EXHIBIT 10.44
COLLATERAL ASSIGNMENT AGREEMENT
COLLATERAL ASSIGNMENT AGREEMENT dated as of July 1, 2004 (the "Agreement")
is by and among WESTERN FINANCIAL BANK, a federally chartered savings bank (the
"Bank"), WFS Financial Auto Loans 2, Inc. ("WFAL2"), and WFS Financial Inc
("WFS"). Capitalized terms used without definition have the meanings set forth
in Article I hereof.
R E C I T A L S
WHEREAS, WFAL2 is a wholly owned subsidiary of WFS;
WHEREAS, WFS is a majority owned subsidiary of the Bank;
WHEREAS, WFAL2 desires to have the Bank post certain amounts of
Collateral, from time to time, on its behalf pursuant to those certain Interest
Rate Swap Agreements ("Swap Agreements") to which it is a party;
WHEREAS, WFAL2 and WFS are parties to that certain Short-Term Investment
Agreement dated August 30, 2002, as amended ("ST Agreement");
WHEREAS, pursuant to the ST Agreement, WFAL2 authorizes WFS to provide the
Bank with Restricted Cash in order for the Bank to provide Collateral to Third
Party pursuant to the Swap Agreements;
WHEREAS, the Bank is desirous of posting such Collateral if secured by
Restricted Cash in order to maximize the Bank's earnings assets.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
and in reliance upon the recitals set forth above, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms shall have the following
respective meanings:
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(a) "Business Day" means any day that is not (a) a Saturday or
Sunday or (b) a day on which banking institutions in the State of
California are authorized or obligated by law or executive order to be
closed.
(b) "Collateral" means any assets and properties acceptable to the
Third Party pursuant to the Swap Agreements.
(c) "Default" means (i) any failure by WFAL2 or WFS to Deliver
Restricted Cash as and when required hereunder, (ii) any other material
breach by WFAL2 or WFS of its obligations hereunder and failure to cure
such breach within two (2) Business Days after receipt of notice.
(d) "Delivery" means, with respect to Collateral, all "instruments"
and "certificated securities" payable to the order of the Bank or
specially indorsed to the Bank;
(e) "Lien" means, as applied to the property or assets (or the
income, proceeds, products, rents or profits ---- therefrom) of any
Person, in each case whether the same is consensual or nonconsensual or
arises by contract, operation of law, legal process or otherwise: (a)
any mortgage, lien, pledge, attachment, charge, lease, conditional sale
or other title retention agreement, or other security interest or
encumbrance of any kind; or (b) any arrangement, express or implied,
under which such property or assets (and/or such income, proceeds,
products, rents or profits) are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same
for payment of debt or performance of any other obligation in priority
to the payment of the general, unsecured creditors of such Person.
(f) "Person" means any individual, sole proprietorship, joint stock
company, unincorporated association, joint venture, corporation,
partnership, business or owner trust, government, governmental
department or agency or any other entity whatsoever.
(g) "Restricted Cash Account" means the amounts placed in general
ledger account with the Bank by or on behalf of WFAL2.
(h) "Third Party" means that certain entity that is a counterparty
to the Swap Agreements with WFAL2 pursuant to which the Restricted Cash
and Collateral are being posted.
(i) "Termination Date" means the date which is the earlier of (a)
the date on which the Bank and WFAL2 have mutually agreed upon or (b)
as required by law, regulation, or government order.
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(j) "Uniform Commercial Code" or "UCC" means the Uniform Commercial
Code as in effect in the State of California or other applicable
jurisdiction.
(k) "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
OBLIGATIONS
Section 2.01. WFAL2 agrees to post cash plus an annual fee of .125%
(the "Restricted Cash") to the Bank, from time to time, in an amount equal
to or greater than the Collateral it desires to have the Bank post for the
benefit of Third Party.
Section 2.02. The Bank shall maintain such Restricted Cash in the
Restricted Cash Account and will pledge Collateral to Third Party, as
notified from time to time by or on behalf of WFAL2.
ARTICLE III
THE COLLATERAL
Section 3.01. Security Interests.
(a) The "Restricted Cash" shall at any time consist of:
(i) any assets or property posted by or on behalf of WFAL2 to
Bank from time to time;
(ii) the related documentation, and all proceeds, income and
profits thereon, and all interest, principal and other payments and
distributions with respect thereto;
(iii) all rights and remedies for the enforcement of payment of
any principal, interest and proceeds;
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(iv) any collateral securing any Restricted Cash 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 Restricted Cash;
(v) 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
Restricted Cash;
(vi) any cash, securities or other property received on account
of the Restricted Cash from any liquidation thereof or any
adjustment of debt of the obligors and any portion of the Restricted
Cash which may be distributed in kind in connection with any such
liquidation or adjustment of debt of the obligors;
(vii) the Restricted Cash Account and each other account, if any,
established by or with the Third Party hereunder; and
(viii) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing.
(b) The Bank agrees that it will not (i) use any adverse selection
method in including Collateral hereunder, and (ii) include any
Collateral which would be charged off in accordance with its normal
accounting practices. If any Collateral Delivered to the Third Party
hereunder shall be or become subject to charge off by the Third Party,
the Bank will promptly substitute new Collateral therefor to the extent
necessary to satisfy the requirements of Section 3.02 hereof.
In order to effectuate the provisions and purposes of this
Agreement, including to effectuate the collateral assignment to the
Third Party pursuant to this Section 3, the Bank hereby Delivers, and
in the future agrees to Deliver, to the Third Party, all items of
Collateral pledged by it hereunder in which a security interest must be
perfected by possession ("Security Interest"). The Bank hereby agrees
to take all additional steps that may be necessary or reasonably
requested by the Third Party or WFAL2 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.
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The Security Interests are granted as security only and shall not
(i) transfer or in any way affect or modify, or relieve WFAL2, from any
obligation to perform or satisfy, any term, covenant, condition or
agreement to be performed or satisfied by it under or in connection with
this Agreement or with the Third Party, (ii) impose any obligation on the
Bank to perform or observe any such term, covenant, condition or agreement
or impose any liability on the Bank 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 3.02. Priority. WFAL2, intends that the Security Interests granted
hereunder to be prior to all other Liens with respect to the Restricted Cash,
and WFAL2 shall take all actions necessary to obtain and maintain, in favor of
the Bank, a first lien on and a first priority, perfected security interest in
the Restricted Cash other than in general intangibles and rights under insurance
policies not perfected by the means used to perfect the Security Interest in the
items of Restricted Cash.
Section 3.03. Maintenance of Restricted Cash.
(a) Safekeeping. The Bank agrees to maintain the Restricted Cash
received by it and all records and documents relating thereto at the Bank.
The Bank shall keep or cause to be kept all Restricted Cash 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 Restricted Cash and the
Restricted Cash Account in such a manner as shall enable the Bank to
verify the accuracy of such record-keeping. The Bank's books and records
shall at all times show that the Restricted Cash is held by the Bank on
behalf of WFAL2. The Bank will promptly report to WFAL2 or its designee
any failure on its part to hold the Restricted Cash as provided in this
Section and will promptly take appropriate action to remedy any such
failure.
(b) Access. The Bank, or its respective duly authorized
representative, attorney, auditor or designee, shall permit WFAL2 or its
designee to inspect the Restricted Cash or Collateral in its possession or
otherwise under the control of the Third Party.
Section 3.04. General Authority. WFAL2 hereby irrevocably appoints the
Bank as its true and lawful attorney, with full power of substitution, to
exercise, at any time while a Default has occurred and is continuing, all or any
of the following powers with respect to all or any of the Restricted Cash:
(i) to demand, xxx for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof,
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(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and
effectually as if the Bank were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference
thereto;
Provided that the Bank will give WFAL2 or its designee such prior notice of the
time and place of sale of any of the Restricted Cash as may be required pursuant
to Section 6.01 hereof.
ARTICLE IV
THE COLLATERAL ACCOUNT
Section 4.01. Collateral Account Funds. Payments on the Collateral
received by the Third Party shall be paid over to the Bank.
Section 4.02. General Provisions Regarding the Accounts. Upon Delivery
or other pledge of Restricted Cash hereunder, the Bank will have a valid
perfected first priority security interest in such Restricted Cash.
Section 4.03. Waiver of Setoffs. The Bank hereby expressly waives any
and all rights of setoff that the Bank may otherwise at any time have
under applicable law with respect to the Restricted Cash Account and
agrees that amounts in the Restricted Cash Account shall at all times be
held and applied solely in accordance with the provisions of this
Agreement.
Section 4.04. Control by the Bank. WFAL2 shall comply with notices and
instructions given by the Bank only if expressly contemplated hereby.
ARTICLE V
COVENANTS OF THE BANK AND WFAL2 AND WFS
Section 5.01. Preservation of Collateral. The Bank 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 the Bank to
perform its obligations with respect to such Collateral as provided
herein. The Bank will do, execute, acknowledge and
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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 to perfect the Security Interests granted hereunder (a) to Third
Party, 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, as pledgor, shall be obligated to
create for the benefit of the Third Party a valid first Lien on, and valid
and perfected, first priority security interest in, all Collateral so
delivered and to deliver such Collateral to the Third Party, free and
clear of any other Lien, together with satisfactory assurances thereof,
and to pay any reasonable costs incurred by the Bank or otherwise in
connection with such Delivery.
Section 5.02. Waiver of Stay or Extension Laws; Marshalling of Assets.
The Bank covenants, to the fullest extent permitted by applicable law,
that it 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, to the fullest extent permitted by applicable law hereby waives
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 Bank, but
will suffer and permit the execution of every such power as though no such
law had been enacted. The Bank shall waive, to the fullest extent
permitted by applicable law, all right to have the Collateral marshalled
upon any foreclosure or other disposition thereof.
Section 5.03. Representations and Warranties of WFAL2 and WFS. Upon
receipt by the WFAL2, WFS or the Bank of a notice stating that a Default
has occurred and is continuing, the defaulting party shall deliver to the
non-defaulting party(ies) all documents and instruments related thereto.
Section 5.04. Licenses: Compliance with Laws. Each of WFAL2 and WFS
have all licenses, franchises, permits and authorizations necessary for
the lawful conduct by WFAL2 or WFS of its business. Each of WFAL2 and WFS
have not violated, and is not in violation of, any such licenses,
franchises, permits or authorizations or any applicable statutes, laws,
ordinances, rules or regulations of any federal, state, or local
governmental bodies, agencies or subdivisions having, asserting or
claiming jurisdiction over it or over any part of its operations.
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Section 5.05. Corporate Existence and Qualifications.
(a) WFAL2 is a corporation or association duly organized, validly
existing and in good standing under the laws of the State of Nevada
with full corporate power to own its properties and to carry on its
business as now owned and operated by WFAL2.
(b) WFS is a corporation or association duly organized, validly
existing and in good standing under the laws of the State of California
with full corporate power to own its properties and to carry on its
business as now owned and operated by WFS.
Section 5.06. Covenants Regarding Corporate Existence.
(a) Preservation of Corporate Existence and Qualifications. Each of
WFAL2 and WFS will keep in full effect its existence, rights and
franchises as a corporation or association under the laws of the
jurisdiction in which organized and will obtain and preserve its
qualifications to carry on business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary.
(b) Observation of Corporate Formalities. Each party shall at all
times observe the applicable legal requirements for the recognition of
the other(s) as a corporate entity(ies) separate and apart from each
other, including without limitation the following:
(i) Each party shall maintain corporate records and books of
account separate from those of the other party(ies);
(ii) Each party shall not at any time commingle its funds with
another party;
(iii) Each party shall hold meetings of the Board of Directors
as appropriate to authorize its corporate actions;
(iv) Each party shall hold meetings of its shareholder(s) as
appropriate and as required by the Corporations Code of the
jurisdiction in which organized to authorize its actions;
(v) Each party shall file all reports required by the
Secretary of State in all jurisdictions in which it is licensed
or qualified, including the annual statement by whatever name
denominated, in a timely manner; and
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(vi) Each party shall ensure that yearly franchise taxes are
paid in a timely manner so as to maintain its corporate existence
uninterrupted.
Section 5.07. Regulations. Each of the parties shall comply with all
applicable federal and state regulations, including OTS.
Section 5.08. Liability: Consultation with Counsel. The Bank shall
assume no responsibility or liability with respect to the business or
affairs of WFAL2 or WFS. WFAL2 and WFS shall indemnify, defend and hold
harmless the Bank against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies (collectively the "Claims"), including
without limitation interest penalties and attorney's fees, that the
Bank shall incur or suffer, which arise, result from or relate to (i)
conduct by WFAL2 or WFS of its business and operations and (ii) breach
by WFAL2 or WFS of its obligations pursuant to this Agreement.
Notwithstanding anything contained herein to the contrary, WFAL2's or
WFS's obligations pursuant to this section shall not be applicable to
Claims arising directly from the Bank's bad faith, gross negligence or
willful misconduct. This Agreement shall create no right, benefit or
privilege in favor of any person not a party hereto, and no person not
a party hereto shall have any recourse against the Bank for any advice,
service or facility provided or omitted by the Bank pursuant to this
Agreement. The Bank may consult with legal counsel (who may also be
counsel to WFAL2 or WFS) concerning any questions that may arise with
respect to its duties and obligations hereunder, and it shall be fully
protected in respect of any action taken or omitted by it hereunder in
good faith reliance on any opinion of such counsel with respect to any
such duty or obligation.
ARTICLE VI
REMEDIES UPON DEFAULT
Section 6.01. Rights and Remedies Upon Default.
(a) In addition to and not in limitation of the rights otherwise
provided to the Bank pursuant to this Agreement, to the fullest
extent permitted by applicable law, if a Default has occurred and is
continuing, the Bank may in its discretion exercise the following
rights, privileges and remedies:
(b) Collection of the Collateral. The Bank shall have the right
to collect all proceeds of the Collateral or Restricted Cash, to pay
all expenses of such collection, including the reasonable expenses
and compensation of the Bank, its agents and attorneys, and to apply
the remainder of the moneys so received as provided herein.
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(c) In the event that WFAL2 or WFS shall default in the
performance or observance of any covenant or agreement contained
herein, the Bank shall have the right to take any action or initiate
any proceeding at law or equity available to it to enforce the terms
of this Agreement.
Section 6.02. No Remedy Exclusive. No right or remedy herein
conferred upon or reserved to the Bank is intended to be exclusive of
any other right or remedy, and every right or remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law,
in equity or otherwise, and each and every right, power and remedy
whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be
deemed expedient by the Bank, 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
MISCELLANEOUS
Section 7.01. Further Assurances. WFAL2 and WFS 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 Bank 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 federal or state regulations if mutually agreed by
the parties hereto and if there is no such mutual agreement, the Bank,
WFAL2 and WFS shall agree to terminate this Agreement.
Section 7.02. 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 7.03. 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
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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 Bank hereunder is unavailable or unenforceable shall not affect
in any way the ability of the Bank to pursue any other remedy available
to it.
Section 7.04. 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:
Western Financial Bank
00000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
(ii) If to WFAL2:
WFS Financial Auto Loans 2, Inc.
Xxxxxxx Xx. Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
(iii) If to WFS:
WFS Financial Inc
00 Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
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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 7.05. 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 WFAL2 under this
Agreement, shall be released to and in favor of WFAL2 or its designee.
Section 7.06. This Agreement may be terminated by either party
without cause upon five (5) days prior written notice and may be
terminated immediately for breach of any covenant, obligation, or duty
herein contained or for violation of law, ordinance, statute, rule or
regulation (collectively referred to as "law") governing the conduct of
either party hereto.
Section 7.07. This Agreement may be modified, amended or superseded
in whole or in part, at any time, by a writing executed by the parties
hereto.
Section 7.08. This Agreement shall be governed by the laws of
California, except to the extent any such laws are superseded by
federal law or regulation.
Section 7.09. This Agreement may be executed in counterparts, all of
which, taken together shall constitute one agreement.
Section 7.10. Neither party shall assign this Agreement without the
prior written consent of the other party, which consent shall not
unreasonably be withheld.
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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 2, INC.
By: ________________________________
Name:
Title:
WFS FINANCIAL INC
By: ________________________________
Name:
Title:
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