EXHIBIT 10.7
EXECUTION COPY
FOURTH
AMENDED AND RESTATED
MASTER COLLATERAL ASSIGNMENT AGREEMENT
THIS FOURTH AMENDED AND RESTATED MASTER COLLATERAL ASSIGNMENT
AGREEMENT dated as of September 1, 2002 (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, as amended and restated as of
November 1, 1998 (the "Second Amended and Restated Agreement"), as amended and
restated as of March 1, 2000 (the "Third Amended and Restated 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.
("WFAL"), WFS FUNDING, INC., a California corporation ("WFS Funding"), WFS
RECEIVABLES CORPORATION, a California corporation ("WFSRC") and WFS RECEIVABLES
CORPORATION 2, a California corporation ("WFSRC2"), WFS FINANCIAL AUTO LOANS 2,
INC., a California corporation formerly known as Western Financial Auto Loans 2,
Inc. ("WFAL2"), FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company (including its successors and assigns, "Financial Security"), DEUTSCHE
BANK TRUST COMPANY AMERICAS (formerly known as Bankers Trust Company), a New
York banking corporation, in its capacity as indenture trustee (the "Indenture
Trustee") under each of the Indentures (as defined in Section 1.01 hereof) and
in its capacity as collateral agent (the "Collateral Agent") under each of the
Insurance Agreements (as defined in Section 1.01 hereof) and DEUTSCHE BANK
NATIONAL TRUST COMPANY (formerly known as Bankers Trust Company of California,
N.A.) as Master Collateral Agent (as defined in Section 1.01 hereof).
Capitalized terms used without definition have the meanings set forth in Article
I hereof.
R E C I T A L S
The Bank and WFAL2 are, and may in the future be, obligors under
certain reinvestment contracts (or RICs). To the extent provided in any RIC, the
Bank and/or WFAL2, as applicable, has received and/or will receive funds
credited to (i) the Collection Account, the Note Distribution Account and/or the
Certificate Distribution Account, (ii) the Spread Account and/or (iii) the
Holding Account for investment in such RIC.
The Bank, WFAL2 and Financial Security have entered into a Master
RIC Reimbursement Agreement to provide for, among other things, the
reimbursement of any payments that may be made under Policies issued by
Financial Security with respect to the RICs.
The parties hereto are entering into this Agreement in order to
secure the full and punctual payment of all amounts when due by the Bank or
WFAL2 under, and the performance by the Bank and WFAL2 of all of their other
obligations pursuant to, the RICs and the Master RIC Reimbursement Agreement by
means of the pledge of Collateral hereunder by the Bank and
WFAL2 to the Master Collateral Agent on behalf of, and for the benefit of, the
Indenture Trustee, the Collateral Agent and Financial Security.
A G R E E M E N T S
In consideration of the premises, the mutual agreements contained
herein and Financial Security's continuing agreement to issue Policies at lower
premium rates than Financial Security would be willing to offer if the
collateral arrangements herein were not maintained, and for other consideration,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless defined in this Agreement,
capitalized terms used in this Agreement shall have the meaning given such terms
in the Sale and Servicing Agreement dated as of November 23, 1998 between WFS
and WFAL2, as amended by Amendment No. 1 thereto dated as of January 1, 2001, as
such agreement may be amended from time to time in accordance with its terms
(the "WFS Sale and Servicing Agreement"). The following terms shall have the
following respective meanings:
"Account" has the meaning specified in Article 9 of the UCC.
"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
equal to the amount determined in the manner described in footnote (c) of the
related Monthly Statement. Clause (ii) shall be deemed amended to the extent a
change in the form of or disclosures required in the Monthly Statement is
approved as described in the definition of "Monthly Statement" that would affect
clause (ii).
"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 WFAL2,
the President, the Chief Financial Officer, Treasurer or any Vice President,
(ii) with respect to Financial Security, the Chairman of the Board, the
President, any Executive Vice President, any Managing Director or any Director,
(iii) with respect to the Master Collateral Agent, any Vice President, Assistant
Vice President or Trust Officer, and (iv) with respect to the Indenture Trustee
or the Collateral Agent, 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.
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"Certificate Distribution Account" has the meaning, with respect to
any Issuer, set forth in the related Trust Agreement.
"Chattel Paper" has the meaning specified in Article 9 of the UCC.
"Clearing Corporation" means 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 Entitlements.
"Collateral" has the meaning specified in Section 2.01(c)(iii)
hereof.
"Collateral Account" has the meaning specified in Section 3.01
hereof.
"Collateral Agent" has the meaning, with respect to any Issuer,
specified in the related Insurance Agreement.
"Collateral Schedule" has the meaning specified in Section 7.01
hereof.
"Collection Account" has the meaning, with respect to any Issuer,
set forth in the related Indenture.
"Contract" means any retail installment sales contract and security
agreement, or installment loan agreement and security agreement that has been
executed by an obligor and pursuant to which such obligor purchased or financed
a motor vehicle and that is pledged or is intended to be pledged hereunder.
"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 Indenture Trustee.
"Controlling Party Notice" has the meaning set forth in Section 3.05
hereof.
"Default" means (i) any failure by the Bank or WFAL2 to Deliver
Collateral as and when required hereunder, (ii) any other material breach by the
Bank or WFAL2 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, WFAL2, WFS or any Depositor
under any Transaction Agreement to which it is a party.
"Delivery" means, with respect to Collateral, the accomplishment of
the following:
(a) "instruments" and "certificated securities" (as such terms are
defined in the UCC; any of such "instruments" or "certificated securities" being
"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 WFAL2, payable to the order of the Bank or WFAL2 or
specially indorsed to the Bank or WFAL2 (except to the extent the foregoing have
been further
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specially indorsed by the Bank or WFAL2 to the Master Collateral Agent or its
nominee or in blank);
(b) Security Entitlements 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
(c) 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.
"Deposit Account" has the meaning specified in Article 9 of the UCC.
"Depositor" means any of (i) WFAL, (ii) WFS Funding, (iii) WFSRC,
(iv) WFSRC2, or (v) any entity that becomes a "Depositor" under this Agreement
pursuant to the provisions of Section 8.03 hereof, and "Depositors" means
(unless otherwise specified) all of them.
"Electronic Chattel Paper" has the meaning specified in Article 9 of
the UCC.
"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 that is maintained at (a) a depository institution or trust company
satisfying the criteria specified in clause (i) above or (b) a depository
institution acceptable to Financial Security as evidenced by a letter to such
effect from Financial Security to the Master Collateral Agent.
"Entitlement Order" means a notification communicated in accordance
with this Agreement by the Controlling Party to the Master Collateral Agent
directing transfer or redemption with respect to a Financial Asset credited to a
Securities Account hereunder.
"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.
"Federal Government Security" means any security issued by the
United States or any department or agency of the United States which is entitled
to the full faith and credit of the United States.
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"Financial Asset" means Collateral that 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 that is, or is of a type, dealt in
or traded on financial markets, or that is recognized in any area in which it is
issued or dealt in as a medium for investment and shall include, for the
purposes of this Agreement, a Federal Agency Security and a Federal Government
Security, regardless of whether the transfer or perfection of a Federal Agency
Security or Federal Government Security is accomplished under federal law or the
UCC. 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.
"General Intangibles" has the meaning specified in Article 9 of the
UCC.
"Holding Account" has the meaning, with respect to any Issuer, set
forth in the related Indenture.
"Indenture" means, with respect to any Issuer, the indenture entered
into between the Indenture Trustee and such Issuer, as such agreement may be
amended from time to time in accordance with the terms thereof, and "Indentures"
means (unless otherwise specified) all of such indentures.
"Instrument" has the meaning specified in Article 9 of the UCC.
"Insurance Agreement" means, with respect to any Issuer, the
Insurance, Indemnity and Pledge Agreement entered into among such Issuer, a
Depositor, Financial Security and the Collateral Agent (and which may also
include other parties) and pursuant to which a Policy (or Policies) is (or are)
issued, as such agreement may be amended from time to time in accordance with
the terms thereof, and "Insurance Agreements" means (unless otherwise specified)
all of such Insurance, Indemnity and Pledge Agreements.
"Insurer Default" has the meaning set forth in the Indenture with
the most recent date (including any "as of" date) with respect to which any
related Policy remains in effect.
"Insurer Insolvency" has the meaning set forth in the Indenture with
the most recent date (including any "as of" date) with respect to which any
related Policy remains in effect.
"Issuer" means any of the Delaware statutory trusts, or other
entities, (i) formed by (or to be formed by) or affiliated with (or to be
affiliated with, when formed) any Depositor and (ii) that has issued (or, in the
future, issues) securities guaranteed pursuant to a Policy, and "Issuers" means
(unless otherwise specified) all of such trusts or other entities.
"Investment Property" has the meaning specified in Article 9 of the
UCC.
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"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, 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, Deutsche Bank National
Trust Company ., including its successors and assigns, in its capacity as
collateral agent on behalf of the Indenture Trustee, the Collateral Agent and
Financial Security, or any successor that 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 Second Amended
and Restated Master RIC Reimbursement Agreement dated as of September 1, 2002
among the Bank, WFAL2 and Financial Security, as such agreement may be amended
from time to time in accordance with the terms thereof.
"Master Secured Obligations" means, on any date, (i) the respective
obligations of the Bank and, WFAL2 set forth in Sections 2.01(c)(i) and
2.01(c)(ii) hereof, and (ii) all costs, expenses, attorney's fees and
disbursements and other amounts expended or incurred by the Master Collateral
Agent, the Indenture Trustee, the 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 Master Collateral Agent, the
Indenture Trustee, the Collateral Agent or Financial Security under this
Agreement.
"Master Servicer" means WFS in its capacity as the Master Servicer
under the WFS Sale and Servicing Agreement.
"Monthly Statement" means the document captioned "Monthly Collateral
Statement" as delivered by the Bank and WFAL2 in the form of Schedule B hereto
pursuant to Section 3.02(b) hereof. The form of and disclosures in Schedule B
may be amended from time to time, with the prior written consent of Financial
Security, which consent shall not be unreasonably withheld or delayed, and as so
amended shall be the "Monthly Statement".
"Mortgage Loan" means any loan secured by real property that is
pledged or is intended to be pledged hereunder.
"Note Distribution Account" has the meaning, with respect to any
Issuer, set forth in the related Indenture.
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"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/or WFAL2 and/or any of their Affiliates), 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, statutory or owner trust, government, governmental department or
agency or any other entity whatsoever.
"Pledge Date" means, each date on which the Bank and/or WFAL2 pledge
items of Collateral to the Master Collateral Agent hereunder.
"Policy" means, with respect to any Issuer, any financial guaranty
insurance policy (including any endorsements thereto) issued by Financial
Security for the benefit of any securities or other obligations of such Issuer,
and "Policies" means (unless otherwise specified) all of such financial guaranty
insurance policies that remain in effect.
"Policy Beneficiary" means, with respect to any Policy, any holder
or other beneficiary of such Policy, and "Policy Beneficiaries" means (unless
otherwise specified) all of such holders or other beneficiaries.
"Possessory Collateral" has the meaning set forth in paragraph (a)
of the definition of "Delivery."
"RIC" has the meaning, with respect to any Issuer, set forth in the
Sale and Servicing Agreement, and "RICs" means (unless otherwise specified) all
of such agreements.
"Sale and Servicing Agreement" has the meaning, with respect
to any Issuer, set forth in the related Indenture, and "Sale and Servicing
Agreements" means (unless otherwise specified) all of such agreements.
"Securities Account" has the meaning specified in Section 8-501 of
the UCC.
"Securities Intermediary" has the meaning set forth in Section
8-102(a)(14) of the UCC.
"Security" means an obligation of an issuer or a share,
participation, or other interest in an issuer or in property or an enterprise of
an issuer that 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 that is
one of a class or series, or which by its terms is divisible into a class or
series, of shares, participations, interests, or obligations and that is, or is
of a type, dealt in or traded on securities exchanges or securities markets.
"Security Entitlement" means the rights and property interest of an
Entitlement Holder with respect to Financial Assets.
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"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 Bank (including its successors),
as servicer under the Servicing Agreement.
"Servicing Agreement" means the Amended and Restated Servicing
Agreement dated as of September 1, 2002 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.
"Tangible Chattel Paper" has the meaning specified in Article 9 of
the UCC.
"Termination Date" means the date that is the earliest of (A) the
latest of (i) the date on which all RICs shall have terminated and all amounts
owing by the Bank, WFAL2 and each Depositor to the relevant Issuer, the
Indenture Trustee, the Policy Beneficiaries, the Collateral Agent or Financial
Security shall have been paid in full, (ii) the date on which Financial Security
shall have received full payment and performance by the Bank, WFAL2 and each
Depositor pursuant to the Transaction Agreements and (iii) the latest date on
which any payment received by Financial Security pursuant to the Transaction
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, receivership, conservatorship, bankruptcy, rehabilitation,
liquidation or reorganization, or (B) the date on which no amounts of any funds
credited to any Collection Account, Note Distribution Account, Certificate
Distribution Account, Spread Account, Holding Account or any other account held
by or for the benefit of the Indenture Trustee, Policy Beneficiaries, the
Collateral Agent or Financial Security are invested in RICs or are held in
general ledger accounts at the Bank or are otherwise commingled with funds of
the Bank, or (C) any date mutually agreed by the Bank, WFAL2 and the Controlling
Party.
"Transaction Agreements" means, with respect to any Issuer, the
Indenture, the Sale and Servicing Agreement, the Trust Agreement, and any
related Policy, Insurance, Indemnity and Pledge Agreement, sub-servicing
agreement, indemnification agreement or RIC to which any of the Bank, WFS, WFAL,
WFAL2, WFSRC, WFS Funding, WFSRC2 or any other Depositor is a party, or, with
respect to all Issuers, all of such agreements.
"Trust Agreement" means, with respect to any Issuer that is a trust,
the trust agreement pursuant to which the Issuer is constituted, as amended from
time to time in accordance with its terms, and "Trust Agreements" means (unless
otherwise specified) all of such trust agreements.
"Uncertificated Security" means 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;
provided, however, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of the Master
Collateral Agent's security interest in any Collateral is governed by the
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Uniform Commercial Code as in effect in a jurisdiction other than the state of
California, the term "UCC" shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of definitions related
to such provisions; provided, further, that if the UCC is amended after the date
hereof, such amendment will not be given effect for the purposes of this
Agreement if and to the extent the result of such amendment would be to limit or
eliminate any item of the Collateral.
"WFS" means WFS Financial Inc, a California corporation.
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.
ARTICLE II
THE COLLATERAL
Section 2.01 Security Interests.
(a) Continuation of Security Interest. The Bank and WFAL2 hereby
restate and reaffirm the pledge set forth in Section 2.01 of the Second Amended
and Restated Agreement as though set forth herein verbatim.
(b) Continuation of Security Interest. The Bank and WFAL2 hereby
restate and reaffirm the pledge set forth in Section 2.01 of the Third Amended
and Restated Agreement as though set forth herein verbatim.
(c) Pledges.
(i) In order to secure the full and punctual payment of all amounts
when due by the Bank or WFAL2 under, and the performance by the Bank and WFAL2
of all of their other obligations pursuant to, the RICs 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 Collateral to the Master Collateral Agent on
behalf of, and for the benefit of, the Indenture Trustee, the Collateral Agent
and Financial Security.
(ii) In order to secure the full and punctual payment of all amounts
when due by WFAL2 or the Bank under, and the performance by WFAL2 and the Bank
of all of their other obligations pursuant to, the RICs and the Master RIC
Reimbursement Agreement from time to time in accordance with the terms thereof,
WFAL2 hereby pledges, assigns, transfers and conveys all of its right, title and
interest in and to all of the Collateral to the Master Collateral
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Agent on behalf of, and for the benefit of, the Indenture Trustee, the
Collateral Agent and Financial Security.
(iii) The "Collateral" shall at any time consist of:
(A) all Accounts, Chattel Paper, Deposit Accounts, Financial Assets,
General Intangibles, Instruments, and Investment Property, as all such assets
shall be more particularly described on each Collateral Schedule from time to
time delivered pursuant hereto and any other assets, property and proceeds
thereof, approved in writing by the Controlling Party (which may be by a
supplemental Collateral Schedule or an amendment (or an amendment and
restatement) of an existing Collateral Schedule by mutual agreement of the Bank,
WFAL2 and the Controlling Party);
(B) the WFS Sale and Servicing Agreement;
(C) the related documentation for, all proceeds, income and profits
on, and all interest, principal and other payments and distributions with
respect to the Collateral described in Section 2.01(c)(iii)(A) hereof;
(D) all rights and remedies for the enforcement of payment of any
principal, interest and proceeds with respect to the Collateral described in
Section 2.01(c)(iii)(A) hereof;
(E) any collateral securing any other 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;
(F) 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;
(G) 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 that may be distributed in kind in
connection with any such liquidation or adjustment of debt of the obligors;
(H) the Collateral Account and each other account, if any,
established by or with the Master Collateral Agent hereunder; and
(I) all distributions, revenues, products, substitutions, benefits,
profits and proceeds, in whatever form, of any of the foregoing.
(iv) Each of the Bank and WFAL2 agrees that it shall not (a) use any
adverse selection method in selecting any Collateral to be pledged (including
any pledge of substitute Collateral) hereunder or (b) include any Collateral
that would be charged off in accordance with its normal accounting practices. If
any Collateral Delivered to the Master Collateral Agent
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hereunder shall be or become subject to charge off by the Bank or WFAL2, the
Bank or WFAL2, as the case may be, shall promptly substitute new Collateral
therefor to the extent necessary to satisfy the requirements of Section 3.02
hereof.
(v) 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 Indenture Trustee and the Collateral Agent,
pursuant to this Section 2.01, each of the Bank and WFAL2 hereby Delivers, and
agrees in the future to Deliver, to the Master Collateral Agent, all items of
Collateral pledged by it hereunder in which a security interest must be
perfected only by possession, and the Master Collateral Agent hereby agrees to
accept such Collateral on the terms set forth in this Agreement. The Bank and
WFAL2, 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.
(vi) The Security Interests are granted as security only and shall
not (a) transfer or in any way affect or modify, or relieve either of the Bank
or WFAL2 from any obligation to perform or to satisfy, any term, covenant,
condition or agreement to be performed or satisfied by either of them under or
in connection with this Agreement, the Servicing Agreement or any Transaction
Agreement to which either of them is a party or (b) impose any obligation on any
of the Master Collateral Agent, the Indenture Trustee, the Collateral Agent or
Financial Security to perform or to observe any such term, covenant, condition
or agreement or impose any liability on any of the Master Collateral Agent, the
Indenture Trustee, the Collateral Agent or Financial Security for any act or
omission on its part relative thereto or for any breach of any representation or
warranty on its part contained therein or made in connection therewith.
Section 2.02 Priority. The Bank and WFAL2, 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 WFAL2, 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. 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 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 Transaction
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 the Collateral Schedules and all other records and
documents relating thereto either at the office of the Master Collateral Agent,
the office of the agent of the Master Collateral Agent or such other address as
may be approved by the Controlling Party.
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Beginning December 31, 2003, the Master Collateral Agent shall keep safe and
secure all Collateral Schedules as and when delivered from time to time to it
after December 31, 2003. 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 Indenture Trustee and the Collateral Agent and is not the property of
the Master Collateral Agent. The Master Collateral Agent will promptly report to
the Indenture Trustee, the Collateral Agent, Financial Security, the Bank and
WFAL2 any failure on its part to hold the Collateral or to safeguard related
documentation 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 the Indenture
Trustee, the Collateral Agent or Financial Security, or their respective duly
authorized representatives, attorneys, auditors or designees, to inspect the
Collateral Schedules and all 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 the Indenture Trustee, the Collateral
Agent or Financial Security may reasonably request with prior written notice.
Prior to a Default such inspection shall be at the expense of the Indenture
Trustee, the Collateral Agent or Financial Security, as the case may be, but
after a Default such inspection shall be at the expense of the Bank and WFAL2,
jointly and severally.
(c) Servicing. The Servicing Agreement notwithstanding, the Bank and
WFAL2 agree that they shall cause all Contracts pledged hereunder to be serviced
by WFS or the Bank pursuant to the WFS Sale and Servicing Agreement or similar
agreement reasonably satisfactory to Financial Security.
(d) Limitations on Investments and Collateral. Specified Account
Funds, Spread Account Funds and Holding Account Deposited Funds, as such terms
are defined in the RICs, may be invested in RICs 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 WFAL2.
(e) Liquidity. In order to ensure that WFAL2 has sufficient funds to
satisfy its repayment obligations pursuant to Section 4 of each RIC, the Bank
hereby agrees to lend WFAL2 sufficient immediately available funds in order to
enable WFAL2 timely to perform its obligations under each of such Sections and
any other payment obligations due by WFAL2 under any RIC, or otherwise to make
available, or cause to be made available, to WFAL2 immediately available funds
for such purpose.
Section 2.04 General Authority. Each of the Bank and WFAL2 hereby
irrevocably appoints each of the Master Collateral Agent and the Controlling
Party as its true and lawful attorney, with full power of substitution, in the
name of the Bank and WFAL2, for the sole use and benefit of the Master
Collateral Agent, the Indenture Trustee, the Collateral Agent
12
and Financial Security, but at the expense of the Bank and WFAL2, to exercise,
at any time while a Default has occurred and is continuing, to the extent
permitted by law, all or any of the following powers with respect to all or any
of the Collateral:
(a) to demand, to ▇▇▇ for, to collect, to receive and to give
acquittance for any and all monies due or to become due upon or by virtue
thereof,
(b) to settle, to compromise, to compound, to prosecute or to defend
any action or proceeding with respect thereto,
(c) to sell, to transfer, to assign or otherwise to 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
(d) 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 WFAL2 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, the Indenture Trustee, the Collateral Agent
and Financial Security 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 and obligations of the Master Collateral Agent, the
Indenture Trustee, the Collateral Agent and Financial Security with respect to
such Collateral shall be automatically released. In addition, the Master
Collateral Agent, the Indenture Trustee, the Collateral Agent and Financial
Security agree that, upon request by the Bank and WFAL2, they, or any of them,
shall execute and deliver, at the expense of the Bank or WFAL2 and at no expense
to the Master Collateral Agent, the Indenture Trustee, the Collateral Agent or
Financial Security whatsoever, such instruments as the Bank or WFAL2 may
reasonably request to effectuate such release, and any such instruments so
executed and delivered shall be fully binding on the Master Collateral Agent,
the Indenture Trustee, the Collateral Agent and Financial Security.
ARTICLE III
THE COLLATERAL ACCOUNT
Section 3.01 Establishment. The Master Collateral Agent has
previously established 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 Master Collateral Agent, designated "Collateral Account -
Deutsche Bank National Trust Company , as Master Collateral Agent for Deutsche
Bank Trust Company Americas, as Trustee and as Collateral Agent (for the benefit
of Financial Security Assurance Inc.)" (the "Collateral Account"). The
Collateral Account shall at all times be established at a banking office,
located in the State of California, of
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Deutsche Bank National Trust Company or another depository institution
acceptable to the Controlling Party. Funds in the Collateral Account shall not
be commingled with any other funds. The Master Collateral Agent 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 WFAL2 shall furnish to the Master Collateral Agent, the
Indenture Trustee, the Collateral Agent 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
related Collateral Schedule, and so Delivered or otherwise pledged hereunder,
subject only to such exceptions as are customary for such legal opinions;
provided, however, that such Opinion of Counsel shall not be required if such
Delivery or other pledge of Collateral would have been within the scope of an
Opinion of Counsel rendered under Section 5.02 or an Opinion of Counsel
previously rendered under this Section 3.02(a) in connection with a previous
Delivery or other pledge of Collateral hereunder and there has been no
applicable change in law.
(b) On the tenth (10th) Business Day of each calendar month, the
Bank and WFAL2 shall deliver to the Master Collateral Agent, the Indenture
Trustee, the Collateral Agent and Financial Security the Monthly Statement,
signed by an Authorized Officer of each of the Bank and WFAL2, 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 WFAL2 shall, together with such Monthly
Statement, Deliver additional Collateral, together with a Collateral Schedule,
in an amount necessary to make the Aggregate Collateral Value (after giving
effect to such additional Delivery) at least equal to the Aggregate Commingled
Account Balance, and such Monthly Statement shall contain a certification as to
Aggregate Collateral Value after giving effect to such additional Delivery.
(c) The Master Collateral Agent shall release items of Collateral
(i) to the Servicer in connection with the Servicer's performance of its duties
pursuant to Section 7.03 hereof, (ii) to the Bank and WFAL2, in the capacity of
each as a pledgor hereunder, in connection with the substitution of new
Collateral against Delivery or other pledge by the Bank and/or WFAL2 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 and
(iii) to the Bank and WFAL2, in the capacity of each as a pledgor hereunder, in
connection with a release of excess Collateral against delivery of a Monthly
Statement, together with or incorporating a request for release of specific
Collateral, indicating that the Aggregate Collateral Value (after giving effect
to such release) is at least equal to the Aggregate Commingled Account Balance.
Each of the Bank and WFAL2 agrees that it shall not use any adverse selection
method in selecting any Collateral to be released in accordance with the
foregoing clauses (ii) and (iii) of this Section 3.02(c).
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(d) On any date on which the Master Collateral Agent shall have
received a Controlling Party Notice to the effect that a Default has occurred
and is continuing, and for as long as such Controlling Party Notice shall be
effective, no Collateral shall be released to the Bank, WFAL2 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 solely by the Master
Collateral Agent; all Collateral consisting of Security Entitlements shall be
continuously maintained by the Master Collateral Agent 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 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) or any other item
of the Collateral to which perfection is not effected by Delivery (i) may be
held by the Master Servicer until receipt by the Master Servicer of a
Controlling Party Notice directing delivery of such Collateral elsewhere and
(ii) shall be duly perfected by the filing of financing statements in the
appropriate filing office, 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 or by WFS as
servicer under the WFS Sale and Servicing Agreement shall be paid over to the
Bank or WFAL2 as pledgor of such Collateral free of the lien created by this
Agreement until the Servicer or WFS shall have received a Controlling Party
Notice specifying that a Default has occurred and is continuing. After receipt
of such a Controlling Party Notice, the Servicer and WFS 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 a Controlling Party 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
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
15
Agent receives a Controlling Party 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(d) 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) The Master Collateral Agent or its affiliates are permitted to
receive additional compensation that could be deemed to be in the Master
Collateral Agent's economic self-interest for (i) serving as investment adviser,
administrator, shareholder, servicing agent, custodian or sub-custodian with
respect to certain investments, (ii) using affiliates to effect transactions in
certain investments and (iii) effecting transactions in certain investments.
(e) On each Business Day specified by the Controlling Party after
delivery of a Controlling Party 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 Indenture Trustee all amounts
constituting Master Secured Obligations owing to Financial Security or the
Indenture 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 relocation of the Collateral Account
hereunder, the Master Collateral Agent shall advise the Bank, WFAL2, the
IndentureTrustee, the Collateral Agent and Financial Security in writing of the
name and address of the depository institution to which such Collateral Account
was relocated (if not Deutsche Bank National Trust Company 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
WFAL2 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, WFAL2, the Master Collateral Agent, the Indenture Trustee, the
Collateral Agent and Financial Security of any charge or claim against or with
respect to the Collateral Account. The Master Collateral Agent shall give the
Bank, WFAL2, the Indenture Trustee, the Collateral Agent and Financial Security
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.
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(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 Deutsche Bank National Trust Company or at
another depository institution acceptable to the Controlling Party.
(c) Any investment of funds in the Collateral Account shall be made
in accordance with the provisions of Section 3.03(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 Controlling Party Notices. The Controlling Party may at
any time give notice (a "Controlling Party 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 Transaction Agreement, terminated the
status of a RIC as an eligible investment under a Trust Agreement or other
Transaction Agreement.
Section 3.06 Representations by the Bank and WFAL2. The Bank and
WFAL2 hereby jointly and severally represent and warrant to the other parties
hereto, as of the date hereof and as of the Pledge Date of any Collateral
hereunder, as follows:
(a) Immediately prior to Delivery or other pledge hereunder of any
item of Collateral, the Bank or WFAL2 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.
(c) The Bank and WFAL2 jointly and severally represent, warrant and
covenant to the Master Collateral Agent, the Indenture Trustee, the Collateral
Agent and Financial Security that, with respect to each Mortgage Loan pledged to
the Master Collateral Agent hereunder, such Mortgage Loan represents a first or
second Lien on a single-family or multi-family residential property and conforms
to the criteria set forth on Schedule A hereto.
(d) The Bank and WFAL2 jointly and severally represent, warrant and
covenant to the Master Collateral Agent, the Indenture Trustee, the Collateral
Agent and Financial Security that, with respect to each Contract pledged to the
Master Collateral Agent
17
hereunder, the Contract is in conformance with every representation and warranty
made with respect to such Contract in the Sale and Servicing Agreement and each
such representation and warranty is deemed repeated in this Agreement by the
Bank and WFAL2 jointly and severally for the benefit of the Master Collateral
Agent, the Indenture Trustee, the Collateral Agent and Financial Security;
provided, however, that if at any time Financial Security gives prior written
approval to the pledge of Electronic Chattel Paper as Collateral hereunder, the
Bank and WFAL2 shall not be required to make or to observe representations and
warranties that are applicable only to Tangible Chattel Paper with respect to
any Electronic Chattel Paper pledged hereunder, but the Bank and WFAL2 jointly
and severally agree to make and to observe such other representations and
warranties applicable to Electronic Chattel Paper as Financial Security may then
impose.
Section 3.07 Representations by WFS. WFS hereby represents and
warrants to the other parties hereto, as of the date hereof and as of the Pledge
Date of any Collateral hereunder consisting of a Contract that was acquired by
WFAL2 from WFS pursuant to the WFS Sale and Servicing Agreement, as to each such
Contract as follows:
(a) As of the Pledge Date, scheduled payments under such Contract
are applied in accordance with the Rule of 78's method or the simple interest
method and are due monthly in level payments through its Maturity Date
sufficient to fully amortize the principal balance of such Contract by its
Maturity Date, assuming timely payment by Obligors on Simple Interest Contracts,
except that the payment in the first or last month in the life of the Contract
may be minimally different from the level payment.
(b) There is only one original of such Contract and such original,
together with all other Contract Documents, is being held by WFS. The Seller has
received a written acknowledgement from WFS that it is holding the Contract
Documents that constitute or evidence the Contracts on behalf and for the
benefit of the WFAL2 and the Master Collateral Agent in accordance with their
interests as they may arise under the WFS Sale and Servicing Agreement and this
Agreement. None of the Contract Documents that constitute or evidence each
Contract has any marks or notations indicating that it has been pledged,
assigned or otherwise conveyed to any Person other than WFAL2 and the Master
Collateral Agent in accordance with their interests as they may arise under the
WFS Sale and Servicing Agreement and this Agreement.
(c) Each Contract (A) constitutes "tangible chattel paper" as
defined in the applicable UCC and (B) shall be maintained in its original
"tangible" form, unless Financial Security has consented in writing to such
chattel paper being maintained in another form or medium.
(d) As of the Pledge Date with respect to the Contracts, the Seller
is not aware of any Obligor that is or has been, since the origination of the
related Contract, the subject of a bankruptcy proceeding.
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(e) The number of, or timing of, scheduled payments has not been
changed on any Contract on or before the Pledge Date, except as reflected on the
computer tape delivered in connection with the sale of the Contracts.
(f) As of the Pledge Date, no Financed Vehicle has been repossessed.
(g) Any prepayment in full of a Contract by an Obligor to WFS will
consist of the entire outstanding principal balance of such Contract together
with all accrued and unpaid interest thereon.
ARTICLE IV
THE MASTER COLLATERAL AGENT
Section 4.01 Appointment and Powers. (a) Subject to the terms and
conditions hereof, the Indenture Trustee, the Collateral Agent, and Financial
Security hereby appoint Deutsche Bank National Trust Company as the Master
Collateral Agent with respect to the Collateral, and Deutsche Bank National
Trust Company hereby accepts such appointment and agrees to act as Master
Collateral Agent hereunder. The Indenture Trustee, the Collateral Agent, and
Financial Security 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 has executed 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 be 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.
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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 WFAL2 of this Agreement or any
of the Collateral (or any part thereof).
The Bank and WFAL2 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, WFAL2, the
Indenture Trustee, the Collateral Agent and Financial Security. If the Master
Collateral Agent is also an Indenture Trustee and/or a Collateral Agent 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 Indenture Trustee or Collateral Agent. 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 WFAL2; 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 WFAL2 or by any defect therein.
Notwithstanding the foregoing, prior to the receipt by the Bank and WFAL2 of a
Controlling Party Notice, such appointment shall be subject to the consent of
the Bank and WFAL2, 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,
20
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 Indenture Trustee and
the Collateral Agent in the Collateral 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 WFAL2, and each of them, for purposes of this
Agreement. Each such successor Master Collateral Agent shall provide the Bank,
WFAL2 and Financial Security with its address, and its telephone and telecopier
numbers, to be used for purposes of Section 7.04 hereof, in a notice complying
with the terms of said Section.
Section 4.06 Representations and Warranties of Deutsche Bank
National Trust Company Deutsche Bank National Trust Company represents and
warrants to the Bank, WFAL2, the Indenture Trustee, the Collateral Agent and
Financial Security as follows:
(a) Deutsche Bank National Trust Company is a national banking
association, duly organized, validly existing and in good standing.
(b) Deutsche Bank National Trust Company 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 Deutsche Bank National Trust Company in its capacity as
Master Collateral Agent enforceable against it in accordance with their
respective terms.
(d) The execution and delivery by Deutsche Bank National Trust
Company 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 WFAL2 only
if expressly contemplated hereby or if accompanied by the written consent of the
Controlling Party, except
21
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 WFAL2. 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
Controlling Party Notice. Any written communication by the Controlling Party to
the Master Collateral Agent specifying the amount of any obligations owing to
the Indenture Trustee, the Collateral Agent or Financial Security shall be
conclusive evidence of such amount, notwithstanding any notice to the contrary
received by the Master Collateral Agent from the Bank, WFAL2 or any other
Person.
ARTICLE V
COVENANTS OF THE BANK AND WFAL2
Section 5.01 Preservation of Collateral. Subject to the rights,
powers and authorities granted to the Master Collateral Agent, the Indenture
Trustee, the Collateral Agent and Financial Security in this Agreement, the Bank
and WFAL2 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 WFAL2, 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 a Controlling Party Notice to the Master
Collateral Agent, the items of Collateral referenced in Schedule A hereto and
(b) after delivery of a Controlling Party 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 WFAL2, 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 a Controlling
Party Notice to the Master Collateral Agent, the items of Collateral referenced
in Schedule A hereto and (b) after delivery of a Controlling Party 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 2004, the Bank and WFAL2 shall, at their own cost and expense,
furnish to the Master Collateral Agent, the IndentureTrustee, the Collateral
Agent and Financial Security 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 first priority lien and
first priority security interest of the Master Collateral Agent with respect to
the items of Collateral set forth on the Collateral Schedules that have been
granted to the Master Collateral Agent as of the
22
last Business Day of the relevant January or July (other than any items of
Collateral that have been released from the Lien of this Agreement in accordance
with the terms of this Agreement) under California law (and other applicable
law) against all creditors of and purchasers from the Bank or WFAL2, 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 Indenture Trustee and the Collateral Agent
with respect to such Collateral under California law (and other applicable law)
against all creditors of and purchasers from the Bank or WFAL2, 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 WFAL2 acquires
knowledge of the occurrence and continuance of any Default, the Bank or WFAL2,
as the case may be, shall promptly give notice thereof to the Master Collateral
Agent, the Indenture Trustee, the Collateral Agent and Financial Security.
Section 5.04 Waiver of Stay or Extension Laws; Marshalling of
Assets. The Bank and WFAL2 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 WFAL2, 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 WFAL2, 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 WFAL2 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 of the Master Collateral
Agent, the Indenture Trustee, the Collateral Agent or Financial Security under
this Agreement, the Servicing Agreement, the WFS Sale and Servicing Agreement or
the Transaction Agreements.
Section 5.06 Changes. Neither the Bank nor WFAL2, unless it shall
have given the Master Collateral Agent, the Indenture Trustee, the Collateral
Agent and Financial Security at least sixty (60) days' prior written notice
thereof (i) change its name, (ii) relocate its principal executive office or its
principal place of business from that set forth in Section 8.05 hereof, (iii)
change the locations where it keeps or holds any Collateral or any records
relating thereto from that set forth in Section 8.05 hereof, or (iv) change its
jurisdiction of organization. Upon (i)
23
at least sixty (60) days' prior written notice to the Master Collateral Agent,
the Indenture Trustee, the Collateral Agent and Financial Security, (ii) the
execution of amendments to all applicable Transaction Agreements affecting the
substitution of a new subsidiary (the "New Subsidiary") of the Bank or WFS in
place of WFAL2 with respect to each such applicable Transaction Agreement and
(iii) the execution by New Subsidiary of an assumption agreement pursuant to
which New Subsidiary agrees to be bound by all of the terms and conditions of
this Agreement and of the Master RIC Reimbursement Agreement and assumes all of
the obligations of this Agreement and of the Master RIC Reimbursement Agreement
to be performed by WFAL2 as though New Subsidiary were originally a party to
this Agreement and the Master RIC Reimbursement Agreement, WFAL2 shall be
released of its obligations under this Agreement and under the Master RIC
Reimbursement Agreement and any Collateral pledged by it shall be released from
the Lien of this Agreement, provided New Subsidiary or the Bank shall have
concurrently pledged additional Collateral with a value sufficient in amount (as
determined in accordance with Schedule A to this Agreement) such that the
Aggregate Collateral Value upon that release will be not less than the then
Aggregate Commingled Account Balance as reported in the relevant Monthly
Statement. Upon the substitution of New Subsidiary for WFAL2, all references
herein and in the Master RIC Reimbursement Agreement to WFAL2 shall be read as
referring to New Subsidiary; provided further, the articles and bylaws of New
Subsidiary shall provide that (i) New Subsidiary shall only engage in the
business of purchasing, holding, pledging and selling Contracts, and activities
necessary or incidental thereto, (ii) New Subsidiary have at all times at least
one independent director, (iii) the affirmative vote of all directors be
required to amend or repeal the article or bylaw provisions limiting the
business of New Subsidiary and (iv) the shareholder(s) of New Subsidiary pledge
all of the outstanding shares of New Subsidiary to Financial Security pursuant
to a stock pledge agreement substantially similar to the Stock Pledge Agreement
dated as of November 1, 1998 by and among WFAL2, Financial Security and the
Master Collateral Agent. The Bank and WFS affirmatively covenant to cause the
articles and bylaws of New Subsidiary to be amended to add such additional
provisions as may enhance the bankruptcy remoteness of New Subsidiary as
Financial Security may reasonably request.
ARTICLE VI
REMEDIES UPON DEFAULT
Section 6.01 Rights and Remedies Upon Default. 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 exercise, or may direct the Master Collateral Agent to exercise,
the following rights, privileges and remedies:
(a) 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.
(b) 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
24
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
WFAL2, 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 WFAL2, 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 WFAL2, 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 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 WFAL2, 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.
(c) 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.
Section 6.02 Restoration of Rights and Remedies. If the Controlling
Party or 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
the Controlling Party or the Master Collateral Agent, then and in every such
case the Bank, WFAL2, the Controlling Party 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 and the Master Collateral Agent 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
25
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. On each Pledge Date, the Bank
and/or WFAL2, as applicable, shall deliver to the Master Collateral Agent, the
Indenture Trustee, the Collateral Agent and Financial Security a schedule of
Collateral (each, a "Collateral Schedule") that, as to each item of Collateral,
sets forth at least the following information (i) in the case of each Mortgage
Loan or Contract, 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, (ii) in the case of any Security, the
security name, the CUSIP number, the pool number (if applicable), the interest
rate, the original principal balance, the outstanding principal balance, the
origination or issue date, the scheduled monthly principal and interest payment
(if applicable) and the maturity date and (iii) in the case of any other item of
Collateral, to the extent applicable, the obligor's name, the loan or other
identifying number, the security name, the CUSIP number, the pool 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.
Section 7.02 Collateral Files.
(a) With respect to each Mortgage Loan pledged on any Pledge Date,
the Bank or WFAL2, as applicable, shall deliver the following documents to the
Master Collateral Agent:
(i) Original mortgage note endorsed or assigned without recourse to
Deutsche Bank National Trust Company, as Master Collateral Agent;
(ii) Original recorded mortgage or deed of trust or certified copy
thereof; and
(iii) Original assignment, in recordable form, of mortgage or deed
of trust (which may be a blanket assignment for all Mortgage Loans) to Deutsche
Bank National Trust Company, as Master Collateral Agent.
The Bank and WFAL2 jointly and severally represent, warrant and covenant to the
Master Collateral Agent, the Indenture Trustee, the Collateral Agent and
Financial Security that, with respect to such Mortgage Loan, the Bank or WFAL2
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.
26
(b) With respect to each Contract pledged on any Pledge Date, the
Bank or WFAL2 jointly and severally represent, warrant and covenant to the
Master Collateral Agent, the Indenture Trustee, the Collateral Agent and
Financial Security that, with respect to such Contract, that the Contract File
(as defined in the WFS Sale and Servicing Agreement) is held by the Master
Servicer as custodian under and in accordance with the terms of the Sale and
Servicing Agreement. The Bank and WFAL2 jointly and severally represent, warrant
and covenant to the Master Collateral Agent, the Indenture Trustee, the
Collateral Agent and Financial Security that, with respect to such Contract, the
Contract File contains all of the Contract Documents (as defined in the Sale and
Servicing Agreement); provided, however, that if at any time Financial Security
gives prior written approval to the pledge of Electronic Chattel Paper as
Collateral hereunder, the original of the Contract shall not be required to be
included in the Contract File. If Financial Security gives its prior written
approval to the pledge of Electronic Chattel Paper as Collateral hereunder, the
Bank and WFAL2 jointly and severally agree to comply with such requirements as
Financial Security may then impose for the control of the single authoritative
copy of such Electronic Chattel Paper.
(c) Upon receipt by the Bank and WFAL2 of a Controlling Party Notice
stating that a Default has occurred and is continuing, the Bank and WFAL2 shall
deliver to the Master Collateral Agent all documents and instruments specified
in Sections 7.02(a) and (b) and such other documents and instruments with
respect to each Mortgage Loan, Contract, Federal Agency Security, Federal
Government Security or other item of Collateral pledged hereunder in which a
security interest may be perfected by possession.
(d) The documents and instruments delivered in respect of each
Mortgage Loan, Contract, Federal Agency Security, Federal Government 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 coming into the Master Collateral
Agent's possession, in secure and fire-resistant facilities within the State of
California in accordance with customary standards for such custody.
Section 7.03 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 or Master Servicer because such Collateral has been paid in full
and is to be released by the Servicer or Master Servicer to the related obligor
or to facilitate enforcement and collection procedures with respect to such
Collateral, the Servicer or Master Servicer shall be entitled to obtain such
document by submitting to the Master Collateral Agent (with copies to the
Indenture Trustee, the Collateral Agent 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 a Controlling Party Notice
stating that a Default has occurred and is continuing, the Master Collateral
Agent shall not release such document to the Servicer or Master Servicer until
it has received the written authorization from the Controlling Party.
27
Section 7.04 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 that act as custodian in similar
transactions.
Section 7.05 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 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
that might arise in connection with unpaid fees or any lien that 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, WFAL2 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, WFAL2 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; Additional Depositors. 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 Third Amended and Restated Agreement,
as amended and restated hereby, shall remain in full force and effect.
Furthermore, any affiliate of the Bank, WFAL or WFAL2 may become a "Depositor"
under this Agreement
28
with Controlling Party Consent and shall thereafter be subject to the provisions
hereof and entitled to the benefits hereunder upon the execution of a
counterpart hereof or other form of acknowledgment hereunder (which may be in
the form of joinder attached hereto as Schedule C), and delivery to the parties
hereto of a copy of such counterparty, acknowledgement or joinder, including
such new Depositor's address for notice hereunder.
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
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: Guy Du Bose, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to WFAL:
WFS Financial Auto Loans, Inc.
▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
29
(iii) If to WFS Funding:
WFS Funding, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, # ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
(iv) If to WFSRC:
WFS Receivables Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
(v) If to WFSRC2:
WFS Receivables Corporation 2
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
(vi) If to WFAL2:
WFS Financial Auto Loans 2, Inc.
▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vii) If to WFS as Servicer:
WFS Financial Inc.
▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Guy Du Bose, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
30
(viii) If to Financial Security:
Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Transaction Oversight Department
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(in each case in which the notice or other
communication to Financial Security refers to an
Event of Default or a claim under the Policy or is a
notice or other communication as to which a failure
on the part of Financial Security to respond shall be
deemed to constitute consent or acceptance, then with
a copy to the attention of the Managing Director -
Transaction Oversight)
(ix) If to the Indenture Trustee or the Collateral Agent:
Deutsche Bank Trust Company Americas
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust & Agency Services - Structured
Finance Services
(x) If to the Master Collateral Agent:
Deutsche Bank National Trust Company
▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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 WFAL2 in respect of the Master Secured Obligations or otherwise
31
under this Agreement, shall be released to and in favor of the Bank or WFAL2, 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
WFAL2 and shall (i) be binding upon the Bank and WFAL2 and their respective
successors and assigns, and (ii) inure to the benefit of and be enforceable by
the Master Collateral Agent, the Indenture Trustee, the Collateral Agent and
Financial Security and by their respective successors and assigns. Neither the
Bank nor WFAL2 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.
(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 Transaction 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
reinsurers, 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 WFAL2, 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
32
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.
33
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:
Title:
WFS FINANCIAL AUTO LOANS, INC.
By:_________________________
Name:
Title:
WFS FUNDING, INC.
By:_________________________
Name:
Title:
WFS FINANCIAL AUTO LOANS 2, INC.
By:_________________________
Name:
Title:
WFS RECEIVABLES CORPORATION
By:_________________________
Name:
Title:
WFS RECEIVABLES CORPORATION 2
By:_________________________
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:_________________________
Name:
Title:
34
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Indenture Trustee and Collateral Agent
By:_________________________
Name:
Title:
DEUTSCHE BANK NATIONAL TRUST COMPANY, as
Master Collateral Agent
By:_________________________
Name:
Title:
35
SCHEDULE A
COLLATERAL GUIDELINES
(effective as of May 15, 2002)
Maximum Borrowing
Capacity as a Percentage of
Outstanding Principal Amount
----------------------------
MORTGAGE COLLATERAL: 1-4 Unit Residential First Mortgages 80%
Multifamily (5-36 units) First Mortgages* 75%
Residential (1-4 units) Second Mortgages 50%
*Limited to $100 million on a discounted basis:
AUTO LOANS: 85%
Maximum Borrowing
Capacity as a Percentage of
Current Market Value
---------------------------
SECURITIES COLLATERAL: FHLB Certificate of Deposit and
eligible deposit accounts 100%
AIDS-Housing Guaranty Certificates 100%
U.S. Treasury Bills, Bonds, and Notes 95%
FHLB Bonds and Discount Notes 95%
FNMA Mortgage-Backed Securities 95%
FNMA Bonds and Discount Notes 95%
GNMA Pass-through Securities 95%
FHLMC Participation Certificates 95%
FHLMC Bonds and Discount Notes 95%
Federal Farm Credit Bank Bonds 80%
Federal Land Bank Bonds 80%
"AA" or "AAA" Publicly Registered
Pass-Throughs 85%
"AA" or "AAA" Publicly Registered
CMO's 80%
In accordance with Section 2.03(d) of the MCA Agreement as to which this
Schedule A relates, for purposes of Section 3.02 of the MCA Agreement and the
definition of "Aggregate Collateral Value", the Bank, WFAL2 and Financial
Security agree that the value of any item of Securities Collateral of a type
listed above shall be determined by apply the specified percentages listed above
for that type of Securities Collateral to the "Market Value" of that Securities
Collateral as determined in accordance with the next following paragraph.
"Market Value" shall at any time be, for any item of Securities Collateral, the
bid price shown on the Bloomberg screen, or any other pricing source approved by
Financial Security.
A-1
ALLOCATION LIMITATIONS: Specified Account Funds, Spread Account Funds and
Holding Account Deposited Funds, pursuant to Section 2.03(d) of the MCA
Agreement, may be invested under Reinvestment Contracts with the Bank and WFAL2
only in accordance with the following; aggregate limitations (in addition to any
limitations set forth in Reinvestment Contracts or other wise under Reinvestment
Contracts):
Bank WFAL2
-------- -----------
Specified Account No Limit Up to 25% of the amount of funds on deposit in
Invested Funds each Specified Account for such Series
Spread Account No Limit No Limit
Invested Funds
Holding Account No Limit 0
Deposited Funds
Capitalized terms not otherwise defined in this Schedule A shall have the
meanings specified in the MCA Agreement to which this Schedule A is annexed.
A-2
SCHEDULE B
MONTHLY COLLATERAL STATEMENT
This certificate is given by the undersigned pursuant to the requirements of
Section 3.02(b) of the Fourth Amended and Restated Master Collateral Assignment
Agreement dated as of September 1, 2002, among Western Financial Bank (the
"Bank"), WFS Financial Auto Loans, Inc. ("WFAL"), WFS Financial Auto Loans 2,
Inc. ("WFAL2"), WFS Receivables Corporation, WFS Receivables Corporation 2,
Western Funding, Inc., Financial Security Assurance Inc., Deutsche Bank Trust
Company Americas (formerly known as Bankers Trust Company), as Trustee and
Collateral Agent, and Deutsche Bank National Trust Company (formerly known as
Bankers Trust Company of California, N.A.), as Master Collateral Agent (the "MCA
Agreement"). All capitalized terms used herein have the definitions given for
them in the MCA Agreement. The undersigned hereby certifies that the following
information is a full, complete and accurate statement as to (1) the Aggregate
Commingled Account and (ii) the Aggregate Collateral Value as of ______________.
I. Aggregate Commingled Account Balance
Aggregate Collection Account Balances (a) $
Aggregate Spread Account Balances $
Aggregate Commingled Account Balance $________
II. Aggregate Collateral Value
Value of Collateral pledged (b)
Residential (1-4 units) Second Mortgages $
Multifamily First Mortgages $
FNMA Participation Certificate $
Auto Loans $
GNMA MBS $
US Treasury Bills $________
Less anticipated collections of principal and interest
from contracts during the next calendar month (c) $(______)
Total Net Value of Collateral Pledged $________
III. The Aggregate Collateral Value as shown in Item II, above, exceeds the
Aggregate Commingled Account Balance as shown in Item I above.
Dated _______________________ WESTERN FINANCIAL BANK
By:________________________
WFS FINANCIAL AUTO LOANS 2, INC.
By:________________________
--------------------------------------------------------------------------------
(a) Aggregate Collection Account Balance has been reduced by Advances made
by the Bank or the Master Servicer [and by $__________________, the
actual amount of principal and interest payments made by the Bank and
WFAL2 to the Trustee on ____________ 1, __________ from the various
Collection Accounts].
B-1
(b) Discounted values in accordance with the Collateral Guidelines,
Schedule A to the MCA Agreement.
(c) Calculated as an amount equal to 3% of the Aggregate Scheduled Balances
(as defined in the applicable Sale and Servicing Agreements) as of the
last Business Day of the immediately preceding month.
B-2