EXHIBIT 10.5
SECOND AMENDED AND RESTATED MASTER RIC REIMBURSEMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED MASTER RIC REIMBURSEMENT AGREEMENT
dated as of September 1, 2002 (the "Agreement"), which amends and restates the
Master RIC Reimbursement Agreement dated as of June 1, 1995 (the "Original
Agreement") as amended by the Amended and Restated Master RIC Reimbursement
Agreement dated as of November 1, 1998 (the "Amended and Restated Agreement") is
by and among WESTERN FINANCIAL BANK, a federally chartered savings bank
(including its successors and assigns, the "Bank"), WFS FINANCIAL AUTO LOANS 2,
INC., a California corporation (including its successors and assigns, "WFAL 2"),
and FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance company
(including its successors and assigns, "Financial Security").
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").
Financial Security has issued financial guaranty insurance policies
guaranteeing payment by the Bank and WFAL 2 under the RICs on each Distribution
Date. The Bank and WFAL 2 have requested, and may in the future request, that
Financial Security issue financial guaranty insurance policies to the Trustee of
the Trusts (as defined in Section 1 hereof) to guarantee payment under the RICs
on each Distribution Date. The policies referred to in the preceding two
sentences are herein called "RIC Policies".
As partial inducement to Financial Security to issue RIC Policies,
the Bank and WFAL 2 intend to enter into this Agreement in order to secure the
obligations of the Bank and WFAL 2 hereunder, and, pursuant to the Master
Collateral Assignment Agreement, to pledge Collateral to the Master Collateral
Agent for the benefit of Financial Security.
All parties hereto wish to maintain in force RIC Policies and other
arrangements with respect to the RICs entered into prior to the date of this
Agreement.
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A G R E E M E N T S
The parties hereto agree as follows:
Section 1. Definitions For all purposes of this Agreement, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used and not defined herein shall have the respective meanings
ascribed to such terms in the Sale and Servicing Agreement of the related Trust,
unless the context shall otherwise require.
"Authorized Officer" means, with respect to the Bank, WFAL 2 or any
corporation, the president, the chief financial officer or any vice president.
"Bank" means Western Financial Bank (including its successors and
assigns).
"Collateral" has the meaning ascribed thereto in the Master
Collateral Assignment Agreement.
"Depositor" means each entity identified as a depositor under the
Master Collateral Assignment Agreement and "Depositors" means all of such
entities.
"Existing Agreements" means the Sale and Servicing Agreements and
any related RIC, RIC Policy, insurance, indemnity and pledge agreement,
sub-servicing agreement, indemnification agreement, relating to a Trust and the
Master Collateral Assignment Agreement to which the Bank, WFAL 2 or any
affiliate thereof is a party.
"Financial Security's Authorized Agent" means each Authorized
Officer of Financial Security and each other Person that Financial Security
designates as its authorized agent with notice to the Bank and WFAL 2.
"Independent Accountant" means an independent accountant within the
meaning of the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended.
"Insurance Agreements" means the insurance, indemnity and pledge
agreements entered into with respect to each Trust.
"Late Payment Rate" means the greater of (i) a per annum rate equal
to 3% in excess of Financial Security's cost of funds, determined on a monthly
basis, or (ii) a per annum rate equal to 3% in excess of the arithmetic average
of the prime or base lending rates publicly announced by JPMorgan Chase Bank,
N.A. (New York, New York) and Citibank, N.A. (New York, New York), as in effect
on the last day of the month for which interest is being computed, but in no
event greater than the maximum rate permitted by law.
"Master Collateral Assignment Agreement" means the Fourth Amended
and Restated Master Collateral Assignment Agreement dated as of September 1,
2002 among the Bank, WFAL 2, the Depositors, Financial Security, the Trustee,
the Collateral Agent and the Master Collateral Agent, as such agreement may be
amended from time to time in accordance with its terms.
"Policies" means financial guaranty insurance policies in respect of
the Trusts (including, in each case, any endorsements thereto) issued by
Financial Security.
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"Trust Agreements" mean the trust agreements pursuant to which the
Trusts are constituted, as amended from time to time in accordance with their
terms.
"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.
"RIC Policies" has the meaning given in the Recitals hereof.
"RIC Reimbursement Amount" means, with respect to any Trust, the sum
of the following amounts:
(1)a sum equal to the total of all amounts that may be paid by
Financial Security under the related RIC Policy;
(2)any and all reasonable charges and expenses which Financial
Security may pay or incur relating to any payment under the related RIC
Policy, including, but not limited to, any fees and charges in connection
with any accounts established to facilitate payments under the related RIC
Policy, to the extent Financial Security has not been immediately
reimbursed on the date that any amount is paid by Financial Security under
the related RIC Policy;
(3)the amount of any costs or expenses (including attorneys' and
accountants' fees and expenses) incurred by Financial Security (A) in
connection with the enforcement of this Agreement or the Original
Agreement, or (B) in connection with the foreclosure upon, sale or other
disposition of the Collateral, to the extent that such costs and expenses
are not recovered from such foreclosure, sale or other disposition; and
(4)any amount otherwise required to be paid to or on behalf of
Financial Security under this Agreement (including the Original
Agreement).
"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.
"Servicer" means Western Financial Bank (including its successors),
as servicer under the Servicing Agreement except in the case of Collateral that
consists of retail installment loans or retail installment contracts secured in
both cases by automobiles or light duty trucks, in which event "Servicer" means
WFS as Servicer under the WFS Sale and Servicing Agreement.
"Termination Date" means the date which is the earlier of (A) the
latest of (i) the date on which all RICs shall have terminated and all amounts
owing by the Bank, WFAL 2 and each Depositor to the relevant Trusts, Financial
Security and the Trustees shall have been paid in full, (ii) the date on which
Financial Security shall have received full payment and performance by WFAL 2,
the Bank, WFS and each Depositor pursuant to the Existing Agreements, (iii) the
latest date on which any payment received by Financial Security pursuant to the
Existing Agreements could be avoided in whole or in part as a preference payment
under the United States Bankruptcy Code or any similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, or (B) the date on which no amounts in any accounts under Sale
and Servicing Agreements are invested in RICs or general ledger accounts at the
Bank or are otherwise commingled with funds of the Bank, or (C) any date
mutually agreed by WFAL 2, the Bank and Financial Security.
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"Trusts" means the grantor trusts or business trusts created in
respect of automobile installment sale contract securitization transactions
established on the date heretofore or from time to time hereafter by the
Servicer and its affiliates whose certificates of beneficial interest or other
securities have the benefit of Policies.
"WFS" means WFS Financial Inc, and its successors.
"WFS Sale and Servicing Agreement" means 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.
Section 2. Reimbursement Obligations. The Bank and WFAL 2 jointly
and severally agree absolutely and unconditionally to pay to Financial Security
all RIC Reimbursement Amounts relating to the RICs. All RIC Reimbursement
Amounts to be paid by the Bank and/or WFAL 2 pursuant to this Agreement shall be
due and payable without demand. Interest shall accrue at the Late Payment Rate
on all unpaid RIC Reimbursement Amounts from the date such amounts are due and
payable up to and including the date on which such amounts are paid.
Section 3. Representations of the Bank. The Bank represents and
warrants, that this Agreement has been duly authorized, executed and delivered
and constitutes a valid and binding agreement of the Bank and that neither the
execution and delivery of this Agreement nor the performance of the obligations
of the Bank under this Agreement will contravene any federal or state law or any
order, decree, license, permit or the like which is applicable to the Bank or to
which the Bank is a party or by which the Bank is bound.
Section 4. Representations of WFAL 2. WFAL 2 hereby represents and
warrants, as of the date hereof and each Pledge Date (as defined in the Master
Collateral Assignment Agreement) as follows:
a. Due Organization; Corporate Power and Authority. WFAL 2 is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, with full right, power and authority to own its
properties and to conduct its business as presently conducted; WFAL 2 has the
power and authority to execute and deliver this Agreement, each RIC and the
Master Collateral Assignment Agreement (each, a "WFAL 2 Agreement"); and to
carry out the terms of each such Agreement, and the execution, delivery, and
performance of each WFAL 2 Agreement has been duly authorized by WFAL 2 by all
necessary corporate action. WFAL 2's principal place of business, chief
executive office and the office where it keeps its records is located at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
b. Valid and Binding Obligations. Each of this Agreement and the
other WFAL 2 Agreements constitutes a legal, valid, and binding obligation of
WFAL 2, enforceable in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, receivership or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or at law.
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c. Noncontravention. The consummation of the transactions
contemplated by Agreement and by each other WFAL 2 Agreement and the fulfillment
of the terms hereof and thereof will not conflict with, result in any breach of
any of the terms and provisions of, or constitute a default (or an event which,
with the giving of notice or passage of time, or both, would constitute a
default) under, the articles of incorporation or by-laws of WFAL 2, or any
indenture, agreement, or other instrument to which WFAL 2 is a party or by which
it is bound; result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, or other
instrument (other than the Master Collateral Assignment Agreement); or violate
any law or any order, rule, or regulation applicable to WFAL 2 of any court or
of any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over WFAL 2 or its properties.
d. No Consents. No consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency, nor any consent, approval, waiver or notification of any creditor,
lessor or other non-governmental person, is required in connection with the
execution, delivery and performance by WFAL 2 of this Agreement of any other
WFAL 2 Agreement is a party, except (in each case) such as have been obtained
and are in full force and effect.
e. Pending Litigation or Other Proceeding. To the best knowledge
of WFAL 2, there are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over WFAL 2 or its properties: (A) asserting
the invalidity of this Agreement, any other WFAL 2 Agreement (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or any other WFAL 2 Agreement, or (C) seeking any determination or
ruling that might materially and adversely affect the performance by WFAL 2 of
its obligations under, or the validity or enforceability of, this Agreement or
any other WFAL 2 Agreement.
f. WFAL 2 is not a party to any agreement, contract, instrument
or other document other than, and has no actual, contingent or other liabilities
or obligations of any kind other than pursuant to, (1) this Agreement and the
other WFAL 2 Agreements and (2) one or more promissory notes or lines of credit
of WFAL 2 in favor of the Bank or WFS (such notes, the "WFAL 2/WFS Notes").
Section 5. Affirmative Covenants of the Bank and WFAL 2. Each of the
Bank and WFAL 2 covenants and agrees with Financial Security that, at all times
during the term of this Agreement:
a. Compliance With Agreements. It will comply with all terms and
conditions of this Agreement and each other Existing Agreement to which it is a
party. It will not cause or permit to become effective any amendment to or
modification of any RIC to which it is a party unless Financial Security shall
have previously approved in writing the form of such amendment or modification.
b. Financial Statements, Accountants' Reports, Other Information.
It will keep proper books and records, in which full and correct entries will be
made of financial transactions and its assets and business in accordance with
generally accepted accounting principles consistently applied. It will also
deliver to Financial Security, simultaneously with the delivery of such
documents to its stockholder copies of all financial statements prepared by it
or on its behalf.
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c. Certificate of Compliance. It will deliver to Financial
Security, concurrently with the delivery of the annual financial statements
required pursuant to paragraph (b) above, a certificate signed by an Authorized
Officer stating that:
(i) a review of it's performance under this Agreement and the
other Existing Agreements to which it is a party during such period has been
made under such officer's supervision; and
(ii) to the best of such officer's knowledge, based upon such
review, it has fulfilled all its obligations under this Agreement and the other
Existing Agreements to which it is a party during such period, or, if there has
been a default of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
d. Access to Records; Discussions With Officers and Accountants.
It will, upon the reasonable request of Financial Security, permit Financial
Security's Authorized Agent at reasonable times (i) to inspect its books and
records as may relate to its obligations under this Agreement and the other
Existing Agreements to which it is a party; and (ii) to discuss the affairs,
finances and accounts with any of its respective officers, directors and
representatives, including its Independent Accountants.
e. Maintain Licenses. It will maintain all licenses, permits,
charters and registrations that are material to the performance by it of its
obligations under the Existing Agreements to which it is a party or by which it
is bound.
f. Maintain Existence; Merger. The Bank will keep in full effect
its existence, rights and franchises as a stock savings association (or, if the
Bank elects to convert to any other type of depository institution, such
depository institution) under the laws of the United States and its rights and
franchises under the laws of the State of California, the accounts of which are
insured, to the extent permitted by law, by the Federal Deposit Insurance
Corporation and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Existing
Agreements to which the Bank is a party. WFAL 2 will keep in full effect its
existence, rights and franchises as a corporation under the laws of the State of
California, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Existing
Agreements to which WFAL 2 is a party. Neither the Bank nor WFAL 2 will
consolidate with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless the Person
formed by such consolidation or into which it has merged or the Person which
acquires by conveyance, transfer or lease substantially all its assets as an
entirety, can lawfully perform its obligations hereunder and executes and
delivers to the Financial Security an agreement, in form and substance
reasonably satisfactory to the Trustee and Financial Security, which contains an
assumption by such Person of the due and punctual performance and satisfaction
of each covenant and condition to be performed or satisfied by it under this
Agreement.
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g. Maintain Separate Corporate Existence. WFAL 2 will at all
times hold itself out to the public, including WFS and the Bank, under WFAL 2's
own name and as a separate and distinct entity from WFS and the Bank. At all
times at least one director and one executive officer of WFAL 2 (or one
individual serving in both capacities) will be a Person who is not a director,
officer or employee of any Person owning beneficially more than 10% of the
outstanding common stock of WFAL 2. WFAL 2 will maintain separate corporate
records and books of account from those of WFS and the Bank, will not commingle
its assets with any other Person (except to the limited extent (if any)
permitted by the approval of Financial Security) and will authorize its
corporate actions in accordance with applicable law. WFAL 2 will not engage in
business transactions with any of its Affiliates on terms and conditions less
favorable to WFAL 2 than those available to WFAL 2 for comparable transactions
from Persons who are not Affiliate of WFAL 2. WFAL 2 will maintain its chief
executive office, principal place of business and the office where it keeps its
records in the State of California and separate and apart from any office of the
Master Servicer.
Section 6. Negative Covenants of WFAL 2. WFAL 2 agrees and covenants
with Financial Security that at all times during the term of this Agreement:
a. Amendments to Organizational Documents. WFAL 2 will not amend,
supplement or otherwise modify, or cause to permit any amendment, supplement or
other modification of, any provision of its charter or its bylaws without the
prior written consent of Financial Security.
b. No Liens. Without the prior written consent of Financial
Security, WFAL 2 will not create, incur, assume or suffer to exist any mortgage,
deed of trust, security interest, assignment, deposit arrangement or other
preferential arrangement, charge or encumbrance (including, without limitation,
any conditional sale or other title retention agreement or finance lease) of any
nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, other than as provided for in the WFAL 2 Agreements, or sign
or file under the Uniform Commercial Code of any jurisdiction any financing
statement that names the WFAL 2 as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing statement,
except as so provided.
c. Creation of Indebtedness. Without the prior written consent of
Financial Security, WFAL 2 will not create, incur, assume or suffer to exist any
indebtedness other than a RIC or the WFAL 2/WFS Notes or other indebtedness
guaranteed or approved in writing by Financial Security.
d. Guarantee, Etc. Without the prior written consent of Financial
Security, WFAL 2 will not assume, guarantee, endorse or otherwise be or become
directly or contingently liable for the obligations of any Person by, among
other things, agreeing to purchase any obligation of another Person, agreeing to
advance funds to such Person or causing or assisting such Person to maintain any
amount of capital.
e. Subsidiaries. Without the prior written consent of Financial,
WFAL 2 will not form, or cause to be formed, any subsidiaries.
f. Insolvency. WFAL 2 will not commence any case, proceeding or
any action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to
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bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seek appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or make a general assignment for the benefit of
its credits. WFAL 2 will not take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in any of the acts set forth above.
WFAL 2 will not be unable to, or admit in writing its inability to, pay its
debts.
g. Impairment of Rights. WFAL 2 will not take any action or fail
to take any action that will interfere with the enforcement of any rights under
this Agreement or the other WFAL 2 Agreements.
h. No Petition Agreement. WFAL 2 covenants and agrees that, for a
period of one year plus one day after payment in full of all amounts payable in
respect of the certificates from the last outstanding Trust, it will not
institute against, or join any other Person in instituting against any Depositor
or WFS any bankruptcy, reorganization, arrangement, conservatorship,
receivership, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy, receivership or similar law, in connection with
any amounts due WFAL 2 (or any Affiliate thereof) under any Existing Agreement
or otherwise without the prior written consent of Financial Security. The
provisions of this paragraph shall survive termination of this Agreement.
Section 7. No Relief from Prior Obligations. Nothing in this
Agreement shall relieve the Bank or WFAL 2 from any obligation under any
Insurance Agreement or related agreement entered into with Financial Security
prior to the date hereof.
Section 8. Waiver. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and estop
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 9. Amendments. This Agreement may be amended, changed,
modified, altered or terminated only by written instrument or written
instruments signed by each of the parties hereto. The Original Agreement, as
amended and restated by the Amended Agreement and hereby, shall remain in full
force and effect.
Section 10. Notices. All notices and other given communications
pursuant to this Agreement shall be communicated to the addresses listed below
or to such other address or to the attention of such other person as such party
shall have designated for such purposes in a written notice to the other:
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If to Financial Security: Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Surveillance Department
If to WFAL 2: WFS Financial Auto Loans 2, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
General Counsel
If to the Bank: Western Financial Bank
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
General Counsel
Section 11. 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.
Section 12. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, transferees and assigns; provided that neither the Bank nor WFAL 2
may assign all or any part of this Agreement without the prior written consent
of Financial Security.
Section 13. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA.
Section 14. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
all of which shall be deemed to be one and the same document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the day and year first
written above.
WESTERN FINANCIAL BANK
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President & Treasurer
WFS FINANCIAL AUTO LOANS 2, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President & Controller
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ ▇▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇
Title: Managing Director
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