Document:

exv10w1

 

EXHIBIT 10.1

 

STOCK PURCHASE AGREEMENT

between

Hanmi Financial Corporation,

and

Korea Exchange Bank

Dated as of August 24, 2005

 

 

 

          STOCK PURCHASE AGREEMENT, dated as of August 24, 2005 (this “Agreement”), between
Hanmi Financial Corporation, a Delaware corporation (“Hanmi”) and Korea Exchange Bank, a
corporation duly incorporated in Korea (“Seller”).

RECITALS

          A. Seller owns 2,338,866 shares of Hanmi’s common stock, par value $.001 per share (the
“Common Stock”); and

          B. Hanmi desires to purchase from Seller, and Seller desires to sell to Hanmi, 1,163,000
shares of Common Stock (the “Shares”), upon the terms and subject to the conditions set
forth herein;

          NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements
herein set forth, the parties hereto hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF SHARES

          SECTION 1.1 Purchase and Sale of Shares. At the Closing, upon the terms and subject
to the conditions of this Agreement, Seller shall sell, transfer and deliver to Hanmi, and Hanmi
shall purchase from Seller, all of the Shares. The aggregate purchase price to be paid by Hanmi
for all of the Shares shall be $19,999,994.70 (the “Purchase Price”). The Purchase Price shall
be paid in cash, in its entirety, by wire transfer in immediately available funds, to an account
designated by Seller.

          SECTION 1.2 Closing Date. The closing of the purchase and sale of the Shares
(hereinafter called the “Closing”) shall take place on August 30, 2005.

          SECTION 1.3 Transactions to be Effected at the Closing. At the Closing, Hanmi shall
deliver the Purchase Price to the Seller against delivery of the Shares to Hanmi.

 

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

          SECTION 2.1 Authorization and Validity of Agreement. Seller has all requisite power
to execute, deliver and perform under this Agreement. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby
have been duly authorized by all necessary action. This Agreement has been duly executed and
delivered by Seller and, assuming due authorization, execution and delivery by Hanmi, is a legal,
valid and binding obligation of Seller, enforceable against Seller in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors’ rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).

          SECTION 2.2 No Conflict. The execution and delivery by the Seller of, and the
performance by the Seller of its obligations under, this Agreement will not contravene or conflict
with any provision of applicable law, or the certificate of incorporation, by-laws or other
constitutive documents of the Seller, or any agreement or other instrument binding upon the Seller
or any judgment, order or decree of any governmental body, agency or court having jurisdiction over
the Seller, and no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Seller of its obligations under
this Agreement.

          SECTION 2.3 Ownership of Shares. As of the date hereof and at the Closing Date, Seller
owns and will own, beneficially and of record, all of the Shares, free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights, charges or other
encumbrances of any nature whatsoever (collectively, “Liens”). At the Closing Date, Seller
will transfer to Hanmi good and marketable title to the Shares, free and clear of all Liens.

          SECTION 2.5 No Liability. The Seller expressly acknowledges that it is not relying
upon any information, representation or warranty by Hanmi in determining to sell the Shares and
that Hanmi has not made any representations or warranties to the Seller in connection therewith
except as set forth herein. The Seller represents that it is a sophisticated seller with respect to
the Shares and acknowledges that it has, independently and without reliance upon Hanmi, and based
on such documents and information as the Seller has deemed appropriate, made its own appraisal of
and investigation into the business, operations, property, financial and other condition and
prospects of Hanmi and the merits and consequences of its sale of the Shares and made its own
decision with respect to its sale of the Shares. The Seller represents that it has consulted to the
extent deemed appropriate by it with its own advisers as to the financial, tax, legal and related
matters concerning a sale of the Shares and on that basis understands the financial, legal, tax and
related consequences of a sale of the Shares, and believes that a sale of the Shares is suitable
and appropriate for it.

          SECTION 2.6 No Manipulation. The Seller has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be expected to cause or result
in, under the U.S. Securities and Exchange Act of 1934, as amended, or otherwise,

 

 

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stabilization or
manipulation of the price of any security of Hanmi to facilitate the sale or resale of the Common
Stock.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER

          SECTION 3.1 Authorization and Validity of Agreement. Hanmi has all requisite corporate
power to execute, deliver and perform under this Agreement. The execution, delivery and
performance by Hanmi of this Agreement and the consummation by Hanmi of the transactions
contemplated hereby have been duly authorized by all necessary corporate action. This Agreement
has been duly executed and delivered by Hanmi and, assuming due authorization, execution and
delivery by Seller, is a legal, valid and binding obligation of Hanmi, enforceable against Hanmi in
accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally and general equitable principles (whether considered in a proceeding in equity or at
law).

          SECTION 3.2 Execution. The execution and delivery by Hanmi of, and the performance by
Hanmi of its obligations under, this Agreement will not contravene any provision of applicable law,
or the certificate of incorporation, by-laws or other constitutive documents of Hanmi, or any
judgment, order or decree of any governmental body, agency or court having jurisdiction over Hanmi,
and no consent, approval, authorization or order of, or qualification with, any governmental body
or agency is required for the performance by Hanmi of its obligations under this Agreement.

ARTICLE IV

MISCELLANEOUS

          SECTION 4.1 Expenses. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, each party hereto agrees to pay or cause to be
paid all expenses incident to the preparation for and performance of their obligations under this
Agreement.

          SECTION 4.2 Notices. All statements, requests, notices and agreements hereunder shall
be in writing, and (i) if to the Seller shall be delivered or sent by mail or telecopy transmission
to Korea Exchange Bank, International Department, 181 Ulchiro 2Ga Chung-Ku, Seoul, Korea.
Attention: Chan Noh, Head of International Department, with a copy to Yong-Joo Hwang (Facsimile
822-754-9817); or (ii) if to Hanmi, shall be delivered or sent by mail or telecopy transmission to
Hanmi Financial Corporation, 3660 Wilshire Boulevard, Los Angeles, CA 90010, Attention: Michael
Winiarski (Facsimile: 213-351-5944); with a copy to Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, NY 10017-3954, Attention: Lee Meyerson (Facsimile: 212-455-2502). Any such
statements, requests, notices or agreements shall take effect at the time of receipt thereof. The
Seller shall only be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of Hanmi.

          SECTION 4.3 Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of this

 

 

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Agreement.

          SECTION 4.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which together shall be
deemed to be one and the same instrument.

          SECTION 4.5 Governing Law. This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of the State of New York
without regard to conflicts of laws principles thereof.

[The remainder of this page intentionally left blank]

 

 

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

	 	 	 	 	 
	 	 	Korea Exchange Bank
	 
	 	 	 	 
	 

	 	By:	 	/s/ Chan Noh 
	 

	 	 	 	 
	 

	 	 	 	Name: Chan Noh
	 

	 	 	 	Title: Head of International Department
	 
	 	 	 	 
	 	 	Hanmi Financial Corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ Michael J. Winiarski 
	 

	 	 	 	 
	 

	 	 	 	Name: Michael J. Winiarski
	 

	 	 	 	Title: SVP and Chief Financial Officerexv10w1

 

EXHIBIT 10.1

FIRST TIER SUBSEQUENT ASSIGNMENT

     This FIRST TIER SUBSEQUENT ASSIGNMENT (this “Agreement”), dated as of August 17, 2005, is made
and entered into by and between WFS Financial Inc, a California corporation (“WFS”) and WFS
Receivables Corporation 3, a California corporation (“WFSRC3”), in reliance upon the following
facts:

     WHEREAS, WFSRC3 desires to purchase from WFS a portfolio of automobile retail installment
sales contracts and installment loans, primarily originated by motor vehicle dealers and
subsequently purchased by WFS, on a without recourse servicing released basis;

     WHEREAS, WFS is willing to sell such automobile retail installment sales contracts and
installment loans to WFSRC3 pursuant to the terms hereof; and

     WHEREAS, WFS has previously sold to WFSRC3 a portfolio of automobile retail installment sales
contracts and installment loans, primarily originated by motor vehicle dealers and subsequently
purchased by WFS, on a without recourse basis, pursuant to the Sale and Assignment between WFS and
WFSRC3, dated as of July 1, 2005, in accordance with the Sale and Servicing Agreement, dated as of
July 1, 2005, by and among WFS, WFSRC3 and the WFS Financial 2005-3 Owner Trust (the “Sale and
Servicing Agreement”).

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

1. Definitions. All capitalized terms not otherwise defined in this Agreement shall have
the meanings given to those terms in the Sale and Servicing Agreement.

2. Conveyance of Contracts.

     a. In consideration of WFSRC3’s delivery to or upon the order of WFS of the purchase price for
the Contracts listed on Schedule A hereto (the “Schedule of Contracts”), WFS hereby sells, grants,
transfers, assigns and otherwise conveys to WFSRC3 on the Subsequent Transfer Date, without
recourse (subject to the obligations herein), all of its right, title and interest, including all
rights to service the Subsequent Contracts (exclusive of the amount, if any, allocable to any
rebatable insurance premium financed by any such Subsequent Contract) in, to and under each and all
of the Subsequent Contracts listed on that Schedule of Contracts, including, without limitation,
all payments of Monthly P&I received after the close of business on August 17, 2005; all Net
Liquidation Proceeds and Net Insurance Proceeds with respect to any Financed Vehicle to which a
Subsequent Contract relates received after the close of business on August 17, 2005 and all other
proceeds received on or in respect of any such Subsequent Contract, and any and all security
interests in the Financed Vehicles; the Contract Documents relating to each of such Subsequent
Contracts; and all proceeds in any way

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delivered with respect to the foregoing, all rights to payments with respect to the foregoing
and all rights to enforce the foregoing. Although the parties intend, and have expressly so
stated, that the conveyance of WFS’ right, title and interest in, to and under the Subsequent
Contracts pursuant to this Agreement shall constitute a purchase and sale and not a financing, in
order to protect WFSRC3 in the event that, despite such express intention that the transaction be
treated as a sale, such conveyance is instead deemed to be a financing, WFS hereby grants to WFSRC3
a first priority security interest in all of WFS’ right, title and interest in, to and under the
Subsequent Contracts, including all proceeds thereof to secure the repayment of such financing, and
agrees this Agreement shall constitute a security agreement under applicable law.

     b. The purchase price for the Subsequent Contracts is $437,296,585.11. At the Subsequent
Transfer Date WFSRC3 shall deliver to WFS the amount on deposit in the Pre-Funding Account on such
date as part of the consideration for the transfer of the Subsequent Contracts to the Trust
pursuant to this Agreement. To the extent the amount received by WFS from WFSRC3 at the Subsequent
Transfer Date is insufficient to fully pay the purchase price, the balance shall be accounted for
as an advance obligation due from WFSRC3 to WFS under the Revolving Line of Credit Agreement, as
amended, dated as of August 8, 2002, by and between WFS and WFSRC3.

     c. WFS has filed or authorized to be filed with the office of the Secretary of State of the
State of California UCC-1 financing statements as debtor, naming WFSRC3 as secured party and
describing all of the Contracts as collateral. From time to time, WFS shall cause to be taken such
actions as are necessary to continue the perfection of the interests of WFSRC3 in the Contracts and
to continue the first priority security interest in the Financed Vehicles and their proceeds (other
than, as to such priority, any statutory lien arising by operation of law after the Subsequent
Transfer 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.

     d. If any change in the name, identity or corporate structure of WFS or the place of its
incorporation would make any financing or continuation statement or notice of lien filed under this
Agreement seriously misleading within the meaning of applicable provisions of the UCC or any title
statute, WFS 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 WFSRC3 in the
Contracts, Financed Vehicles and the proceeds thereof. Promptly thereafter, WFS shall deliver to
WFSRC3 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 WFSRC3 in the Contracts,
Financed Vehicles and the proceeds thereof have been filed, and reciting the details of such
filings.

     e. WFS shall pay all reasonable costs and disbursements in connection with the perfection and
the maintenance of perfection, as against all third parties, of WFSRC3’s right, title and interest
in and to the Contracts and in connection with

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maintaining the first priority security interest in the Financed Vehicles and the proceeds
thereof.

3. Representations and Warranties of WFS. WFS hereby makes the following representations
and warranties on which WFSRC3 is deemed to have relied in acquiring the Subsequent Contracts.
Such representations and warranties speak as of the execution and delivery of this Agreement and as
of the Subsequent Transfer Date, but shall survive the sale, transfer and assignment of the
Subsequent Contracts to WFSRC3 and the transfer of those Subsequent Contracts by WFSRC3 to the
Trust and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

     a. As to WFS:

         i. Organization and Good Standing. WFS 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 Subsequent Contracts.

         ii. Due Qualification. WFS 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, subject to the effect of 12 C.F.R. §560.2.

         iii. Power and Authority. WFS has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; WFS has full power and authority to sell and
assign the property to be sold and assigned to and deposited with WFSRC3, and has duly authorized
such sale and assignment to WFSRC3 by all necessary corporate action; and the execution, delivery
and performance of this Agreement has been duly authorized by WFS by all necessary corporate
action.

         iv. Binding Obligation. This Agreement constitutes (A) a valid sale, transfer and
assignment of the Subsequent Contracts, enforceable against creditors of and purchasers from WFS
and (B) a legal, valid and binding obligation of WFS 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 WFS, or any indenture, agreement or other instrument to
which WFS 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

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pursuant to the Bank Documents for which WFS is a party); nor violate any law or, to the best of
WFS’s knowledge, any order, rule or regulation applicable to WFS of any court or of any federal or
state regulatory body, administrative agency or other governmental instrumentality having
jurisdiction over WFS or its properties.

         vi. No Proceedings. There are no proceedings or investigations pending, or to WFS’s
best knowledge, threatened, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over WFS or its properties: (A) asserting the
invalidity of this Agreement or any 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, (C) seeking any determination or ruling that might
materially and adversely affect the performance by WFS of its obligations under, or the validity or
enforceability of, this Agreement, any of the other Basic Documents, the Notes or the Certificates
or (D) which might adversely affect the federal or state income tax statements of the Notes or the
Certificates.

         vii. No Tax Liens. WFS is not aware of any judgment or tax lien filing against it.

     b. As to each Subsequent Contract or as to all of the Subsequent Contracts listed on the
Schedule of Contracts as the case may be:

         i. Schedule of Contracts. The information pertaining to each Subsequent Contract set
forth in the Schedule of Contracts was true and correct in all material respects at the Subsequent
Transfer Date and the calculations of the Principal Balances appearing in such Schedule of
Contracts for each such Subsequent Contract at the Subsequent Transfer 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 Subsequent Transfer Date, WFS has taken all steps
necessary to perfect its security interest against the Obligors in the Financial Vehicles securing
the Subsequent Contracts and such Subsequent Contracts granted a valid and enforceable first
priority security interest in favor of WFS (or to the Bank, a Dealer or 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
Subsequent Transfer Date). WFS 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 WFSRC3 hereunder. All financing statements filed
against WFS in favor of WFSRC3 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 WFSRC3 unless WFSRC3 authorizes it.

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         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 Subsequent Transfer Date and will show WFS named
as the original secured party under the related Contract as the holder of a first priority security
interest in such Financed Vehicle, and (B) if the related Financed Vehicle was originated in a
State in which the filing of a financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly made and show WFS named as
the original secured party under the related Subsequent 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 Subsequent Contract) against all parties claiming an
interest in such Financed Vehicle. With respect to each Subsequent 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 Subsequent Transfer Date, WFS
had good and indefeasible title to and was the sole owner of each Subsequent Contract and the
Certificates to be transferred to WFSRC3 pursuant to this Agreement free of liens, claims,
encumbrances and rights of any Person and, upon transfer of each such Subsequent Contract to WFSRC3
pursuant to this Agreement, WFSRC3 will have good and indefeasible title to and will be the sole
owner of each such Subsequent Contract free of liens, claims, encumbrances and rights of any
Person; except for the Lien of the Indenture Trustee under the Indenture; provided, however, the
Issuer or Indenture Trustee may be required to file or record a transfer of the lien on a Financed
Vehicle prior to enforcement of that lien in the name of the Issuer or Indenture Trustee,
respectively.

         v. Current in Payment. As of the Subsequent Transfer Date, each Subsequent 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 Subsequent Transfer Date, there is no lien against the
related Financed Vehicle for delinquent taxes.

         vii. Rescission, Offset, Etc. As of the Subsequent Transfer 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 each Subsequent Contract; the operation of the terms of such
Subsequent Contract or the exercise of any right thereunder will not render such Subsequent
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.

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         viii. Mechanics’ Liens. As of the Subsequent Transfer 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 each Subsequent Contract.

         ix. Compliance with Laws. Each Subsequent 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 Subsequent Contracts to WFSRC3, the pledge of the
Subsequent Contracts to the Indenture Trustee by the Issuer, and the receipt of interest by WFSRC3
will not involve the violation of any applicable state or federal law.

         x. Valid and Binding. Each Subsequent 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 Subsequent Contract had full legal capacity to
execute and deliver such Subsequent Contract and all other documents related thereto and to grant
the security interest purported to be granted thereby; and the terms of such Subsequent Contract
have not been waived or modified in any respect, except by instruments that are part of the
Contract Documents.

         xi. Enforceability. Each Subsequent 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 Subsequent Transfer Date, there was no default, breach,
violation or event permitting acceleration existing under such Subsequent 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 Subsequent Contract, and WFS has not waived any such default,
breach, violation or event permitting acceleration except payment delinquencies permitted by
subparagraph (v) above.

         xiii. Insurance. At the Subsequent Transfer Date, the related Financed Vehicle will
be covered by (A) a comprehensive and collision insurance policy (i) in an amount at least equal to
the lesser of (a) its actual cash value or (b) the principal amount due from the Obligor under the
related Subsequent Contract, (ii) naming WFS as a loss payee and (iii) insuring against loss and
damage due to fire, theft, transportation, collision

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and other risks generally covered by comprehensive and collision coverage or (B) an LDI Policy;
provided, however, that if such Financed Vehicle has an unpaid principal balance of less than
$4,000.00 or the related Subsequent Contract has six or fewer months remaining before its Maturity
Date, it will not be required to be covered by the insurance described in this subparagraph;
provided further, to the extent not paid in full by the Obligor, the related Advanced Insurance
Premium for such LDI Policy shall be an expense of the Master Servicer. WFS 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 Subsequent 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 Subsequent Contract from all
other similar contracts purchased by WFS.

         xv. Scheduled Payments. As of the Subsequent Transfer Date, scheduled payments under
such Subsequent Contract are applied in accordance with the Rule of 78’s method or the simple
interest method and are due monthly in level payments through its Maturity Date sufficient to fully
amortize the principal balance of such Subsequent 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 Subsequent Contract may be minimally different from the level payment.

         xvi. One Original. There is only one original of each Subsequent Contract and such
original, together with all other Contract Documents, is being held by WFS pursuant to Section 3.04
of the Sale and Servicing Agreement .

         xvii. Characteristics. With respect to each Contract owned by WFS at the Statistical
Calculation Date, at the Statistical Calculation Date such Contract had (i) an Outstanding
Principal Balance of not less than $534.28 nor more than $151,372.61, (ii) an original term of not
less than 12 months nor greater than 84 months, (iii) a remaining maturity of not less than three
months nor greater than 84 months, and (iv) an APR of not less than 4.24%.

         xviii. Identification. WFS has clearly marked its electronic records to indicate that
each Subsequent Contract is owned by WFSRC3.

         xix. Maturity. As of the Subsequent Transfer Date, no Subsequent Contract had a
Maturity Date later than the last day of the Collection Period immediately preceding the Class D
Final Scheduled Distribution Date.

         xx. Principal Balance. At the Subsequent Transfer Date the initial Principal Balance
of each Subsequent Contract was not greater than the purchase price of the related Financed Vehicle
and such Principal Balance does not include any amounts the Master Servicer may have expended in
obtaining an LDI Policy, if any, for such Subsequent Contract.

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         xxi. Location of Contract Files. The Contract Files are kept at one or more of the
locations listed in Schedule B to the Sale and Servicing Agreement.

         xxii. Finance Charge. With respect to each Contract owned by WFS at the Statistical
Calculation Date, 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 4.24% for Rule of 78’s Contracts and Simple Interest Contracts.

         xxiii. Third Party Lender Originations. With respect to the Contracts owned by WFS at
the Statistical Calculation Date, the aggregate Principal Balance as of the Statistical Calculation
Date of such Contracts purchased by WFS from the Bank and Third Party Lenders or originated
directly by WFS is not more than approximately 3.55% of the Statistical Calculation Date Principal
Balance.

         xxiv. Simple Interest Contracts. With respect to each Contract owned by WFS at the
Statistical Calculation Date, as of the Statistical Calculation Date, approximately 99.38% of the
Contracts by Statistical Calculation Date, Principal Balance shall be Simple Interest Contracts and
approximately 0.62% of the Contracts by Statistical Calculation Date Principal Balance shall be
Rule of 78’s Contracts.

         xxv. New or Pre-owned Vehicles. At least 33.30% of the Contracts owned by WFS at the
Statistical Calculation Date by Statistical Calculation Date Principal Balance were Contracts that
financed new vehicles and not greater than 66.70% were Contracts that financed pre-owned vehicles.

         xxvi. States of Origination. Approximately 37.45% of the Contracts owned by WFS at
the Statistical Calculation Date by the Statistical Calculation Date Principal Balance were
originated or purchased by WFS in California and approximately 62.55% of the Contracts by
Statistical Calculation Date Principal Balance were originated in states other than California.

         xxvii. No Government Entity Obligors. Each Subsequent Contract shall have an Obligor
that is not a local, state or federal governmental entity.

         xxviii. Chattel Paper. Each Subsequent Contract constitutes “tangible chattel paper”
as defined in the applicable UCC.

         xxix. Priority of Interest. This Agreement creates a valid and continuing security
interest (as defined in the UCC) in the Subsequent Contracts in favor of WFSRC3, which security
interest is prior to all other Liens, and is enforceable as such as against creditors of and
purchasers from WFS. Other than the security interest granted to WFSRC3 pursuant to this
Agreement, WFS has not pledged, assigned, sold, granted a security interest in, or otherwise
conveyed any of the Subsequent Contracts. WFS has not authorized the filing of and is not aware of
any financing statements against WFS that

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include a description of collateral covering the
Subsequent Contracts other than any financing statement relating to the security interest granted to WFSRC3 hereunder, the
security interest granted to the Indenture Trustee under the Indenture or that has been terminated
or subordinated to the rights of WFSRC3, the Issuer and the Indenture Trustee.

         xxx. Contract Characteristics as of the Subsequent Transfer Date. The representations
and warranties made in this Section with respect to certain Contracts as of the Statistical
Calculation Date shall also be true and correct in every material respect for all Contracts as of
the Subsequent Transfer Date.

         xxxi. Obligor Bankruptcy. As of the Subsequent Transfer Date with respect to the
Subsequent Contracts, WFS is not aware of any Obligor that is or has been, since the origination of
the related Subsequent Contract, the subject of a bankruptcy proceeding.

         xxxii. No Extensions. The number of, or timing of, scheduled payments has not been
changed on any Subsequent Contract on or before the Subsequent Transfer Date, except as reflected
on the computer tape delivered in connection with the sale of the Subsequent Contracts.

         xxxiii. Repossession. On or prior to the Subsequent Transfer Date, no Financed
Vehicle has been repossessed.

         xxxiv. Prepayment of Contracts. Any prepayment in full of a Subsequent Contract by an
Obligor to the Master Servicer will consist of the entire outstanding principal balance of such
Subsequent Contract together with all accrued and unpaid interest thereon.

4. Purchase of Certain Contracts. The representations and warranties of WFS set forth in
Section 3 shall survive delivery of the Contract Documents to WFSRC3 or as directed by WFSRC3 and
shall continue until the termination of this Agreement. Upon discovery by WFSRC3, WFS 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 Subsequent Contract has
not been properly executed by the Obligor or contains a material defect or has not been received by
WFSRC3, 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 WFSRC3,
WFS 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 WFS is unable to do so, WFS shall purchase such
Subsequent Contract on the Master Servicer Report Date next succeeding the end of such 90-day
period from WFSRC3 for an amount equal to the related Repurchase Amount for that Subsequent
Contract. Upon any such repurchase, WFSRC3 shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, as shall be necessary to vest in WFS title to any
Subsequent Contract repurchased hereunder. The sole remedy of WFSRC3 with respect to a breach of a
WFS representation and warranty pursuant to

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Section 3 shall be to enforce WFS’s obligation to
repurchase Subsequent Contracts pursuant to this Section; provided, however, that WFS shall
indemnify WFSRC3 against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by it as a result of third-party
claims arising out of the events or facts giving rise to such breach.

5. Custody of Contract Files. Subject to further direction by WFSRC3, which it may give at
any time while it owns the Subsequent Contracts in its sole discretion, WFSRC3 hereby irrevocably
appoints WFS to act as the agent of WFSRC3 as custodian of the Contract Documents and any and all
other documents that WFS shall keep on file, in accordance with its customary procedures, relating
to a Subsequent Contract, Obligor or Financed Vehicle, which are hereby constructively delivered to
WFSRC3 with respect to each Subsequent Contract, provided, however, all obligations of WFS to
WFSRC3 hereunder shall be superceded by the obligations of WFS under the Sale and Servicing
Agreement:

     a. the original of the Subsequent Contract;

     b. documents evidencing the existence of physical damage insurance covering the Financed
Vehicles;

     c. the original credit application fully executed by the Obligor; and

     d. 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 WFS in the
Financed Vehicle.

     e. WFS 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 as directed by WFSRC3. WFS shall cause the electronic record of the Subsequent Contracts
maintained by it to be clearly marked to indicate that the Subsequent Contracts have been sold to
WFSRC3 and shall not in any way assert or claim an ownership interest in the Subsequent Contracts.

     f. Instructions; Authority to Act. WFS shall be deemed to have received proper
instructions with respect to the Contract Files upon its receipt of written instructions signed by
a Responsible Officer of WFSRC3.

     g. Indemnification. WFS shall indemnify WFSRC3 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 WFSRC3 as the result of any improper act or omission in any way relating to the
maintenance and custody by WFS of the Contract Files, or the failure of WFS to perform its duties
in compliance with the terms of this Agreement.

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6. Effective Period and Termination. WFS’ appointment as custodian shall become effective
as of the Subsequent Transfer Date and shall continue in full force and effect until terminated
under the transfer of the Subsequent Contracts by WFSRC3 to the Trust pursuant to the Sale and
Servicing Agreement.

7. Nonpetition Covenant. WFS shall not petition or otherwise invoke the process of any
court or government authority for the purpose of commencing or sustaining a case under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of WFSRC3 or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of WFSRC3.

8. Collecting Title Documents Not Delivered at the Subsequent Transfer Date. In the case
of any Subsequent 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
WFS as first lienholder has been applied for from the Registrar of Titles was delivered to the
Owner Trustee on the Subsequent Transfer Date in lieu of a Title Document, WFS shall use its best
efforts to collect such Title Document from the Registrar of Titles as promptly as possible. If
such Title Document showing WFS as first lienholder is not received by WFS or the related
Subservicer within 180 days after the Subsequent Transfer Date, then the representation and
warranty in Section 3(b)(iii) in respect of such Subsequent Contract shall be deemed to have been
incorrect in a manner that materially and adversely affects the Certificateholders.

9. Corporate Existence of WFSRC3. During the term of this Agreement, WFSRC3 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, and each other instrument or agreement necessary or appropriate
to the proper administration of this Agreement and the transaction contemplated hereby. In
addition, all transactions and dealings between WFSRC3 and its Affiliates will be conducted on an
arm’s-length basis.

10. Amendment. This Agreement may only be amended by a writing signed by all parties to
this Agreement and only if such amendment will not be contrary to any obligation of WFS or WFSRC3,
in any capacity under the Sale and Servicing Agreement.

11. Protection of Title to Trust.

     a. WFS shall file such financing statements and cause to be filed such continuation
statements, all in such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of WFSRC3 in the Subsequent Contracts and in the proceeds
thereof. WFS shall deliver (or cause to be delivered) to WFSRC3 file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available following such filing.

11

 

     b. WFS authorizes WFSRC3 to file such financing statements as may be required by law fully to
preserve, maintain and protect the interest of WFSRC3 in the Subsequent Contracts and in the
proceeds thereof.

     c. WFS shall not change its name, identity or corporate structure or place of incorporation in
any manner that would, could or might make any financing statement or continuation statement filed
in accordance with Section 11(a) seriously misleading within the meaning of Section 9-507(c) of the
UCC, unless it shall have given WFSRC3 at least 60 days’ prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing statements or
continuation statements.

     d. WFS shall give WFSRC3 at least 60 days’ prior written notice of any relocation of the
principal executive office of WFS 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.

     e. WFS, so long as it is custodian hereunder, shall maintain or cause to be maintained
accounts and records as to each Subsequent Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Subsequent Contract.

12. 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. To the extent this Agreement imposes obligations
on WFS or rights in favor of WFSRC3 greater than the terms and conditions of the January S&SA
provide, this Agreement shall control.

13. Notices. All demands, notices and communications upon or to WFS or WFSRC3 under this
Agreement shall be in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case of (a) WFS, at 23
Pasteur, Irvine, California 92618, Attention: Legal Department, and (b) WFSRC3, at 444 East Warm
Springs Road #116, Las Vegas, Nevada, 89119, Attention: Legal Department, or, as to each of the
foregoing, at such other address as shall be designated by written notice to the other parties.
Any notice 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.

14. 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.

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15. Assignment. Notwithstanding anything to the contrary contained herein, the obligation
of WFS under this Agreement may not be assigned by WFS without the prior written consent of WFSRC3.

16. 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.

17. 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.

[Signature page follows]

13

 

     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 RECEIVABLES CORPORATION 3

 	 
	 	By:  	___________________________________
 	 
	 	 	Name:  	John L. Coluccio 	 
	 	 	Title:  	President 	 
	 
	 	WFS FINANCIAL INC

 	 
	 	By:  	___________________________________
 	 
	 	 	Name:  	J. Keith Palmer 	 
	 	 	Title:  	Senior Vice President and Treasurer 	 

14

 

	 	 	 	 	 

Schedule A

SCHEDULE OF CONTRACTS

(Schedule of Contracts and terms of sale for Subsequent Contracts

sold on August 17, 2005, the Subsequent Transfer Date)

	 	 	 	 	 
	Closing Date:

	 	 	8/17/05	 
	Number of Contracts Sold:

	 	 	23,257	 
	Aggregate Principal Balance of Contracts Sold:

	 	$	437,296,585.11	 
	Purchase Price of Contracts Sold:

	 	$	437,296,585.11	 
	List of Contracts sold attached as print-out or on Cd-Rom

	 	CD-Rom

15

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