1
EXHIBIT 10.14
SECOND
AMENDED AND RESTATED
MASTER COLLATERAL ASSIGNMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED MASTER COLLATERAL ASSIGNMENT
AGREEMENT dated as of November 1, 1998 (the "Agreement"), which amends and
restates the Master Collateral Assignment Agreement dated as of September 30,
1993, as amended and restated as of June 1, 1995 (the "Original Agreement"), is
by and among WESTERN FINANCIAL BANK, a federally-chartered savings association
formerly known as Western Financial Savings Bank, F.S.B. (including its
successors and assigns, the "Bank"), WFS FINANCIAL AUTO LOANS, INC., a
California corporation formerly known as Western Financial Auto Loans, Inc.,
(the "Depositor"), WFS FINANCIAL AUTO LOANS 2, INC., a California corporation
formerly known as Western Financial Auto Loans 2, Inc. ("WFAL 2"), FINANCIAL
SECURITY ASSURANCE INC., a New York stock insurance company (including its
successors and assigns, "Financial Security"), BANKERS TRUST COMPANY, a New York
banking corporation, in its capacities as Trustee and Collateral Agent (each as
defined herein) and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., in its capacity
as Master Collateral Agent (as defined herein). Capitalized terms used without
definition have the meanings set forth in Article I hereof.
R E C I T A L S
The Bank (i) is, the obligor under certain reinvestment
contracts (as amended from time to time, the "Bank Reinvestment Contracts") and
may in the future be an obligor together with WFAL 2 under certain reinvestment
contracts (as amended from time to time, the "Joint Reinvestment Contracts",
and, with the Bank Reinvestment Contracts, the "Reinvestment Contracts") all as
referenced in the Trust Agreements (as defined in Section 1.01 hereof), pursuant
to which Trusts (as defined in Section 1.01 hereof) have been or will be formed,
in favor of Bankers Trust Company, in its capacity as each of the trustees
(collectively, the "Trustee") under the Trust Agreements and/or in its capacity
as each of the collateral agents (acting for the benefit of Financial Security)
referenced in the Trust Agreements (collectively, together with any collateral
agent appointed by Financial Security thereunder or under the Master RIC
Reimbursement Agreement, the "Collateral Agent"), and (ii) was formerly the
obligor under certain spread account agreements with Financial Security, the
Trustee and the Collateral Agent ("Spread Account Agreements") relating to the
Trusts insofar as the Bank was obligated thereunder to repay moneys deposited in
its general ledger accounts when due.
WFAL 2 is and may in the future be the obligor under Joint
Reinvestment Contracts.
2
In transactions in which certificates insured by Financial
Security were issued under the Trust Agreements dated as of a date prior to
January 1, 1993, WFAL 2 pledged, pursuant to the related Spread Account
Agreements, to the Collateral Agent for the benefit of Financial Security all
its right, title and interest in and to the Spread Accounts (as defined in the
relevant Agreements) (together with the Spread Accounts referred to in the next
succeeding paragraph, the "Spread Accounts") and all investments and moneys
therein from time to time and all proceeds thereof (collectively, the related
"Spread Amounts").
In certain transactions in which certificates insured by
Financial Security were issued under the pooling and servicing agreements dated
as of a date on or after January 1, 1993, the Depositor or WFAL 2 pledged
pursuant to the Trust Agreements, to the Trustee, as collateral agent, all their
right, title and interest in and to the Spread Accounts (as defined in the
relevant pooling and servicing agreements) and all investments and moneys
therein from time to time and related Spread Amounts in order to secure their
respective obligations under such pooling and servicing agreements and related
Spread Account Agreements.
All securities issued in transactions referenced in the
foregoing two paragraphs in which WFAL 2 was a depositor have been fully paid
and discharged, and all obligations of the Bank and the Depositor in respect of
Spread Account Agreements referenced in clause (ii) of the first Recital hereof
have been fully performed and discharged.
To the extent provided in the Reinvestment Contracts, the Bank
and/or WFAL 2, as applicable, will receive funds credited to (i) in the
Collection Accounts, the Note Distribution Accounts and the Certificate
Distribution Accounts, (ii) in the Spread Accounts and (iii) in the Holding
Accounts for investment in Reinvestment Accounts.
The parties hereto desire to amend and restate the Original
Agreement to reflect (i) the continuing role of WFS Financial Inc, a California
corporation (including its successors and assigns "WFS"), as Master Servicer
with respect to the Trusts, (ii) the addition of WFAL 2 as an obligor under the
Joint Reinvestment Contracts, (iii) the amendment and restatement of the Master
RIC Reimbursement Agreement, (iv) the reflection of amendments of Articles 8 and
9 of the Uniform Commercial Code, and (v) the matters set forth in the preceding
paragraphs.
Except as specifically amended by this Agreement the Original
Agreement shall continue in full force and effect in accordance with its
existing terms. Any reference to this Agreement prior to the date hereof shall
refer to the Original Agreement.
A G R E E M E N T S
In consideration of the premises, the mutual agreements
contained herein and the reduction of Financial Security's premium for the
Policies, and for other consideration, the parties hereto agree as follows:
3
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms shall have the following
respective meanings:
"Aggregate Collateral Value" means, as of any date of
determination, (i) the aggregate outstanding principal amount of all items of
Collateral pledged to the Master Collateral Agent pursuant to Section 2.01
hereof, discounted as set forth on Schedule A hereto less (ii) the collection
discount determined in Section II.B. of the relevant Monthly Statement.
"Aggregate Commingled Account Balance" means, as of any date
of determination, the aggregate amounts as determined in Section I of the
relevant Monthly Statement.
"Authorized Officer" means, (i) with respect to the Bank and
WFAL 2, the President, the Chief Financial Officer, Treasurer or any Vice
President, (ii) with respect to Financial Security, the Chairman of the Board,
the President, the Executive Vice President or any Managing Director, (iii) with
respect to the Master Collateral Agent, any Vice President, Assistant Vice
President or Trust Officer, (iv) with respect to the Collateral Agent or
Trustee, any Vice President or Trust Officer.
"Business Day" means any day that is not (a) a Saturday or
Sunday or (b) a day on which banking institutions in the City of New York or in
the State of California are authorized or obligated by law or executive order to
be closed.
"Clearing Corporation" shall mean a "clearing corporation" (as
defined in Section 8-102(a)(5) of the UCC) with which the Master Collateral
Agent maintains an account and which is used by the Master Collateral Agent to
hold Securities and Securities Entitlement.
"Collateral" has the meaning specified in Section 2.01(c)
hereof.
"Collateral Account" has the meaning specified in Section 3.01
hereof.
"Collateral Schedule" has the meaning specified in Section
7.01 hereof.
"Contract" means any retail installment sales contract and
security agreement, or installment loan agreement and security agreement, which
have been executed by an obligor and pursuant to which such obligor purchased or
financed a motor vehicle, not inconsistent with the criteria set forth on
Schedule A hereto.
"Controlling Party" means Financial Security so long as no
Financial Security Insolvency shall have occurred and no Insurer Default shall
have occurred and be continuing, and, at any other time, the Trustee.
4
"Default" means (i) any failure by the Bank or WFAL 2 to
Deliver Collateral as and when required hereunder, (ii) any other material
breach by the Bank or WFAL 2 of its obligations hereunder and failure to cure
such breach within two (2) Business Days after receipt of notice thereof from
the Controlling Party or (iii) any default by the Bank, WFAL 2, WFS or the
Depositor under any Existing Agreement to which it is a party.
"Delivery" means, with respect to Collateral, the
accomplishment of the following:
(i) all "instruments" and "certificated securities" (as such
terms are defined in the UCC)("Possessory Collateral") shall be in bearer form
or registered in the name of the Master Collateral Agent or its nominee or duly
indorsed to the Master Collateral Agent or in blank, and in no case will any
Collateral be registered in the name of the Bank or WFAL 2, payable to the order
of the Bank or WFAL 2 or specially indorsed to the Bank or WFAL 2 (except to the
extent the foregoing have been further specially indorsed by the Bank or WFAL 2
to the Master Collateral Agent or its nominee or in blank);
(ii) all Security Entitlements in certificated Securities
included in the Collateral and held by or for a Clearing Corporation shall be
(A) held by the Clearing Corporation (or its custodian and/or nominee) as
specified in clause (i) above, (B) evidenced by a written or electronic advice
of the book-entry registration of such Securities Entitlement in an account of
the Master Collateral Agent (or its nominee) as such Clearing Corporation
maintained in accordance with the rules of such Clearing Corporation (a
"Clearing Corporation Account"), and (C) the corresponding Security Entitlement
shall be evidenced by written records of the Master Collateral Agent as being
credited to the Collateral Account; and
(iii) as to all Uncertificated Securities included in the
Collateral the Master Collateral Agent shall have received evidence that (A) it
or its nominee is the registered owner on the books of the issuer thereof or (B)
a Clearing Corporation or its nominee is so registered and the corresponding
Security Entitlement is evidenced by written records of the Master Collateral
Agent as being credited to the Collateral Account.
"Depositor" means Western Financial Auto Loans, Inc., in its
capacity as depositor under relevant Trust Agreements, and its successors and
assigns in such capacity.
"Eligible Account" means (i) a segregated trust account in the
corporate trust department that is maintained with a depository institution or
trust company the commercial paper or other short-term debt obligations of which
have credit ratings from S&P at least equal to "A-1" and from ▇▇▇▇▇'▇ equal to
"P-1", which account is fully insured up to applicable limits by the Federal
Deposit Insurance Corporation or (ii) a general ledger account or deposit
account (a) that is maintained at a depository institution or trust company
satisfying the criteria specified in clause (i) above or (b) that otherwise is
maintained at a depository institution acceptable to Financial Security as
evidenced by a letter to such effect from Financial Security to the Master
Collateral Agent.
5
"Entitlement Order" shall mean a notification communicated in
accordance with this Agreement by the Controlling Party to the Master Collateral
Agent directing transfer, redemption or other action with respect to a Financial
Asset credited to a Custody Account hereunder.
"Existing Agreements" means the Trust Agreements and any
related Policy, insurance, indemnity and pledge agreement, sub-servicing
agreement, indemnification agreement, Reinvestment Contract and Spread Account
Agreement relating to a Trust to which the Bank, WFS or the Depositor is a
party.
"Federal Agency Security" means any mortgage-backed security
issued by the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation or guaranteed by the Government National Mortgage
Association.
"Financial Asset" shall mean Collateral which is a security or
an obligation of a Person or a share, participation, or other interest in a
Person or in property or an enterprise of a Person which is, or is of a type,
dealt in or traded on financial markets, or which is recognized in any area in
which it is issued or dealt in as a medium for investment. As the context
requires, references to "Financial Asset" herein shall mean the Financial Asset
itself or the means by which the interest of a Person holding an interest
therein is evidenced, including a Security Certificate or Uncertificated
Security or a Security Entitlement.
"FSA Notice" has the meaning set forth in Section 3.05 hereof.
"Insurer Default" has the meaning set forth in the latest
Indenture referenced in the relevant Trust Agreement.
"Insurer Insolvency" has the meaning set forth in the latest
Indenture referenced in the relevant Trust Agreement.
"Lien" means, as applied to the property or assets (or the
income, proceeds, products, rents or profits therefrom) of any Person, in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise: (a) any mortgage, lien, pledge,
attachment, charge, lease, conditional sale or other title retention agreement,
or other security interest or encumbrance of any kind; or (b) any arrangement,
express or implied, under which such property or assets (and/or such income,
proceeds, products, rents or profits) are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
"Master Collateral Agent" means, initially, Bankers Trust
Company of California, N.A., including its successors and assigns, in its
capacity as collateral agent on behalf of the Trustee, the Collateral Agent and
Financial Security, or any successor which shall have become the Master
Collateral Agent pursuant to Section 4.05 hereof, and thereafter "Master
Collateral Agent" shall mean such successor.
"Master RIC Reimbursement Agreement" means, the Amended and
Restated Master RIC Reimbursement Agreement dated as of the date hereof among
the Bank, WFAL 2 and Financial Security.
6
"Master Secured Obligations" means, on any date, (i) the
respective obligations of the Bank and, WFAL 2 set forth in Sections 2.01(a) and
2.01(b) hereof, and (ii) all costs, expenses, attorney's fees and disbursements
and other amounts expended or incurred by the Trustee, the Master Collateral
Agent, or Financial Security in connection with the protection or preservation
of any Collateral and the enforcement of the rights and remedies of the Trustee,
the Master Collateral Agent or Financial Security under this Agreement.
"Monthly Statement" means the Monthly Collateral Statement of
the Bank and WFAL 2 in the form of Schedule B hereto Delivered pursuant to
Section 3.02(b) hereof.
"Mortgage Loan" means any single-family or multi-family
mortgage loan, representing a first or second lien on residential mortgaged
property, not inconsistent with the criteria set forth on Schedule A hereto.
"Opinion of Counsel" means a written opinion of counsel
acceptable, as to form, substance and issuing counsel (which may be counsel to
the Bank and WFAL 2), to the Controlling Party and the Master Collateral Agent.
"Person" means any individual, sole proprietorship, joint
stock company, unincorporated association, joint venture, corporation,
partnership, business or owner trust, government, governmental department or
agency or any other entity whatsoever.
"Policies" means financial guaranty insurance policies in
respect of the Trusts (including, in each case, any endorsements thereto) issued
by Financial Security.
"Securities Intermediary" shall have the meaning set forth in
Section 8-102(a)(14) of the UCC.
"Security" shall mean an obligation of an issuer or a share,
participation, or other interest in an issuer or in property or an enterprise or
an issuer which is represented by a Security Certificate in bearer or registered
form, or an Uncertificated Security, the transfer of which may be registered
upon books maintained for that purpose by or on behalf of the issuer, or which
is one of a class or series or by its terms is divisible into class or series of
shares, participations, interests, or obligations and which is, or is of a type,
dealt in or traded on securities exchanges or securities markets.
"Security Entitlement" shall mean the rights and property
interest of an Entitlement Holder with respect to Financial Assets.
"Security Interests" means the Liens on the Collateral granted
to the Master Collateral Agent under this Agreement to secure the Master Secured
Obligations.
"Servicer" means Western Financial Savings Bank, F.S.B.
(including its successors), as servicer under the Servicing Agreement.
7
"Servicing Agreement" means the Servicing Agreement dated as
of September 30, 1993 between the Servicer and the Master Collateral Agent, with
the Controlling Party as a third party beneficiary thereof, as such agreement
may be amended from time to time in accordance with the terms thereof.
"Termination Date" means the date which is the earlier of (A)
the latest of (i) the date on which all Reinvestment Contracts shall have
terminated and all amounts owing by the Bank, WFAL 2 and the Depositor to the
relevant Trust, Financial Security and the Trustee shall have been paid in full,
(ii) the date on which Financial Security shall have received full payment and
performance by the Bank, WFAL 2 and the Depositor pursuant to the Existing
Agreements, (iii) the latest date on which any payment received by Financial
Security pursuant to the Existing Agreements could be avoided in whole or in
part as a preference payment under the United States Bankruptcy Code or any
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, or (B) the date on which no amounts in any
accounts under Trust Agreements or Spread Account Agreements are invested in
Reinvestment Contracts or general ledger accounts at the Bank or are otherwise
commingled with funds of the Bank, or (C) any date mutually agreed by the Bank,
WFAL 2 and the Controlling Party.
"Trust Agreements" mean the trust agreements pursuant to which
the Trusts are constituted, as amended from time to time in accordance with
their terms.
"Trusts" means the grantor trusts or business trusts created
in respective automobile installment sale contract securitization transactions
established prior to the date hereof or from time to time hereafter by the Bank
and its affiliates whose certificates of beneficial interest or other securities
have the benefit of Policies.
"Uncertificated Security" shall mean a Security that is not
represented by a certificate.
"Uniform Commercial Code" or "UCC" means the Uniform
Commercial Code as in effect in the State of California or other applicable
jurisdiction.
"WFS Sale and Servicing Agreement" means the Sale and
Servicing Agreement dated as of the date hereof between WFS Financial Inc. and
WFAL 2.
Section 1.02. Rules of Interpretation. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article," "Section," "Exhibit" or "Annex" shall refer to an Article or
Section of, or Exhibit or Annex to, this Agreement. The definition of a term
shall include the singular, the plural, the past, the present, the future, the
active and the passive forms of such term.
8
ARTICLE II
THE COLLATERAL
Section 2.01. Security Interests.
(a) In order to secure the full and punctual payment of all
amounts when due by the Bank or WFAL 2 under, and the performance by the Bank
and WFAL 2 of all of their other obligations pursuant to, the Reinvestment
Contracts and the Master RIC Reimbursement Agreement from time to time in
accordance with the terms thereof, the Bank hereby pledges, assigns, transfers
and conveys all of its right, title and interest in and to all of the
securities, property and assets set forth in Section 2.01(c) hereof (the
"Collateral") to the Master Collateral Agent on behalf of, and for the benefit
of, the Trustee, the Collateral Agent and Financial Security. The Security
Interests granted to the Master Collateral Agent, the Trustee, the Depositor,
the Collateral Agent and Financial Security shall be pari passu in all respects.
(b) In order to secure the full and punctual payment of all
amounts when due by WFAL 2 or the Bank under, and the performance by WFAL 2 and
the Bank of all of their other obligations pursuant to, the Reinvestment
Contracts and the Master RIC Reimbursement Agreement from time to time in
accordance with the terms thereof, WFAL 2 hereby pledges, assigns, transfers and
conveys all of its right, title and interest in and to all of the securities,
property and assets set forth in Section 2.01(c) hereof (the "Collateral") to
the Master Collateral Agent on behalf of, and for the benefit of, the Trustee,
the Collateral Agent and Financial Security. The Security Interests granted to
the Master Collateral Agent, the Trustee, the Depositor, the Collateral Agent
and Financial Security shall be pari passu in all respects.
(c) The "Collateral" shall at any time consist of (i) the
assets, property and Financial Assets set forth on the most recent Schedule B
hereto and any other assets, property and Financial Assets, and proceeds
thereof, approved in writing by the Controlling Party (which may be by amendment
of Schedule A or B by mutual agreement of the Bank, WFAL 2 and the Controlling
Party), and (ii) the WFS Sale and Servicing Agreement, including:
(i) the related documentation, and all
proceeds, income and profits thereon, and all interest, principal and
other payments and distributions with respect thereto;
(ii) all rights and remedies for the
enforcement of payment of any principal, interest and proceeds;
(iii) any collateral securing any Collateral
including, without limitation, all rights and remedies of a beneficiary
of such security to foreclose upon, repossess and sell the related
collateral, or all rights and remedies assertable against any Person
other than the related obligor under a guaranty, warranty or otherwise
in connection with any Collateral;
9
(iv) insurance proceeds, if any, and any other
proceeds received in connection with the disposition, repossession,
foreclosure, destruction or condemnation of, or impairment of title to,
any Collateral;
(v) any cash, securities or other property
received on account of the Collateral from any liquidation thereof or
any adjustment of debt of the obligors and any portion of the
Collateral which may be distributed in kind in connection with any such
liquidation or adjustment of debt of the obligors;
(vi) the Collateral Account and each other
account, if any, established by or with the Master Collateral Agent
hereunder; and
(vii) all distributions, revenues, products,
substitutions, benefits, profits and proceeds, in whatever form, of any
of the foregoing.
(d) Each of the Bank and WFAL 2 agrees that it will not (i)
use any adverse selection method in including Collateral hereunder, and (ii)
include any Collateral which would be charged off in accordance with its normal
accounting practices. If any Collateral Delivered to the Master Collateral Agent
hereunder shall be or become subject to charge off by the Bank or WFAL 2, the
Bank or WFAL 2, as the case may be, will promptly substitute new Collateral
therefor to the extent necessary to satisfy the requirements of Section 3.02
hereof.
(e) In order to effectuate the provisions and purposes of this
Agreement, including to effectuate the collateral assignment to the Master
Collateral Agent, as agent for the Trustee and the Collateral Agent, pursuant to
this Section 2.01, each of the Bank and WFAL 2 hereby Delivers, and in the
future agrees to Deliver, to the Master Collateral Agent, all items of
Collateral pledged by it hereunder in which a security interest must be
perfected by possession, and the Master Collateral Agent hereby agrees to accept
such Collateral on the terms set forth in this Agreement. The Bank and WFAL 2,
and each of them, hereby agree to take all additional steps that may be
necessary or reasonably requested by the Master Collateral Agent or the
Controlling Party from time to time for the perfection, preservation,
protection, maintenance or continuation of such transfers, assignments and
security interests including, but not limited to, the execution, recording,
registering and filing of any appropriate collateral assignments, security
interests and Uniform Commercial Code financing statements and the making of
notations on records or documents of title.
(f) The Security Interests are granted as security only and
shall not (i) transfer or in any way affect or modify, or relieve the Bank or
WFAL 2, or any of them, from any obligation to perform or satisfy, any term,
covenant, condition or agreement to be performed or satisfied by them or any of
them under or in connection with this Agreement, the Servicing Agreement or any
Existing Agreement to which it is a party or (ii) impose any obligation on
Financial Security, the Trustee or the Master Collateral Agent to perform or
observe any such term, covenant, condition or agreement or impose any liability
on Financial Security, the Trustee or the Master Collateral Agent for any act or
omission on its part relative thereto or for any breach of any
10
representation or warranty on its part contained therein or made in connection
therewith.
Section 2.02. Priority. The Bank and WFAL 2, and each of them, intend
the Security Interests granted hereunder to be prior to all other Liens in
respect of the Collateral, and the Bank and WFAL 2, and each of them, shall take
all actions necessary to obtain and maintain, in favor of the Master Collateral
Agent, a first lien on and a first priority, perfected security interest in the
Collateral other than in general intangibles and rights under insurance policies
not perfected by the means used to perfect the Security Interest in the items of
Collateral set forth on Schedule A hereto. The Master Collateral Agent shall
have all of the rights, remedies and recourse with respect to the Collateral
afforded a secured party under the Uniform Commercial Code of the State of
California and all other applicable law, in addition to, and not in limitation
of, the other rights, remedies and recourse granted to the Master Collateral
Agent by this Agreement, the Servicing Agreement, any Existing Agreement or any
other law relating to the creation and perfection of liens on, and security
interests in, the Collateral.
Section 2.03. Maintenance of Collateral.
(a) Safekeeping. The Master Collateral Agent agrees to
maintain the Collateral received by it and all records and documents relating
thereto at the office of the Master Collateral Agent or such other address as
may be approved by the Controlling Party. The Master Collateral Agent shall keep
or cause to be kept all Collateral and related documentation in its possession
separate and apart from all other property that it is holding in its possession
and from its own general assets and shall maintain accurate records pertaining
to the Collateral and the Collateral Account in such a manner as shall enable
the Master Collateral Agent and the Controlling Party to verify the accuracy of
such record-keeping. The Master Collateral Agent's books and records shall at
all times show that the Collateral is held by the Master Collateral Agent as
agent for the Trustee and the Collateral Agent and is not the property of the
Master Collateral Agent. The Master Collateral Agent will promptly report to
Financial Security, the Trustee, the Bank and WFAL 2 any failure on its part to
hold the Collateral as provided in this Section 2.03(a) and will promptly take
appropriate action to remedy any such failure.
(b) Access. The Master Collateral Agent shall permit Financial
Security or the Trustee, or their respective duly authorized representatives,
attorneys, auditors or designees, to inspect the Collateral in the possession of
or otherwise under the control of the Master Collateral Agent pursuant hereto at
such reasonable times during normal business hours as Financial Security or the
Trustee may reasonably request with prior written notice. Prior to a Default
such inspection shall be at the expense of Financial Security or the Trustee, as
the case may be, but after a Default such inspection shall be at the expense of
the Bank and WFAL 2.
(c) Servicing. The Bank and WFAL 2 agree that they shall cause
all Contracts pledged hereunder to be serviced by WFS Financial Inc. pursuant to
the WFS Sale and Servicing Agreement.
11
(d) Limitations on Investments and Collateral.
(i) Specified Account Funds, Spread Account Funds
and Holding Account Deposited Funds, as such terms are defined in the
Reinvestment Contracts, may be invested in Bank Reinvestment Contracts and WFAL
2 Reinvestment Contracts subject to the aggregate limitations and other
provisions set forth in Schedule A hereto, which may be amended from time to
time by a writing signed only by Financial Security, the Bank and WFAL 2.
(e) Liquidity. In order to ensure that WFAL 2 has sufficient
funds to satisfy its repayment obligations pursuant to Section 4 of each
Reinvestment Contract, the Bank hereby agrees to lend WFAL 2 sufficient
immediately available funds in order to enable WFAL 2 timely to perform its
obligations under each such Sections and any other payments obligations due by
WFAL 2 under any Reinvestment Contract, or otherwise to make available, or cause
to be made available, to WFAL 2 immediately available funds for such purpose.
Section 2.04. General Authority. The Bank and WFAL 2, and each of them,
hereby irrevocably appoint each of the Master Collateral Agent and the
Controlling Party its true and lawful attorney, with full power of substitution,
in the name of the Bank, WFAL 2, the Master Collateral Agent, Financial
Security, the Trustee or otherwise, for the sole use and benefit of the Master
Collateral Agent, the Trustee and Financial Security, but at the expense of the
Bank and WFAL 2, to the extent permitted by law, to exercise, at any time while
a Default has occurred and is continuing, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give
acquittance for any and all monies due or to become due upon
or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and
effectually as if the Master Collateral Agent were the
absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference
thereto;
provided that the Controlling Party or the Master Collateral Agent (as the case
may be) shall give the Bank and WFAL 2 such prior notice of the time and place
of sale of any of the Collateral as may be required pursuant to Section 6.01
hereof.
Section 2.05. Termination of Security Interests. On the Termination
Date, the rights, remedies, powers, duties, authority and obligations conferred
upon the Master Collateral Agent, Financial Security and the Trustee pursuant to
this Agreement in respect of the Collateral shall terminate and be of no further
force and effect and all rights, remedies, powers, duties, authority
12
and obligations of the Master Collateral Agent, Financial Security and the
Trustee with respect to such Collateral shall be automatically released. In
addition, the Trustee, the Master Collateral Agent and Financial Security agree
that, upon request by the Bank and WFAL 2, they, or any of them, shall execute
and Deliver such instruments as the Bank or WFAL 2 may reasonably request to
effectuate such release, and any such instruments so executed and Delivered
shall be fully binding on the Master Collateral Agent, Financial Security and
the Trustee.
ARTICLE III
THE COLLATERAL ACCOUNT
Section 3.01. Establishment. On the date of this Agreement, the Master
Collateral Agent shall establish a segregated, non-interest bearing trust
account, which shall be an Eligible Account under the control (as defined in
Article 8-106 of the UCC) of the Controlling Party, designated "Collateral
Account - Bankers Trust Company of California, N.A., as Master Collateral Agent
for Bankers Trust Company, as Trustee and as Collateral Agent (for the benefit
of Financial Security Assurance Inc.)" (the "Collateral Account"). The
Collateral Account shall be established at a banking office, located in the
State of California, of Bankers Trust Company of California, N.A. or another
depository institution acceptable to the Controlling Party. Funds in the
Collateral Account shall not be commingled with any other funds. The Controlling
Party shall have sole signature authority over the Collateral Account, and no
withdrawals of funds in the Collateral Account shall be made except as specified
in this Agreement.
Section 3.02. Delivery and Release of Collateral.
(a) Concurrently with each Delivery or other pledge of
Collateral hereunder, the Bank and WFAL 2 shall furnish to the Master Collateral
Agent, the Trustee and Financial Security an Opinion of Counsel to the effect
that the Master Collateral Agent has a valid, perfected first priority security
interest in such items of Collateral listed in the relevant Collateral Schedule,
and so Delivered or otherwise pledged hereunder, subject to customary
exceptions.
(b) On the tenth (10th) Business Day of each calendar month,
the Bank and WFAL 2 shall Deliver to the Master Collateral Agent, the Trustee
and Financial Security the Monthly Statement, signed by an Authorized Officer
each of the Bank and WFAL 2, certifying the Aggregate Collateral Value of
Collateral Delivered by it to the Master Collateral Agent and held by the Master
Collateral Agent as of the last day of the preceding calendar month and the
Aggregate Commingled Account Balance required to be maintained as of such day.
If the Aggregate Collateral Value so certified is less than the Aggregate
Commingled Account Balance as so certified, either or both of the Bank and WFAL
2 shall, together with such certificate, Deliver additional Collateral in an
amount necessary to make the Aggregate Collateral Value (after giving effect to
such Delivery) at least equal to the Aggregate Commingled Account Balance.
(c) The Master Collateral Agent may release items of
Collateral (i) to the Servicer in connection with the Servicer's performance of
its duties pursuant to Section 7.02 hereof and (ii) to the Bank and WFAL 2, in
the
13
capacity of each as a pledgor hereunder, in connection with the substitution of
new Collateral against Delivery by the Bank and/or WFAL 2 to the Master
Collateral Agent of substitute Collateral in an amount necessary to make the
Aggregate Collateral Value (after giving effect to such substitution) at least
equal to the Aggregate Collateral Value prior to such substitution.
(d) On any date on which the Master Collateral Agent shall
have received an FSA Notice to the effect that a Default has occurred and is
continuing, and for as long as stated in such FSA Notice, no Collateral shall be
released to the Bank, WFAL 2 or any other Person, except as specified in
Sections 3.03(d) and/or 6.01 hereof.
(e) Pending its maturity or disposition hereunder, all
Collateral consisting of Possessory Collateral shall be held, pending maturity
or disposition, solely by the Master Collateral Agent; all Collateral consisting
of Security Entitlements shall be continuously maintained by the Master
Collateral Agent, pending maturity or disposition hereunder, through continued
book-entry registration of such Collateral as described in clause (ii) of the
definition of "Delivery"; and all Collateral consisting of Uncertificated
Securities shall be maintained pending its maturity or deposition hereunder,
through continued registration of the ownership of such Security as described in
Clause (iii) of the definition of "Delivery".
(f) All Collateral consisting of chattel paper or general
intangibles (including the WFS Sale and Servicing Agreement) shall be duly
perfected by the filing of financing statements with appropriate filing officer,
as set forth in the Opinion of Counsel required to be delivered pursuant to
subsection (a) above.
Section 3.03. Collateral Account Funds.
(a) Payments on the Collateral received by the Servicer shall
be paid over to the Bank or WFAL 2 as pledgor of such Collateral free of the
lien created by this Agreement until the Servicer shall have received an FSA
Notice specifying that a Default has occurred and is continuing. After receipt
of such an FSA Notice, the Servicer shall transfer to the Master Collateral
Agent any moneys received by it on or in respect of the Collateral for deposit
in the Collateral Account.
(b) Following delivery of an FSA Notice, all payments made to
the Master Collateral Agent on or otherwise received by the Master Collateral
Agent in respect of any Collateral shall be deposited on the date of receipt by
the Master Collateral Agent in the Collateral Account. Any income received by
the Master Collateral Agent with respect to the balance from time to time
credited to the Collateral Account, including any interest or capital gains on
investments, shall be deposited in the Collateral Account. All right, title and
interest in and to the funds on deposit from time to time in the Collateral
Account, together with any investments made pursuant to paragraph (c) below,
shall vest in the Master Collateral Agent, shall constitute part of the
Collateral hereunder and shall not constitute payment of any Master Secured
Obligations until applied as specified herein.
(c) Amounts, if any, on deposit in the Collateral Account
shall be invested and re-invested from time to time in such investments as shall
be
14
specified by instructions (which may include, subject to the other provisions
hereof, general standing instructions) given to the Master Collateral Agent by
the Controlling Party; provided that if the Master Collateral Agent receives an
FSA Notice, the Master Collateral Agent shall, if instructed by the Controlling
Party, liquidate any such investments and apply or cause to be applied the
proceeds thereof to the payment of the Master Secured Obligations in the manner
specified in Section 3.03(c) hereof. If no such instruction with respect to
investment of any portion of the Collateral Account is received by the Master
Collateral Agent, no investment shall be made of such portion and the Master
Collateral Agent shall not be liable for any resulting absence of income.
(d) On each Business Day specified by the Controlling Party
after delivery of an FSA Notice, the Master Collateral Agent shall withdraw from
the Collateral Account an amount (up to the balance therein) that is sufficient
to pay to Financial Security or the Trustee all amounts constituting Master
Secured Obligations owing to Financial Security or the Trustee, as the case may
be (such payments to be applied to reduce the Master Secured Obligations in such
manner as the Controlling Party shall specify). All amounts or investments, if
any, remaining in the Collateral Account on any date after giving effect to the
distribution required to be made on such date pursuant to this paragraph shall
remain on deposit in the Collateral Account until required or permitted to be
withdrawn therefrom pursuant to the provisions of this Section.
Section 3.04. General Provisions Regarding the Accounts..
(a) Promptly upon the establishment (initially or upon any
relocation) of the Collateral Account hereunder, the Master Collateral Agent
shall advise the Bank, WFAL 2, Financial Security and the Trustee in writing of
the name and address of the depository institution at which such Collateral
Account was established (if not Bankers Trust Company of California, N.A. or any
successor Master Collateral Agent in its commercial banking capacity), the name
of the officer of the depository institution who is responsible for overseeing
the Collateral Account, the Collateral Account number and the individuals whose
names appear on the signature cards for the Collateral Account. The Bank and
WFAL 2 shall cause such depository institution to execute a written agreement,
in form and substance satisfactory to the Controlling Party, waiving, in each
case to the extent permitted under applicable law, (i) any banker's or other
statutory or similar Lien, and (ii) any right of setoff or other similar right
under applicable law with respect to the Collateral Account and agreeing to
notify the Bank, WFAL 2, the Master Collateral Agent, Financial Security and the
Trustee of any charge or claim against or with respect to the Collateral
Account. The Master Collateral Agent shall give the Bank, WFAL 2, Financial
Security and the Trustee at least ten (10) Business Days' prior written notice
of any change in the location of the Collateral Account or in any related
account information. Anything herein to the contrary notwithstanding, unless
otherwise consented to by the Controlling Party in writing, the Master
Collateral Agent shall have no right to change the location of the Collateral
Account.
(b) If at any time the Collateral Account ceases to be an
Eligible Account, the Master Collateral Agent shall establish, in accordance
with paragraph (a) of this Section, a successor Collateral Account thereto which
shall be an Eligible Account at Bankers Trust Company of California, N.A. or at
another depository institution acceptable to the Controlling Party.
15
(c) Any investment of funds in the Collateral Account shall be
made in accordance with the provisions of Section 3.02(c) hereof in the name of
the Master Collateral Agent (in its capacity as such). Subject to the other
provisions hereof, the Master Collateral Agent shall have sole control over each
such investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the
Master Collateral Agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Master Collateral Agent in
a manner which complies with Article II and this Section.
(d) Subject to Section 4.03 hereof, the Master Collateral
Agent shall not be liable by reason of any insufficiency in the Collateral
Account resulting from any loss on any investment included therein except for
losses attributable to the Master Collateral Agent's failure to make payments on
investments as to which the Master Collateral Agent, in its commercial capacity,
is obligated.
Section 3.05. FSA Notices. The Controlling Party may at any time give
notice (an "FSA Notice") to the Master Collateral Agent stating that (i) a
Default has occurred and is continuing or (ii) the Controlling Party has,
pursuant to any Existing Agreement, terminated the status of a Reinvestment
Contract as an eligible investment under a Trust Agreement or other Existing
Agreement.
Section 3.06. Representations by the Bank and WFAL 2. The Bank and WFAL
2 hereby jointly and severally represent and warrant to the other parties
hereto, as of the date hereof and as of the Delivery of any Collateral
hereunder, as follows:
(a) Immediately prior to Delivery or other pledge hereunder of
any item of Collateral, the Bank or WFAL 2 shall have owned such Collateral free
and clear of all liens, adverse claims or rights of others of any nature
whatsoever.
(b) Upon Delivery or other pledge of Collateral hereunder, the
Master Collateral Agent will have a valid perfected first priority security
interest in such Collateral.
16
ARTICLE IV
THE MASTER COLLATERAL AGENT
Section 4.01. Appointment and Powers. (a) Subject to the terms and
conditions hereof, the Collateral Agent, the Trustee and the Depositor in their
capacities as pledgees hereunder hereby appoint Bankers Trust Company of
California, N.A. as the Master Collateral Agent with respect to the Collateral,
and Bankers Trust Company of California, N.A. hereby accepts such appointment
and agrees to act as Master Collateral Agent hereunder. The Collateral Agent,
the Trustee and the Depositor in their capacities as pledgees hereunder hereby
authorize the Master Collateral Agent to take such action on their behalf, and
to exercise such rights, remedies, powers and privileges hereunder as the
Controlling Party may direct and as are specifically authorized to be exercised
by the Master Collateral Agent by the terms hereof, together with such actions,
rights, remedies, powers and privileges as are reasonably incidental thereto.
The Master Collateral Agent shall execute the Servicing Agreement and shall act
upon and in compliance with the written instructions of the Controlling Party
delivered pursuant to this Agreement promptly following receipt of such written
instructions.
(b) The Master Collateral Agent is, and shall at all times
during the term of this Agreement be, a Securities Intermediary for Financial
Security.
(c) The Master Collateral Agent is eligible to maintain, and
does maintain, and will continue to be eligible to maintain and will maintain,
one or more accounts in its name (or the name of a nominee) with each Clearing
Corporation through which Securities or Security Entitlements constituting
Collateral are held.
Section 4.02. Performance of Duties. The Master Collateral Agent may
perform any of its duties hereunder by or through agents and employees, shall be
entitled to retain counsel and act in reliance upon the written advice of such
counsel concerning all matters pertaining to the agencies hereby created or its
duties hereunder and shall not be liable for actions taken, or omitted to be
taken, in good faith reliance upon the opinion of counsel selected by it. The
duties of the Master Collateral Agent shall be mechanical and administrative in
nature. The Master Collateral Agent shall not have by reason of this Agreement a
fiduciary relationship. Nothing in this Agreement, express or implied, is
intended to or shall be construed as to impose upon the Master Collateral Agent
any obligations in respect of this Agreement except as expressly set forth
herein.
Section 4.03. Limitation on Liability; Indemnification. Neither the
Master Collateral Agent nor any of its directors, officers or employees, shall
be liable for any action taken or omitted to be taken by it or them hereunder,
or in connection herewith, except that the Master Collateral Agent shall be
liable for its own gross negligence or willful misconduct; nor shall the Master
Collateral Agent be responsible for the validity, effectiveness, value,
sufficiency or enforceability against the Bank or WFAL 2 of this Agreement or
any of the Collateral (or any part thereof).
17
The Bank and WFAL 2 hereby jointly and severally agree to
indemnify and hold the Master Collateral Agent harmless from and against all
damage, liability and expense (including reasonable attorneys' fees) arising out
of or in connection with this Agreement, except to the extent such damage,
liability or expense arises out of the Master Collateral Agent's negligence,
willful misconduct or breach of the obligations imposed hereby on the Master
Collateral Agent.
Section 4.04. Reliance upon Documents. Subject to the provisions of
Section 4.08 hereof, in the absence of gross negligence or willful misconduct on
its part, the Master Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person and
shall have no liability in acting, or omitting to act, where such action or
omission to act is in reasonable reliance upon any statement or opinion
contained in any such document or instrument.
Section 4.05. Successor Master Collateral Agent. The Master Collateral
Agent acting hereunder at any time may resign by giving not less than ninety
(90) days' prior written notice in writing to the Bank, WFAL 2, the Trustee and
Financial Security. If the Master Collateral Agent is also a Trustee and, as
such, determines that it has a conflicting interest on account of its acting as
Master Collateral Agent, the Master Collateral Agent shall eliminate such
conflicting interest by resigning as Master Collateral Agent hereunder rather
than resigning as such Trustee. The Controlling Party shall appoint a successor
to the Master Collateral Agent upon any such resignation by an instrument of
substitution complying with the requirements of applicable law, or, in the
absence of any such requirements, without formality other than appointment and
designation in writing, a copy of which instrument or writing shall be sent to
the Bank and WFAL 2; provided, however, that the validity of any such
appointment shall not be impaired or affected by any failure to give any such
notice to the Bank and WFAL 2 or by any defect therein. Notwithstanding the
foregoing, prior to the receipt by the Bank and WFAL 2 of an FSA Notice, such
appointment shall be subject to the consent of the Bank and WFAL 2, which
consent shall not be unreasonably withheld. Upon the making and acceptance of
such appointment, the execution and delivery by such successor Master Collateral
Agent of a ratifying instrument pursuant to which such successor Master
Collateral Agent agrees to assume the duties and obligations imposed on the
Master Collateral Agent by the terms of this Agreement, and the delivery to such
successor Master Collateral Agent of the Collateral and related documents then
held by the retiring Master Collateral Agent, such successor Master Collateral
Agent shall thereupon succeed to and become vested with all the estate, rights,
powers, remedies, privileges, immunities, indemnities, duties and obligations
hereby granted to or conferred or imposed upon the Master Collateral Agent named
herein, and one such appointment and designation shall not exhaust the right to
appoint and designate further successor Master Collateral Agents hereunder. No
Master Collateral Agent shall be discharged from its duties or obligations
hereunder until the Collateral and related documents then held by such Master
Collateral Agent shall have been transferred and delivered to the successor
Master Collateral Agent and such retiring Master Collateral Agent shall have
executed and delivered to the successor Master Collateral Agent appropriate
instruments establishing the successor Master Collateral Agent as the record
holder of all liens and security interests in favor of the Trustee and the
Collateral Agent in the Collateral
18
and transferring to such successor Master Collateral Agent all power given
pursuant to this Agreement to act as attorney-in-fact of the Bank and WFAL 2,
and each of them, for purposes of this Agreement. Each such successor Master
Collateral Agent shall provide the Bank, WFAL 2 and Financial Security with its
address, and its telephone and telecopier numbers, to be used for purposes of
Section 7.05 hereof, in a notice complying with the terms of said Section.
Section 4.06. Representations and Warranties of Bankers Trust Company
of California, N.A.. Bankers Trust Company of California, N.A. represents and
warrants to the Bank, WFAL 2, the Trustee and Financial Security as follows:
(a) Bankers Trust Company of California, N.A. is a national
banking association, duly organized, validly existing and in good standing.
(b) Bankers Trust Company of California, N.A. has full power,
authority and legal right to execute, deliver and perform this Agreement and the
Servicing Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement and the Servicing
Agreement.
(c) This Agreement and the Servicing Agreement constitute
valid and binding obligations of Bankers Trust Company of California, N.A. in
its capacity as Master Collateral Agent enforceable against it in accordance
with their respective terms.
(d) The execution and delivery by Bankers Trust Company of
California, N.A. of this Agreement and the Servicing Agreement and the
performance by it of its obligations hereunder and thereunder, will not violate
any law, rule or regulation or any agreement, order or decree binding on it or
its properties.
Section 4.07. Waiver of Setoffs. The Master Collateral Agent hereby
expressly waives any and all rights of setoff that the Master Collateral Agent
may otherwise at any time have under applicable law with respect to the
Collateral Account and agrees that amounts in the Collateral Account shall at
all times be held and applied solely in accordance with the provisions of this
Agreement.
Section 4.08. Control by the Controlling Party. The Master Collateral
Agent shall comply with notices and instructions given by the Bank or WFAL 2
only if expressly contemplated hereby or if accompanied by the written consent
of the Controlling Party, except that if any Default shall have occurred and be
continuing, the Master Collateral Agent shall act upon and comply with notices
and instructions given by the Controlling Party alone in the place and stead of
the Bank or WFAL 2. In the absence of any written communication by the
Controlling Party to the Master Collateral Agent to the effect that a Default
has occurred and is continuing, the Master Collateral Agent may assume that no
Default has occurred and is continuing. The Master Collateral Agent shall have
no duty to verify whether or not a Default has occurred or is continuing or the
facts stated in any FSA Notice. Any written communication by the Controlling
Party to the Master Collateral Agent specifying the amount of any obligations
owing to Financial Security or the Trustee shall be conclusive evidence of such
amount, notwithstanding any notice to the contrary received by the Master
Collateral Agent from the Bank, WFAL 2 or any other Person.
19
ARTICLE V
COVENANTS OF THE BANK AND WFAL 2
Section 5.01. Preservation of Collateral. Subject to the rights, powers
and authorities granted to the Master Collateral Agent, Financial Security, and
the Trustee in this Agreement, the Bank and WFAL 2 shall take such action as is
necessary and proper with respect to the Collateral in order to preserve,
maintain and service such Collateral and to cause (subject to the rights of the
Controlling Party) the Master Collateral Agent to perform its obligations with
respect to such Collateral as provided herein. The Bank and WFAL 2, and each of
them, will do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such instruments of transfer or take such other
steps or actions as may be necessary, or required by the Controlling Party, to
perfect the Security Interests granted hereunder in (a) prior to delivery of an
FSA Notice to the Master Collateral Agent, the items of Collateral referenced in
Schedule A hereto and (b) after delivery of an FSA Notice to the Master
Collateral Agent, all Collateral, to ensure that such Security Interests rank
prior to all other Liens and to preserve the priority of such Security Interests
and the validity and enforceability thereof. Upon any Delivery or substitution
of Collateral, the Bank and/or WFAL 2, as pledgor, shall be obligated to create
for the benefit of the Master Collateral Agent a valid first Lien on, and valid
and perfected, first priority security interest in, (a) prior to delivery of an
FSA Notice to the Master Collateral Agent, the items of Collateral referenced in
Schedule A hereto and (b) after delivery of an FSA Notice to the Master
Collateral Agent, all Collateral so delivered and to deliver such Collateral to
the Master Collateral Agent, free and clear of any other Lien, together with
satisfactory assurances thereof, and to pay any reasonable costs incurred by the
Controlling Party or the Master Collateral Agent (including its agents) or
otherwise in connection with such Delivery.
Section 5.02. Opinions as to Collateral. On the date of delivery of the
Monthly Statement following each January and July, commencing with such date
following January 1999, the Bank and WFAL 2 shall, at their own cost and
expense, furnish to Financial Security, the Trustee and the Master Collateral
Agent an Opinion of Counsel either stating that, in the opinion of such counsel,
(a) such actions have been taken as are necessary under California law to
perfect, maintain and protect the lien and security interest of the Master
Collateral Agent with respect to the items of Collateral set forth on Schedule A
that have been granted to the Master Collateral Agent as of the last Business
Day of the relevant January or July under California law (and other applicable
law) against all creditors of and purchasers from the Bank or WFAL 2, as the
case may be, and reciting the details of such action, or (b) no action is
necessary to maintain such perfected lien and security interest. Such Opinion of
Counsel shall describe each execution and filing of any documents and
instruments and such other actions as will, in the opinion of such counsel, be
required to perfect, maintain and protect the lien and security interest of the
Master Collateral Agent, on behalf of the Trustee and the Collateral Agent with
respect to such Collateral under California law (and other applicable law)
against all creditors of and purchasers
20
from the Bank or WFAL 2, as the case may be, for a period, specified in such
Opinion, continuing until a date not earlier than eighteen months from the date
of such Opinion.
Section 5.03. Notices. In the event the Bank or WFAL 2 acquires
knowledge of the occurrence and continuance of any Default, the Bank or WFAL 2,
as the case may be, shall promptly give notice thereof to the Master Collateral
Agent, the Trustee and Financial Security.
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of Assets.
The Bank and WFAL 2 covenant, to the fullest extent permitted by applicable law,
that they, and each of them, will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Agreement or any sale of the Collateral or any part thereof in accordance with
this Agreement or the possession thereof by any purchaser at any sale, pursuant
to and in accordance with Section 6.01 hereof; and the Bank and WFAL 2, to the
fullest extent permitted by applicable law, for themselves and all who may claim
under them, or any of them, hereby waive the benefit of all such laws, and
covenant that they will not hinder, delay or impede the execution of any power
herein granted to the Master Collateral Agent, but will suffer and permit the
execution of every such power as though no such law had been enacted. The Bank
and WFAL 2, for themselves and all who may claim under them, waive, to the
fullest extent permitted by applicable law, all right to have the Collateral
marshalled upon any foreclosure or other disposition thereof.
Section 5.05. Noninterference, etc.. The Bank and WFAL 2 shall not take
any action, or fail to take any action, if such action or failure to take action
will interfere with the enforcement of any rights under this Agreement, the
Servicing Agreement or the Existing Agreements.
Section 5.06. Changes. Neither the Bank nor WFAL 2 shall change its
name unless it shall have given Financial Security, the Trustee and the Master
Collateral Agent at least sixty (60) days' prior written notice thereof. The
Bank or WFAL 2, as the case may be, shall give Financial Security, the Trustee
and the Master Collateral Agent at least sixty (60) days' prior written notice
of any relocation of its principal executive office. If the Bank or WFAL 2
relocates (i) its principal executive office or principal place of business from
that set forth in Section 8.05 hereof or (ii) the locations where it keeps or
holds any Collateral or any records relating thereto from that set forth in
Section 8.05 hereof, the Bank or WFAL 2, as the case may be, shall give prior
notice thereof to Financial Security, the Trustee and the Master Collateral
Agent.
21
ARTICLE VI
REMEDIES UPON DEFAULT
Section 6.01. Rights and Remedies Upon Default.
(a) In addition to and not in limitation of the rights
otherwise provided to the Controlling Party pursuant to this Agreement, to the
fullest extent permitted by applicable law, if a Default has occurred and is
continuing, the Controlling Party in its discretion may, or may direct the
Master Collateral Agent to, exercise the following rights, privileges and
remedies:
(i) Collection of the Collateral. The Master Collateral
Agent shall have the right to collect all proceeds of the Collateral, to pay all
expenses of such collection, including the reasonable expenses and compensation
of the Master Collateral Agent, its agents and attorneys, and to apply the
remainder of the moneys so received as provided herein.
(ii) Sale of Collateral. The Master Collateral Agent may
sell, or cause to be sold, the Collateral or any part thereof or interest
therein, at public auction to the highest bidder for cash or at private sale or
auction with or without demand, advertisement or notice of the date, time or
place of sale or any adjournment thereof, upon such terms as the Controlling
Party may approve, and upon such sale the Master Collateral Agent shall make and
deliver to the purchaser or purchasers an appropriate instrument or instruments
of transfer. The Master Collateral Agent is hereby irrevocably appointed the
true and lawful attorney of the Bank and WFAL 2, and each of them, in its name
and stead, to make all necessary transfers of property thus sold; and for that
purpose it may execute all necessary instruments of transfer, and may substitute
one or more Persons with like power, the Bank and WFAL 2, and each of them,
hereby ratifying and confirming all that its said attorney, or such substitute
or substitutes, shall lawfully do by virtue hereof. Nevertheless, if so
requested by the Master Collateral Agent or any purchaser of the Collateral or
any part thereof, the Bank and WFAL 2, and each of them, shall ratify and
confirm any such sale or transfer by executing and delivering to the Master
Collateral Agent or such purchaser all proper instruments of transfer and
releases as may be designated in any such request. The Master Collateral Agent
may proceed at law or in equity to foreclose the lien of this Agreement against
all or any part of the Collateral and to have the same sold under the judgment
or decree of a court having jurisdiction or as otherwise may be required or
permitted by law. Upon any such sale, whether made under the power of sale
hereby given or by virtue of judicial proceedings, the Controlling Party may bid
for and purchase the Collateral or any part thereof and, upon compliance with
the terms of such sale, may hold, retain, possess or dispose of such property in
its or their own absolute right without accountability. Upon any sale, whether
made under the power of sale hereby given or by virtue of judicial proceedings,
a receipt of the Master Collateral Agent, or of the officer making such sale
under judicial proceedings, shall be a sufficient discharge to the purchaser or
purchasers at such sale for its or their purchase money, and such purchaser or
purchasers shall not be obliged to see to the application thereof. Any such
sale, whether under the power of sale hereby given or by virtue of judicial
proceedings, shall bind the Master Collateral Agent, the Bank and WFAL 2, shall
operate to divest all right, title and interest whatsoever, either at law or in
equity, of each of them in and to the property sold, and shall be a perpetual
bar, both at law and in equity, against each of them and their successors and
assigns, and against any and all Persons claiming through or under them.
22
(iii) Other Actions. The Master Collateral Agent shall
have the right to cause any other action permitted at law or in equity to be
initiated and prosecuted to enforce this Agreement and any rights granted by
virtue of the pledge of the Collateral hereunder.
(b) In the event that the Bank or WFAL 2 shall default in the
performance or observance of any covenant or agreement contained herein, the
Master Collateral Agent shall have the right to take any action or initiate any
proceeding at law or equity available to it to enforce the terms of this
Agreement.
Section 6.02. Restoration of Rights and Remedies. If the Master
Collateral Agent has instituted any proceeding to enforce any right or remedy
under this Agreement, and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Master Collateral Agent,
then and in every such case the Bank, WFAL 2 and the Master Collateral Agent
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Controlling Party shall continue as though no such
proceeding had been instituted.
Section 6.03. No Remedy Exclusive. No right or remedy herein conferred
upon or reserved to the Master Collateral Agent or the Controlling Party is
intended to be exclusive of any other right or remedy, and every right or remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law, in
equity or otherwise, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the
Controlling Party, and the exercise of or the beginning of the exercise of any
right or power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy.
ARTICLE VII
CUSTODY
Section 7.01. Collateral Schedule; Collateral Files. On each date on
which the Bank and/or WFAL 2 pledge items of Collateral to the Master Collateral
Agent hereunder (each such date, a "Pledge Date"), the Bank and WFAL 2 shall
deliver to the Master Collateral Agent, the Trustee and Financial Security a
schedule of Collateral (each, a "Collateral Schedule") which, as to each item of
Collateral, sets forth, to the extent applicable, the obligor's name, the loan
or other identifying number, the interest rate, the original principal balance,
the outstanding principal balance, the origination or issue date, the scheduled
monthly principal and interest payment and the maturity date.
On each Pledge Date, the Bank and WFAL 2 shall deliver to the
Master Collateral Agent the following documents with respect to each Mortgage
Loan pledged on such date to the Master Collateral Agent:
23
a. Original mortgage note endorsed or assigned
without recourse to Bankers Trust Company of
California, N.A., as Master Collateral Agent;
b. Original recorded mortgage or deed of trust or
certified copy thereof; and
24
c. Original assignment, in recordable form, of
mortgage or deed of trust (which may be a blanket
assignment for all Mortgage Loans) to Bankers Trust
Company of California, N.A., as Master Collateral
Agent.
The Bank and WFAL 2 jointly and severally represent, warrant
and covenant to the Master Collateral Agent, the Trustee and Financial Security
that, with respect to each Mortgage Loan pledged to the Master Collateral Agent
hereunder, the Bank or WFAL 2 has (i) originals of all assumption and
modification agreements related thereto, (ii) evidence of homeowners insurance
on the related mortgaged property, and (iii) a title insurance policy.
Upon receipt by the Bank and WFAL 2 of an FSA Notice stating
that a Default has occurred and is continuing, the Bank and WFAL 2 shall deliver
to the Master Collateral Agent all documents and instruments specified in the
immediately preceding paragraph and such other documents and instruments with
respect to each Mortgage Loan, Contract, Federal Agency Security or other item
of Collateral pledged hereunder to the Master Collateral Agent in which a
security interest may be perfected by possession.
The documents and instruments delivered in respect of each
Mortgage Loan, Contract, Federal Agency Security or other item of Collateral are
herein referred to as the "Collateral File". The Master Collateral Agent shall
segregate and maintain continuous custody of all documents constituting each
Collateral File in secure and fireproof facilities within the State of
California in accordance with customary standards for such custody.
Section 7.02. Release of Documents to Servicer. In the event that a
specific document relating to an item of Collateral is required to be obtained
by the Servicer because such Collateral has been paid in full and is to be
released by the Servicer to the related obligor or to facilitate enforcement and
collection procedures with respect to such Collateral, the Servicer shall be
entitled to obtain such document by submitting to the Master Collateral Agent
(with copies to the Trustee and Financial Security) a written request therefor,
indicating and confirming that it will hold such document in trust for the
benefit of the Master Collateral Agent until such time as it is released to the
related obligor upon full payment or is otherwise returned to the Master
Collateral Agent. Upon its receipt of an FSA Notice stating that a Default has
occurred and is continuing, the Master Collateral Agent shall not release such
document to the Servicer until it has received the written authorization from
the Controlling Party.
Section 7.03. Insurance. The Master Collateral Agent shall, at its own
expense, maintain at all times during the existence of this Agreement and keep
in full force and effect (a) fidelity insurance, (b) theft of documents
insurance and (c) forgery insurance. All such insurance shall be in amounts,
with standard coverage and subject to deductibles, as are customary for
insurance typically maintained by institutions which act as custodian in similar
transactions.
Section 7.04. Master Collateral Agent's Interest in Collateral. By
execution of this Agreement, the Master Collateral Agent warrants and covenants
that it currently does not hold, and during the existence of this Agreement will
not hold, any adverse interest, by way of security
25
or otherwise, in any Collateral and hereby waives and releases any such interest
which it may have or acquire in the future. The Master Collateral Agent
expressly waives (i) any lien which might arise in connection with unpaid fees
or any lien which might arise in connection with any other claims against any
party hereto and (ii) any possessory lien, claim or right of set-off with
respect to any Collateral.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Further Assurances. Each of the Bank, WFAL 2 and the
Master Collateral Agent shall take such action and deliver such instruments, in
addition to the actions and instruments specifically provided for herein, as may
be reasonably requested or required by the Controlling Party to effectuate the
purpose or provisions of this Agreement or to confirm or perfect any transaction
described or contemplated herein. The parties hereto will make any changes
required by the Office of Thrift Supervision if mutually agreed by the parties
hereto and if there is no such mutual agreement, the Bank, WFAL 2 and the
Controlling Party agree to terminate this Agreement.
Section 8.02. Waiver. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and stop
such party from thereafter enforcing such provision, right, remedy or option if
such waiver is given in writing and only as to the specific instance and for the
specific purpose for which such waiver was given. The failure or refusal of any
party hereto to insist in any one or more instances, or in a course of dealing,
upon the strict performance of any of the terms or provisions of this Agreement
by any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or relinquishment of any such term
or provision, but the same shall continue in full force and effect.
Section 8.03. Amendments. This Agreement may be amended, changed,
modified, altered or terminated only by written instrument or written
instruments signed by each of the parties hereto; provided that the consent of
the Master Collateral Agent shall not be withheld or delayed with respect to any
amendment that does not adversely affect the Master Collateral Agent and,
provided further that Schedule A hereto may be amended or replaced as set forth
in Section 2.03 (d) hereof. The Original Agreement, as amended and restated
hereby, shall remain in full force and effect.
Section 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
26
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Master Collateral Agent or by the Controlling
Party hereunder is unavailable or unenforceable shall not affect in any way the
ability of the Master Collateral Agent or the Controlling Party to pursue any
other remedy available to it.
Section 8.05. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Bank or the Bank as Servicer:
Western Financial Bank
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Depositor:
WFS Financial Auto Loans, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to WFAL 2:
WFS Financial Auto Loans 2, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to WFS as Servicer:
WFS Financial Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
27
(v) If to Financial Security:
Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Surveillance Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(vi) If to the Trustee or the Collateral Agent:
Bankers Trust Company
Four Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group/
Western Financial Master Collateral
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vii) If to the Master Collateral Agent:
Bankers Trust Company of California, N.A.
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Western Financial Collateral
Assignment
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication) the Controlling Party and the Master Collateral Agent.
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 8.06. Term of this Agreement. This Agreement shall take effect
on the date hereof and shall continue in effect until the Termination Date. On
the Termination Date, this Agreement shall terminate, all obligations of the
parties hereunder shall cease and terminate and the Collateral, if any, held
hereunder and not to be used or applied in discharge of any obligations of the
Bank or WFAL 2 in respect of the Master Secured Obligations or otherwise under
this Agreement, shall be released to and in favor of the Bank or WFAL 2, as
pledgor as the case may be.
Section 8.07. Assignments; Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the
Bank and WFAL 2 and shall (i) be binding upon the Bank and WFAL 2 and their
respective successors and assigns, and (ii) inure to the benefit of and be
enforceable by Financial Security, the Trustee and the Master Collateral Agent,
and by their respective successors and assigns. Neither the Bank nor WFAL 2 may
assign this Agreement or delegate any of its duties hereunder, without the prior
written consent of the Controlling Party. Any assignment made in violation of
this Agreement shall be null and void.
28
(b) Financial Security shall have the right to give
participations in its rights under this Agreement and to enter into contracts of
reinsurance with respect to any Policy issued in connection with any of the
Trusts upon such terms and conditions as Financial Security may in its
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve Financial Security of its
obligations hereunder or under any such Policy.
(c) In addition, Financial Security shall be entitled to
assign or pledge to any bank or other lender providing liquidity or credit with
respect to any Trust or the obligations of Financial Security in connection
therewith any rights of Financial Security under this Agreement, the Servicing
Agreement or the Existing Agreements or with respect to any real or personal
property or other interests pledged to Financial Security, or in which Financial
Security has a security interest, in connection with any Trust.
(d) Except as provided herein with respect to participants
and, nothing in this Agreement shall confer any right, remedy or claim, express
or implied, upon any Person, any owner or other holder of any security or other
investment covered by any Policy, other than Financial Security, against the
Bank or WFAL 2, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of the
parties hereto and their successors and permitted assigns.
Section 8.08. Consent of the Controlling Party. In the event that the
Controlling Party's consent is required under the terms hereof, it is understood
and agreed that, except as otherwise provided expressly herein, the
determination whether to grant or withhold such consent shall be made solely by
the Controlling Party in its sole discretion.
Section 8.09. Trial by Jury Waived. EACH OF THE PARTIES HERETO WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE SERVICING AGREEMENT, ANY OF THE EXISTING
AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER. EACH
OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THIS WAIVER.
Section 8.10. Counterparts. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 8.11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
29
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date set forth on the first page hereof.
WESTERN FINANCIAL BANK
By:
------------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President, Treasurer
WFS FINANCIAL AUTO LOANS, INC.
By:
------------------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS 2, INC.
By:
------------------------------------------
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
BANKERS TRUST COMPANY, as Trustee
and Collateral Agent
By:
------------------------------------------
Name:
Title:
30
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Master Collateral Agent
By:
------------------------------------------
Name:
Title:
31
SECOND AMENDED AND RESTATED
MASTER COLLATERAL ASSIGNMENT AGREEMENT
dated as of September 30, 1993
as amended and restated
dated as of June 1, 1995
and as further amended and restated
dated as of November 1, 1998
among
WESTERN FINANCIAL BANK
WFS FINANCIAL AUTO LOANS, INC.,
WFS FINANCIAL AUTO LOANS 2, INC.,
FINANCIAL SECURITY ASSURANCE INC.,
BANKERS TRUST COMPANY,
as Trustee and Collateral Agent
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Master Collateral Agent
32
Schedule A - Collateral Guidelines
Schedule B - Form of Monthly Collateral Statement