1
EXHIBIT 10.1
REINVESTMENT CONTRACT
AGREEMENT dated as of _______, 1997 by and between Western Financial
Bank, F.S.B. (the "Bank"), and Bankers Trust Company, not in its individual
capacity but solely in its respective capacities as trustee (the "Indenture
Trustee") and as collateral agent, under the Indenture, dated as of _______,
1997 (the "Indenture"), between the Trust and the Indenture Trustee (the
"Indenture").
BACKGROUND: Western Financial 1997-B Owner Trust (the "Trust")
created by the Trust Agreement dated as of ________, 1997, [as amended and
restated as of ________, 1997,] among WFS Financial Auto Loans, Inc., WFS
Investments, Inc., Financial Security Assurance Inc. (the "Insurer") and Chase
Manhattan Bank Delaware has issued $___________ aggregate principal amount of
____% Auto Receivable Backed Notes, Class A-1 (the "Class A-1 Notes"),
$___________ aggregate principal amount of ____% Auto Receivable Backed Notes,
Class A-2 (the "Class A-2 Notes), $___________ aggregate principal amount of
____% Auto Receivable Backed Notes, Class A-3 (the "Class A-3 Notes"),
$__________ aggregate principal amount of ____% Auto Receivable Backed Notes,
Class A-4 (the "Class A-4 Notes" and, collectively with the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, the "Notes"),
and $__________ aggregate principal amount of ____% Auto Receivable Backed
Certificates (the "Certificates"). The Contracts will be sold to the Trust and
serviced by the Master Servicer pursuant to the Sale and Servicing Agreement,
dated as of _______, 1997 (the "Sale and Servicing Agreement"), among the
Trust, WFS Financial Auto Loans, Inc. and WFS Financial Inc (the "Master
Servicer"). The Indenture Trustee as trustee under the Indenture desires to
assure that the funds deposited in or credited to the Collection Account, the
Note Distribution Account and the Certificate Distribution Account
(collectively, the "Specified Accounts") from time to time are invested and
that funds deposited in or credited to the Holding Account are held (but not
invested) and applied in accordance with the Sale and Servicing Agreement, and
the Indenture Trustee as collateral agent desires to assure that funds on
deposit from time to time in the Spread Account are invested.
The parties hereto agree as follows:
Section 1. Investments by the Indenture Trustee. Subject to Section
2, the Indenture Trustee shall invest pursuant to this Agreement (i) all funds
credited to the Specified Accounts, from time to time, on the Business Day on
which such funds are so
2
credited (such funds so invested being herein referred to as the "Specified
Account Invested Funds"), and (ii) all funds credited to the Spread Account,
from time to time, on the Business Day on which such funds are so credited
(such funds so invested being herein referred to as the "Spread Account
Invested Funds"). The Indenture Trustee, in addition, shall deliver to the
Bank pursuant to this Agreement all funds in the Holding Account, from time to
time, on the Business Day on which such funds are so credited (such funds so
held being herein referred to as the "Holding Account Deposited Funds"). The
Specified Invested Funds and the Spread Account Invested Funds are herein
referred to collectively as the "Invested Funds".
Section 2. Investment of Invested Funds. (a) The Master Servicer
will deposit in the Collection Account upon receipt certain collections on the
Contracts as described in Sections 4.01 and 5.02 of the Sale and Servicing
Agreement and the Indenture Trustee will deposit in the Spread Account, the
Note Distribution Account and the Certificate Distribution Account amounts from
time to time required to be deposited in such Accounts pursuant to Article Five
of the Sale and Servicing Agreement. Subject to paragraphs (b) and (c) below,
the Bank may invest the Invested Funds in investments selected by the Bank at
its discretion (including, without limitation, the use of such funds in the
Bank's operations) so long as this Agreement is an Eligible Investment. Except
as specified in paragraphs (b) and (c) below, it shall not be necessary for the
Bank to segregate the Invested Funds or the Holding Account Deposited Funds
deposited with it hereunder. If on any date this Agreement shall cease to be
an Eligible Investment or is terminated, then on such date and on each date
thereafter funds in the Specified Accounts will not be delivered to and
invested by the Bank but will instead be invested by the Indenture Trustee in
Eligible Investments pursuant to the Sale and Servicing Agreement, funds in the
Holding Account will be maintained in such Account and will not be deposited
with the Bank pursuant to this Agreement and funds in the Spread Account will
(in each case) not be invested by the Bank but will instead be invested by the
Indenture Trustee as collateral agent in Eligible Investments pursuant to the
Sale and Servicing Agreement.
(b) If on any date the Insurer, acting in its sole discretion,
shall have notified the Bank and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Specified Account
Invested Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Specified Account
Invested Funds shall be held in segregated trust accounts established by the
Indenture Trustee as Eligible Accounts at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Invested Funds held in an
account established pursuant to this paragraph shall be invested in Eligible
Investments, except pursuant to paragraph (a) above, pursuant to instructions
by the Bank in its discretion or, in the absence of
2
3
such instructions by the Bank or if any Event of Default shall have occurred
and is continuing, pursuant to instructions by the Insurer.
(c) If on any date the Insurer, acting in its sole discretion,
shall have notified the Bank and the Indenture Trustee (in its capacity as
collateral agent) in writing that the Spread Account Invested Funds are to be
held in a segregated trust account, then on such date (or, if such date is not
a Business Day, the next succeeding Business Day) and on each day thereafter
during the term of this Agreement all Spread Account Invested Funds shall be
held in a segregated trust account established by the Indenture Trustee as an
Eligible Account at Bankers Trust Company or at another depositary institution
approved by the Insurer. All Invested Funds held in an account established
pursuant to this paragraph shall be invested in Eligible Investments, except
pursuant to paragraph (a) above, pursuant to instructions by the Master
Servicer or, in the absence of such instructions, as otherwise provided in
Section 5.06(c) of the Sale and Servicing Agreement.
(d) If on any date the Insurer, acting in its sole discretion,
shall have notified the Bank and the Indenture Trustee (in its capacity as
Indenture Trustee under the Indenture) in writing that the Holding Account
Deposited Funds are to be held in a segregated trust account, then on such date
(or, if such date is not a Business Day, the next succeeding Business Day) and
on each day thereafter during the term of this Agreement all Holding Account
Deposited Funds shall be held in a segregated trust account established by the
Indenture Trustee as an Eligible Account at Bankers Trust Company or at another
depositary institution approved by the Insurer. All Holding Account Deposited
Funds held in an account established pursuant to this paragraph shall not be
invested.
Section 3. Payments by the Bank. The Bank shall be obligated to make
payments in accordance with this Section until this Agreement shall have
terminated and all amounts owing by the Bank under this Agreement shall have
been paid by the Bank in full. On the fifth Business Day prior to each
Distribution Date, the Bank shall deposit (A) in the related Specified Account,
the portion of the Specified Account Invested Funds allocable to such Specified
Account with respect to such Distribution Date plus the amount, if any (the
"Reinvestment Earnings"), by which the Interest Payment (as defined below) for
such Distribution Date exceeds the sum of (i) the aggregate amount of interest
collected on the Contracts (adjusted with respect to each Contract to the
Pass-Through Rate and exclusive of such collections that have been paid to the
Master Servicer in reimbursement of a previous Advance) that is part of the Net
Collections for such Distribution Date and (ii) the amount of the interest
portion of the Advance for the related Due Period
3
4
(assuming for this purpose that an Advance was made in respect of each
delinquent Contract), and (B) in the Spread Account, the Spread Account
Invested Funds, (C) in the Holding Account, the Holding Account Deposited
Funds; provided, however, that if Invested Funds (or Holding Account Deposited
Funds, as the case may be) are held in one or more segregated trust accounts at
the Indenture Trustee or another depositary institution pursuant to paragraph
(b), (c), or (d) of Section 2, then the Indenture Trustee shall, on the fifth
Business Day prior to each Distribution Date, make or cause to be made the
following respective deposits (as paragraphs (b), (c), and (d) of Section 2 are
then applicable, respectively): (A) in each Specified Account, the Specified
Account Invested Funds with respect to such Specified Account and such
Distribution Date plus the net reinvestment income, if any, thereon, (B) in the
Spread Account, the Spread Account Invested Funds plus the net reinvestment
income, if any, thereon, (C) in the Holding Account, the Holding Account
Deposited Funds; provided, further, that solely for purposes of this Agreement
the Interest Payment for the first Distribution Date shall be calculated as
interest for the period from the Cut-Off Date to and including _______, 1997.
"Interest Payment" means, with respect to any Distribution
Date, an amount equal to the sum of (i) interest at the Class A-1 Interest Rate
on the outstanding principal balance of the Class A-1 Notes as of the
immediately preceding Distribution Date, (ii) interest at the Class A-2
Interest Rate on the outstanding principal balance of Class A-2 Notes as of the
immediately preceding Distribution Date, (iii) interest at the Class A-3
Interest Rate on the outstanding principal balance of Class A-3 Notes as of the
immediately preceding Distribution Date, (iv) interest at the Class A-4
Interest Rate on the outstanding principal balance of the Class A-4 Notes as of
the immediately preceding Distribution Date, and (v) interest at the Pass
Through Rate on the Certificate Balance as of the immediately preceding
Distribution Date.
Section 4. Timing of Payments. On the fifth Business Day immediately
prior to each Distribution Date (each, a "RIC Maturity Date"), (i) the
investment pursuant to this Agreement of Specified Account Invested Funds with
respect to such Distribution Date and of all Spread Account Invested Funds
shall mature and be due and payable, and the Holding Account Deposited Funds
shall be required to be returned to and deposited into the Holding Account.
Section 5. Manner of Payments. Deposits into any Specified Account
by the Bank in accordance with this Agreement shall be made in immediately
available funds to such Specified Account under advice to the Indenture Trustee
at its address set forth in Section 8. Deposits into the Spread Account by the
Bank in accordance with this Agreement shall be made in immediately
4
5
available funds to the Spread Account under advice to the Indenture Trustee as
collateral agent at its address set forth in Section 8. Deposits into the
Holding Account by the Bank in accordance with this Agreement shall be made in
immediately available funds to the Holding Account under advice to the
Indenture Trustee at its address set forth in Section 8.
Section 6. Term of Agreement. This Agreement shall terminate on the
first date on which (i) the Notes and the Certificates shall have been paid in
full as provided in the Sale and Servicing Agreement, (ii) the Bank shall have
paid the aggregate amount of all Specified Account Invested Funds and Holding
Account Deposited Funds hereunder to the Indenture Trustee and the aggregate
amount of all Class A-1 Spread Account Invested Funds hereunder to the
Indenture Trustee as collateral agent, and (iii) the Bank shall have paid all
other remaining amounts owing by it hereunder; provided that no termination of
this Agreement shall limit or restrict any rights of the Insurer under the
Insurance Agreement to recover Unreimbursed Insurer Amounts in respect of any
claims paid under the Policies in respect of this Agreement. This Agreement
may be terminated by the Bank, with the prior written consent of the Insurer,
upon written notice to the Insurer and the Indenture Trustee on any date
following receipt by the Bank of a notice from the Insurer pursuant to
paragraph (b) of Section 2 hereof; provided that such termination by the Bank
may occur on any RIC Maturity Date without such consent of the Insurer if (i)
the Bank shall have made all of the payments referred to in clauses (ii) and
(iii) of the immediately preceding sentence, and (ii) the Bank shall have paid
the amount of the pro rata portion of Reinvestment Earnings and net
reinvestment income accrued under Section 3 but not otherwise owing on such RIC
Maturity Date. If on any date this Agreement shall cease to be an Eligible
Investment, then (A) on such date and on each date thereafter funds in the
Specified Accounts and in the Spread Account will be invested, and funds in the
Holding Account will be maintained, in the manner specified in the last
sentence of Section 2(a), (B) on the next succeeding RIC Maturity Date the Bank
shall make all of the payments referred to in clause (ii) of the second
preceding sentence (other than Specified Account Invested Funds, if any,
relating to the second Distribution Date immediately following such RIC
Maturity Date) and clause (iii) of the second preceding sentence, and (C) on
the RIC Maturity Date next succeeding the RIC Maturity Date referred to in
clause (B) of this sentence, the Bank shall pay the aggregate amount of any
remaining Specified Account Invested Funds hereunder to the Indenture Trustee
and shall pay all remaining amounts owing by the Bank hereunder, including the
pro rata portion of Reinvestment Earnings and net reinvestment income accrued
under Section 3 for the period ending on such date, to the Indenture Trustee,
as trustee under the Indenture and as collateral agent, respectively, in the
manner specified in Section 5, and upon the making of all such payments
pursuant to clauses (B) and (C) of this
5
6
sentence this Agreement shall terminate; provided, that no such termination of
this Agreement shall limit or restrict any rights of the Insurer under the
Insurance Agreement to recover Unreimbursed Insurer Amounts in respect of any
claims paid under the Policies in respect of this Agreement. Notwithstanding
that the Notes have been paid in full, the Indenture Trustee shall continue to
perform its obligations pursuant to this Agreement until the Certificate
Balance is reduced to zero.
Section 7. Representations. The Indenture Trustee, solely in its
respective capacities as trustee under the Indenture and as collateral agent
and not in its individual capacity, and the Bank represent and warrant, each as
to itself to the other, that this Agreement has been duly authorized, executed
and delivered and constitutes a valid and binding agreement of the Indenture
Trustee (in such respective capacities) and the Bank, respectively, and that
neither the execution and delivery of this Agreement nor the performance of the
obligations of the Indenture Trustee (in such respective capacities) or 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 Indenture
Trustee (in such respective capacities) or the Bank or to which the Bank or the
Indenture Trustee (in such respective capacities) is a party or by which the
Bank or the Indenture Trustee is bound.
Section 8. Notices. All notices and other communications given
pursuant to this Agreement shall be communicated to the addresses listed below,
in each case with a copy to Financial Security Assurance Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance Department, or to such other
address or to the attention of such other person as such party shall have
designated for such purpose in a written notice to the other:
If to the Indenture Bankers Trust Company
Trustee, as trustee Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
under the Indenture ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and as collateral Attention: Corporate Trust
agent Department - Asset
Backed Group
If to the Bank: Western Financial Bank, F.S.B.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Section 9. Terms. All capitalized terms used herein and not defined
herein shall have the meanings assigned to them in the Sale and Servicing
Agreement or, if not otherwise defined in the Sale and Servicing Agreement, in
the Indenture, as applicable.
6
7
Section 10. Amendments. This Agreement may not be amended except
with the prior written consent of the Insurer pursuant to an instrument signed
by each party hereto.
Section 11. 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 the Bank may not
assign all or any part of this Agreement without the prior written consent of
the Insurer.
Section 12. 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, except that the duties of the Indenture
Trustee, as trustee under the Indenture and as collateral agent, shall be
governed by the laws of the State of New York.
Section 13. 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.
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, F.S.B.
By: __________________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee under
the Indenture and as collateral agent
By: __________________________________
Name:
Title:
7
