Trustee or the Insurer or
        after discovery of such failure by an officer of the Master Servicer;

                (c) any failure by the Master Servicer to deliver to the
        Insurer, the Indenture Trustee or the Owner Trustee a report in
        accordance with Section 4.09 and/or Section 4.10 by the fourth Business
        Day prior to the Distribution Date with respect to which such report is
        due, or the Master Servicer shall have defaulted in the due observance
        of any provision of Section 7.02 (other than failure to enter into an
        assumption agreement under Section 7.02, which is a Servicer Default
        only if such failure continues for ten Business Days);

                (d) failure on the part of the Seller, the Issuer or the Master
        Servicer duly to observe or to perform in any material respect any other
        covenants or agreements of the Master Servicer or the Seller set forth
        in this Agreement or any other Basic Document, which failure shall (i)
        materially and adversely affect the rights of the Insurer, the Owner
        Trustee, the Indenture Trustee, the Certificateholders or Noteholders
        and (ii) continue unremedied for a period of 30 days after the date on
        which written notice of such failure, requiring the same to be remedied,
        shall have been given (A) to the Master Servicer or the Seller (as the
        case may be) by the Insurer, the Owner Trustee or the Indenture Trustee
        or (B) to the Master Servicer or the Seller (as the case may be), and to
        the Owner Trustee and the Indenture Trustee by the Holders of Notes
        evidencing not less than 25% of the Outstanding Amount of the Notes, or,
        if the Notes have been paid in full, by Certificateholders evidencing
        not less than 25% of the aggregate Certificate Percentage Interest, or
        so long as no default under the Note Policy has occurred and is
        continuing and no insolvency of the Insurer has occurred, by the
        Insurer;

                (e) the occurrence of an Insolvency Event with respect to the
        Seller, the Issuer or the Master Servicer; or

                (f) any representation, warranty or statement of the Master
        Servicer, the Issuer or the Seller made in this Agreement or any
        certificate, report or other writing delivered pursuant hereto shall
        prove to be incorrect in any material respect as of the time when the
        same shall have been made (excluding, however, any representation or
        warranty to which



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        Section 3.01 or 4.06 shall be applicable so long as the Master
        Servicer or the Seller shall be in compliance with Section 3.02 or 4.07,
        as the case may be), and the incorrectness of such representation,
        warranty or statement has a material adverse effect on the Noteholders
        or the Certificateholders and, within 30 days after written notice
        thereof shall have been given to the Master Servicer or the Seller by
        the Indenture Trustee or the Owner Trustee or by the Holders of Notes
        evidencing not less than 25% of the Outstanding Amount of the Notes, or
        Certificateholders evidencing not less than 25% of the aggregate
        Certificate Percentage Interest or, so long as no default has occurred
        under the Note Policy and is continuing and no Insurer Insolvency has
        occurred, by the Insurer, the circumstance or condition in respect of
        which such representation, warranty or statement was incorrect shall not
        have been eliminated or otherwise cured;

then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the aggregate Certificate Percentage Interest),
by notice then given in writing to the Master Servicer (and to the Insurer, the
Indenture Trustee and the Owner Trustee if given by the Noteholders or the
Certificateholders) may terminate all the rights and obligations of the Master
Servicer under this Agreement. Upon such termination, termination of the Master
Servicer as custodian can be made pursuant to Section 3.07. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the Notes,
the Certificates, the Contracts or otherwise, shall, without further action,
pass to and be vested in the Indenture Trustee or such successor Master Servicer
as may be appointed under Section 8.02; and, without limitation, the Indenture
Trustee and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to any Contract.

        Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon
the Master Servicer's receipt of notice of termination pursuant to Section 8.01
or resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,



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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders from effecting a transfer of
servicing. Notwithstanding the above, the Indenture Trustee may, if it shall be
unwilling to act, or shall, if it shall be legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of motor vehicle retail installment sales
contracts, as the successor to the Master Servicer under this Agreement. Pending
appointment of any such successor Master Servicer, the Indenture Trustee shall
act in such capacity as provided above. In connection with such appointment, the
Indenture Trustee may make such arrangements for the compensation of such
successor out of payments on Contracts it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Master Servicer under this Agreement without the consent of the
Insurer. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.

        Section 8.03. Repayment of Advances. If the identity of the Master
Servicer shall change, the predecessor Master Servicer shall be entitled to
receive reimbursement for outstanding Advances pursuant to Section 5.04 with
respect to all Advances made by the predecessor Master Servicer.

        Section 8.04. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer
pursuant to this Article, the Owner Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register and to each Rating Agency.

        Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, or, if all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, Certificateholders evidencing not less than 51% of the aggregate
Certificate Percentage Interest (in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, with the consent of the Insurer, waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.

        Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt
of actual knowledge thereof by a Responsible Officer, the Indenture Trustee
shall promptly notify the



                                       72

<PAGE>   78

Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder, by its purchase
of Certificates or a beneficial interest therein, the Owner Trustee and the
Indenture Trustee hereby agree that, so long as neither a default under the Note
Policy nor an Insurer Insolvency has occurred and is continuing, the Insurer may
at any time during the continuation of an Insolvency Proceeding direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. The Insurer
shall be subrogated to the rights of the Indenture Trustee, the Owner Trustee
and each Securityholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding. In addition, for so long as the Insurer guarantees amounts owing
under the RIC and has not defaulted in the making of any payment required to be
made by it pursuant to such guaranty, the Insurer shall have the right to
initiate and control a proceeding against the obligor under the RIC but only to
the extent such proceeding relates to the amounts so guaranteed and no
settlement of any other proceeding or claim that would adversely affect the
Insurer's rights to recover such amounts shall be effected without the prior
written consent of the Insurer.

























                                       73



<PAGE>   79


                                  ARTICLE NINE

                                   TERMINATION

        Section 9.01. Optional Purchase of All Contracts.

        (a) On each Distribution Date as of which the sum of the Scheduled
Balances of the Contracts is less than or equal to $120,000,000, the Seller
shall have the option to purchase the remaining Contracts from the Issuer.
Notice of the exercise of such option shall be given by the Seller to the Owner
Trustee, the Indenture Trustee and the Insurer not later than the 25th day of
the month immediately preceding the month of the related Distribution Date. To
exercise such option, the Seller shall pay to the Indenture Trustee for the
benefit of the Securityholders, by deposit in the Collection Account on the
Business Day immediately preceding the related Distribution Date, the Aggregate
Repurchase Amount, and shall succeed to all interests in and to the Issuer. Such
purchase shall be deemed to have occurred on the last day of such Due Period. In
addition, if the Master Servicer or the Seller has outstanding senior debt and
such debt is not rated "investment grade" by Moody's at the time of exercising
the option pursuant to this Section, then the Master Servicer or such Seller
shall deliver to the Owner Trustee, the Indenture Trustee and Moody's, an
Opinion of Counsel to the effect that such optional purchase is not a fraudulent
conveyance.

        (b) Upon any sale of the assets of the Issuer pursuant to Section
5.02(b) of the Indenture, the Master Servicer shall instruct the Indenture
Trustee to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in the Collection Account.
On the Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):

                (i) to the Note Distribution Account, any portion of the Note
        Interest Distributable Amount not otherwise deposited into the Note
        Distribution Account on such Distribution Date;

                (ii) to the Note Distribution Account, the outstanding principal
        amount of the Notes (after giving effect to the reduction in the
        outstanding principal amount of the Notes to result from the deposits
        made in the Note Distribution Account on such Distribution Date and on
        prior Distribution Dates);

                (iii) to the Insurer, to the extent of any Unreimbursed Insurer
        Amounts;

                (iv) to WFSRC until WFSRC has received full repayment of the
        Spread Account Initial Deposit; and




                                       74


<PAGE>   80

                (v) to the Certificate Distribution Account, for distribution to
        Certificateholders in accordance with Section 5.02 of the Trust
        Agreement as determined by the Master Servicer.

        (c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Issuer shall be given by the Master Servicer to the Owner
Trustee, the Insurer, the Swap Counterparty and the Indenture Trustee as soon as
practicable after the Master Servicer has received notice thereof.

        (d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.

        (e) On a Distribution Date on which an optional purchase pursuant to
Section 9.01(a) or an Optional Repurchase of all remaining Contracts in the
Issuer occur, the Master Servicer shall instruct the Indenture Trustee to make
the following distributions of the Optional Repurchase Payment or the Aggregate
Repurchase Amount, as the case may be, and any Net Collections on deposit in the
Collection Account in the following priorities:

                (i) to the Master Servicer, any accrued and unpaid Servicing
        Fees with respect to one or more prior Due Periods;

                (ii) to the Owner Trustee and Indenture Trustee, any accrued and
        unpaid fees and expenses;

                (iii) to the Note Distribution Account, the Redemption Price for
        full payment of outstanding principal and accrued interest on the Notes;

                (iv) in the case of an Optional Repurchase, to the Note
        Distribution Account, the Repurchase Premium for pro rata distribution
        to the Noteholders based on the principal balance of each Noteholder
        reduced by the Note Principal Distributable Amount calculated for the
        Due Period preceding the date of the Optional Repurchase;

                (v) to the Insurer, to the extent of any Unreimbursed Insurer
        Amounts;

                (vi) to WFSRC until WFSRC has received full repayment of the
        Spread Account Initial Deposit; and

                (vii) to the Certificate Distribution Account, for distribution
        to Certificateholders in accordance with Section 5.02 of the Trust
        Agreement as determined by the Master Servicer.

        Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Class A-4 Final Scheduled Distribution Date and (ii) an amount sufficient to
pay the Note Distributable Amount on the Class A-4 Final Scheduled Distribution
Date has been deposited with the Indenture Trustee by the Insurer for the
benefit of the Class A-4 Noteholders, then on the Class A-4 Final Scheduled




                                       75

<PAGE>   81


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 Scheduled Distribution Date and the
Owner Trustee, on behalf of the Trust, shall execute, and the Indenture Trustee
shall authenticate and deliver to the Insurer or its designee, in the name of
the Insurer or its designee, as the case may be, a new Class A-4 Note evidencing
the entire Note Balance. Such new Class A-4 Note shall have the same terms as
the Class A-4 Notes deemed transferred by the Class A-4 Noteholders. No service
charge shall be made for the issuance of such Class A-4 Note to the Insurer or
its designee, but the Owner Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith. Such
transfer shall not diminish or restrict the Insurer's rights hereunder or under
the Insurance Agreement.



























                                       76




<PAGE>   82

                                   ARTICLE TEN

                                  MISCELLANEOUS

        Section 10.01. Amendment.

        (a) This Agreement may be amended by the Seller, the Master Servicer and
the Owner Trustee on behalf of the Issuer, collectively, without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
and (iii) to change any provision applicable for determining the Specified
Spread Account Balance or the manner in which the Spread Account is funded (in
each case with the approval of the Insurer); provided, however, that any such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Securityholder and provided, further, that
in connection with any amendment pursuant to clause (ii) and (iii) above, the
Master Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
the Insurer a letter from Standard & Poor's to the effect that such amendment
will not cause its then-current rating on any Class of Notes to be qualified,
reduced or withdrawn, without giving any consideration to the effect of the
guaranty under the Note Policy of payments owing to Noteholders, and the Master
Servicer shall provide 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,
the Swap Counterparty 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








                                       77



<PAGE>   83

substance of the amendment or consent described in Section 10.01(c) above, at
the expense of the Seller, the Master Servicer or the Owner Trustee on behalf of
the Issuer, as the case may be, to each Certificateholder and Noteholder,
respectively. It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 10.01(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Owner
Trustee or the Indenture Trustee may prescribe.

        (e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.

        Section 10.02. Protection of Title to Trust.

        (a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the perfection and priority of the interest of the Issuer, the
Securityholders, the Indenture Trustee, the Owner Trustee and the Insurer in the
Contracts and in the proceeds thereof. The Master Servicer shall deliver (or
cause to be delivered) to the Owner Trustee and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.

        (b) Neither WFS, the Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-507 of the
UCC, unless it shall have given the Insurer, the Owner Trustee and the Indenture
Trustee at least 60 days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements.

        (c) WFS, the Seller and the Master Servicer shall give the Insurer, the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of the principal executive office of WFS or the Seller and the
Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master Servicer
shall at all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States.

        (d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries




                                       78

<PAGE>   84

on (or with respect to) each Contract and the amounts from time to time
deposited in or credited to the Collection Account and the Holding Account in
respect of such Contract.

        (e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.

        (f) If at any time the Seller, the Master Servicer or a Subservicer
shall propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.

        (g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and its agents, at any time during normal business
hours, to inspect, audit and make copies of and abstracts from the Master
Servicer's records regarding any Contract.

        (h) Upon request, the Master Servicer shall furnish to the Owner
Trustee, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Estate, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Issuer.

        (i) The Master Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, each Rating Agency and the Insurer:

                (i) promptly after the execution and delivery of this Agreement
        and of each amendment hereto, an Opinion of Counsel stating that, in the
        opinion of such counsel, the Indenture Trustee holds a perfected
        security interest in the Contracts, that the Issuer holds title to the
        Contracts subject to the security interest of the Indenture Trustee and
        the lien of the Insurer pursuant to the Insurance Agreement, and that
        the Insurer holds a lien on the Contracts under the Insurance Agreement,
        subject to applicable subordination; and

                (ii) within 90 days after the beginning of each calendar year
        beginning with the first calendar year beginning more than three months
        after the Cut-Off Date, an Opinion of Counsel, dated as of a date during
        such 90-day period, either (A) stating that, in the opinion of such
        counsel, all financing statements and continuation statements have been
        executed and filed that are necessary fully to preserve and protect the
        interest of the Owner Trustee and the Indenture Trustee in the
        Contracts, and reciting the details of such




                                       79

<PAGE>   85

        filings or referring to prior Opinions of Counsel in which such details
        are given or (B) stating that, in the opinion of such counsel, no such
        action shall be necessary to preserve and protect such interest.

        Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.

        Section 10.04. Notices. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee,
the Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (i) WFSRC,
at 6655 West Sahara Avenue, Las Vegas, Nevada 89146, Attention: Keith Ford, (ii)
the Master Servicer, 23 Pasteur, Irvine, California 92618, Attention: Legal
Department, (iii) the Issuer or the Owner Trustee, at the Corporate Trust Office
(with, in the case of the Issuer, a copy to the Seller), (iv) the Indenture
Trustee, at Four Albany Street - 10th Floor, New York, New York 10006,
Attention: Corporate Trust Department - Asset Backed Group, (v) Moody's, to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007, (vi) Standard & Poor's, to Standard & Poor's, 55 Water
Street, New York, New York 10041, Attention of Asset Backed Surveillance
Department and (vii) the Insurer, at 350 Park Avenue, New York, New York 10022,
Attention: Transaction Oversight Department, with a copy to the Senior Vice
President - Transaction Oversight; or, as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties. Any
notice required or permitted to be to be mailed to a Securityholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Note Register or the Certificate Register, as the case may be. Any
notice so mailed within the time prescribed herein shall be conclusively
presumed to have been duly given, whether or not such Securityholder shall
receive such notice.

        Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.

        Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66%
of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66% 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




                                       80



<PAGE>   86

and the Swap Counterparty shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.

        Section 10.08. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or an Insurer Insolvency has
occurred, any provision giving the Insurer the right to direct, appoint or
consent to, approve of, or take any action under this Agreement, shall be
inoperative during the period of such default or the period from and after such
Insurer Insolvency and such consent or approval shall be deemed to have been
given for the purpose of such provisions.

        Section 10.09. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.

        Section 10.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

        Section 10.11. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.

        Section 10.12. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank USA, National Association not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank USA, National Association in its
individual capacity or any beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.

        Section 10.13. Effect of Policy Expiration Date. Notwithstanding
anything to the contrary set forth herein, all references to any right of the
Insurer to direct, appoint, consent to, accept, approve of, take or omit to take
any action under this Sale and Servicing Agreement or any other Basic Document
shall be inapplicable at all times after the Policy Expiration Date, and (i) if
such reference provides for another party or parties to take or omit to take any
such action following an Insurer Default, such party or parties shall be
entitled to take or omit to take such action following the Policy Expiration
Date and (ii) if such reference does not provide for another party or parties to
take or omit to take any such action following an Insurer Default, then the
Trustee acting at the written direction of the Certificateholders holding in the
aggregate more than 51% of the outstanding Certificateholders Note Balance shall
have the right to take or omit to take any such action following the Policy
Expiration Date. In addition, any other provision of this Sale and Servicing
Agreement or any other Basic Document which is operative based in




                                       81


<PAGE>   87

whole or in part on whether an Insurer Default has or has not occurred shall, at
all times on or after the Policy Expiration Date, be deemed to refer to whether
or not the Policy Expiration Date has occurred.

        Section 10.14. Limitation on Recourse Against WFSRC. Notwithstanding
anything to the contrary contained in this Agreement, the obligations of WFSRC
under the Basic Documents are solely the corporate obligations of WFSRC, and
shall be payable by WFSRC, solely as provided by the Basic Documents. WFSRC
shall only be required to pay (i) any fees, expenses, indemnities or other
liabilities that it may incur under the Basic Documents from funds available
pursuant to, and in accordance with, the payment priorities set forth in this
Agreement and (ii) to the extent WFSRC has additional funds available (other
than funds described in the preceding clause (i)) that would be in excess of
amounts that would be necessary to pay the debt and other obligations of WFSRC
incurred in accordance with WFSRC's certificate of incorporation and all
financing documents to which WFSRC is a party. The agreement set forth in the
preceding sentence shall constitute a subordination agreement for purposes of
Section 510(a) of the Bankruptcy Code. In addition, no amount owing by WFSRC
hereunder in excess of the liabilities that it is required to pay in accordance
with the preceding sentence shall constitute a "claim" (as defined in Section
101(5) of the Bankruptcy Code) against it.

        Section 10.15. Replacement Interest Rate Swap Agreement. Upon a request
by the Insurer pursuant to Section 3.13 of the Insurance Agreement, the
Collateral Agent shall cause the Issuer to enter into a Replacement Interest
Rate Swap Agreement with a replacement swap provider(s) in form and substance
satisfactory to the Insurer. Any payment by a replacement swap provider(s) to
enter into a Replacement Interest Rate Swap Agreement shall be applied first to
pay all Net Swap Payments payable to the Swap Counterparty until such payment
obligations are satisfied.
























                                       82




<PAGE>   88

        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 2001-C OWNER TRUST

                                         By: CHASE MANHATTAN BANK USA, NATIONAL
                                             ASSOCIATION,
                                             not in its individual capacity but
                                             solely as Owner Trustee on behalf
                                             of the Trust

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                         WFS RECEIVABLES CORPORATION,
                                           as Seller

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                         WFS FINANCIAL INC,
                                             as Master Servicer

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

Acknowledged and accepted as of the day
and year first above written:

BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee



By:
    ----------------------------------
    Name:
    Title:




                                       83



<PAGE>   89

                                                                      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>   90

                                                                     SCHEDULE B

                           LOCATION OF CONTRACT FILES


WFS Financial Inc                                 WFS Financial Inc
23 Pasteur                                        6061 N. State Highway 161
Irvine, CA  92618                                 Irving, TX  75038
714-727-1000                                      972-870-8060









































                                      SB-1




<PAGE>   91

                                                                      SCHEDULE C


                         CHARGE-OFF PERCENTAGE TRIGGERS


<TABLE>
<CAPTION>
                                       CHARGE-OFF PERCENTAGE
CALCULATION DAY                                TRIGGER
---------------                        ---------------------
<S>                                    <C>
August 2001                                     0.00%
September 2001 - November 2001                  0.34%
December 2001 - February 2002                   1.03%
March 2002 - May 2002                           1.72%
June 2002 - August 2002                         2.32%
September 2002 - November 2002                  2.87%
December 2002 - February 2003                   3.35%
March 2003 - May 2003                           3.77%
June 2003 - August 2003                         4.12%
September 2003 - November 2003                  4.39%
December 2003 - February 2004                   4.61%
March 2004 - May 2004                           4.77%
June 2004 - August 2004                         4.90%
September 2004 - November 2004                  5.00%
December 2004 - February 2005                   5.07%
March 2005 - May 2005                           5.11%
June 2005 - August 2005                         5.15%
September 2005 - November 2005                  5.18%
December 2005 - February 2006                   5.21%
March 2006 - May 2006                           5.22%
June 2006 - August 2006                         5.24%
September 2006 - November 2006                  5.24%
December 2006 - February 2009                   5.25%
</TABLE>





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