Document:

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                                                                  EXHIBIT 10.4.2

                                                                     CCR&W DRAFT
                                                                          3/2/00

                               ENDORSEMENT NO. 1

FINANCIAL SECURITY                          350 Park Avenue
ASSURANCE INC.                              New York, New York  10022

OBLIGOR:              WFS Financial ________ Owner Trust

OBLIGATIONS:          $________ ____% Auto Receivable Backed Notes, Class A-1,
                      $________ ____% Auto Receivable Backed Notes, Class A-2,
                      $________ ____% Auto Receivable Backed Notes, Class A-3,
                                      and
                      $________ ____% Auto Receivable Backed Notes, Class A-4

Date of Issuance:     _______________
Policy No.:           _______________

               1. Definitions. For all purposes of this Policy, 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, dated as of
_______________, by and among the Trust, WFS Financial Auto Loans, Inc., as a
Seller, WFS Receivables Corporation, as a Seller, and WFS Financial Inc, as
Master Servicer (as amended from time to time in accordance with its terms, the
"Sale and Servicing Agreement") or, if not defined therein, then in the
Indenture, dated as of _______________, by and between the Trust and Bankers
Trust Company, unless the context shall otherwise require.

               "Business Day" means any day other than (i) a Saturday or Sunday,
or (ii) a day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to be closed.

               "Guaranteed Payments" means, as to each Distribution Date, the
amount equal to the sum of (i) the Guaranteed RIC Payments for such Distribution
Date and (ii) the Scheduled Payments for such Distribution Date less the amount
of any payment under this Policy of the Guaranteed RIC Payments for such
Distribution Date that is required to be applied pursuant to the Sale and
Servicing Agreement to pay such Scheduled Payments; provided, however, that the
aggregate amount of payments guaranteed to be paid under this Policy shall not
exceed the Outstanding Amount of the Notes plus all interest thereon.

               "Guaranteed RIC Payments" means (i) with respect to the first
Distribution Date to occur during any period in which Financial Security's
claims-paying ability is not rated Aa2 or higher by Moody's and AAA by Standard
& Poor's and amounts in the Collection Account, Note Distribution Account,
Certificate Distribution Account and the Spread Account shall have been invested
in the RIC pursuant to Section 2(a) thereof, an amount equal to the RIC Payment

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Amount for such Distribution Date, (ii) with respect to the second Distribution
Date to occur during any period in which Financial Security's claims-paying
ability is not rated Aa2 or higher by Moody's and AAA by Standard & Poor's and
amounts in the Collection Account in respect of such second Distribution Date
shall have been invested in the RIC pursuant to Section 2(a) thereof, an amount
equal to the Supplemental RIC Payment Amount for such second Distribution Date,
and (iii) with respect to any other date, zero; provided, however, that with
respect to clauses (i) and (ii) above, the amount payable in respect of the
Guaranteed RIC Payments under this Policy on any Distribution Date shall not
exceed the Scheduled Payments for such Distribution Date.

               "Indenture Trustee" means Bankers Trust Company, as trustee under
the Indenture, and any successor in such capacity.

               "Policy" means this Financial Guaranty Insurance Policy and
includes each endorsement thereto.

               "Receipt" and "Received" mean actual delivery to Financial
Security and to the Fiscal Agent (as defined below), if any, prior to 12:00
noon, New York City time, on a Business Day; delivery either on a day that is
not a Business Day, or after 12:00 noon, New York City time, shall be deemed to
be receipt on the next succeeding Business Day. If any notice or certificate
given hereunder by the Indenture Trustee is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so notify
the Indenture Trustee and the Indenture Trustee may submit an amended notice.

               "RIC" means the Reinvestment Contract, dated as of November 1,
1999, among Western Financial Bank, WFS Financial Auto Loans 2, Inc. and the
Indenture Trustee, as in effect on the date of this Policy and without regard to
any amendment or modification of the RIC except amendments or modifications to
which Financial Security has given its prior written consent.

               "RIC Payment Amount" means, as to any Distribution Date, certain
obligations due and owing under the RIC for such Distribution Date in an amount
equal to the sum of (A) the Spread Account Invested Funds (as defined in the
RIC) plus the Holding Account Deposited Funds (as defined in the RIC) and (B)
the amount that is equal to the lesser of (a) the Specified Account Invested
Funds (as defined in the RIC) and (b) the amount by which (i) the sum of (x) the
aggregate amount due and owing on such Distribution Date to the Holders of the
Notes and the Certificates, (y) the amount (if any) required to be deposited out
of Excess Amounts into the Spread Account on such Distribution Date (after
giving effect to distributions and other payments required to have been made on
such date prior to such required deposit and assuming that the Spread Account
Invested Funds were available in the Spread Account for such date), and (z) the
amount of Servicing Fee due and owing to the Master Servicer on such date
exceeds (ii) the Net Collections for such Distribution Date that are otherwise
on deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.

               "Scheduled Payments" means, as to each Distribution Date, the
payment to be made to Holders in accordance with the original terms of the
Obligations when issued and

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without regard to any subsequent amendment or modification of the Obligations or
of the Indenture, except amendments or modifications to which Financial Security
has given its prior written consent, in an amount equal to (i) the Note Interest
Distributable Amount and (ii) the Note Principal Distributable Amount. Scheduled
Payments do not include payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) any election to pay principal on an
accelerated basis, including, specifically, any Repurchase Premium, (c) the
occurrence of an Event of Default under the Indenture or (d) any other cause,
unless Financial Security elects, in its sole discretion, to pay in whole or in
part such principal due upon acceleration, together with any accrued interest to
the date of acceleration. In the event Financial Security does not so elect,
this Policy will continue to guarantee payment on the Notes in accordance with
their original terms. Scheduled Payments shall not include any portion of a Note
Interest Distributable Amount due to Noteholders because a notice and
certificate in proper form as required by paragraph 2 hereof was not timely
Received by Financial Security, unless, in each case, Financial Security elects,
in its sole discretion, to pay such amount in whole or in part. Scheduled
Payments shall not include any amounts due in respect of the Obligations
attributable to any increase in Interest Rate, penalty or other sum payable by
the Obligor by reason of any default or event of default in respect of the
Obligations, or by reason of any deterioration of the credit worthiness of the
Obligor, nor shall Scheduled Payments include, nor shall coverage be provided
under this Policy in respect of, any taxes, withholding or other charge with
respect to any Holder imposed by any governmental authority due in connection
with the payment of any Scheduled Payment to a Holder. Notwithstanding the
foregoing, the term "Scheduled Payments" that appears on the face of the Policy
(and only on the face of the Policy) shall mean "Guaranteed Payments" as such
term is defined in this Endorsement No. 1 to the Policy.

               "Supplemental RIC Payment Amount" means, as to the first
Distribution Date following the Distribution Date (if any) on which the
Guaranteed RIC Payment shall have been equal to the RIC Payment Amount, the
amount that is equal to the lesser of (A) the amount of remaining Specified
Account Invested Funds (if any) that is required to be a part of the Net
Collections for such Distribution Date and (B) the amount (if any) by which (i)
the sum of (x) the aggregate amount due and owing on such Distribution Date to
Holders of the Notes and the Certificates plus (y) the amount (if any) required
to be deposited out of Excess Amounts into the Spread Account on such
Distribution Date (after giving effect to distributions and other payments
required to have been made on such date prior to such required deposit) exceeds
(ii) the Net Collections for such Distribution Date that are otherwise on
deposit in the Collection Account and available for payment of the amounts
referred to in clause (i) above pursuant to the Sale and Servicing Agreement.

               "Term of this Policy" means the period from and including the
Closing Date to and including the date on which (i) all Scheduled Payments have
been paid that are required to be paid by the Obligor within the meaning of
Section 4.01 of the Indenture, (ii) any period during which any Scheduled
Payment could have been voided in whole or in part as a preference payment under
applicable bankruptcy, insolvency, receivership or similar law has expired, and
(iii) if any proceedings requisite to voidance as a preference payment have been
commenced prior to the occurrence of (i) and (ii), a final and nonappealable
order in resolution of each such proceeding has been entered.

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               2. Notices and Conditions to Payment in Respect of Guaranteed
Payments. Following Receipt by Financial Security of a notice and certificate
from the Trustee in the form attached as Exhibit A to this Endorsement,
Financial Security will pay any amount payable hereunder in respect of
Guaranteed Payments out of the funds of Financial Security on the later to occur
of (a) 12:00 noon, New York City time, on the fourth Business Day following
Receipt of such notice and certificate and (b) 12:00 noon, New York City time,
on the Distribution Date to which such claim relates. Payments due hereunder, in
respect of Guaranteed Payments, will be disbursed by wire transfer of
immediately available funds to the Indenture Trustee.

               Financial Security shall be entitled to pay any amount hereunder
in respect of Guaranteed Payments, including any acceleration payment, whether
or not any notice and certificate shall have been Received by Financial Security
as provided above; provided, however, that by acceptance of this Policy the
Indenture Trustee agrees to provide upon request to Financial Security a notice
and certificate in respect of any such payments made by Financial Security.
Financial Security's obligations hereunder in respect of Guaranteed Payments
shall be discharged to the extent funds are disbursed by Financial Security as
provided herein, whether or not such funds are properly applied by the Indenture
Trustee.

               3. Notices and Conditions to Payment in Respect of Guaranteed
Payments Avoided as Preference Payments. If any Guaranteed Payment is avoided as
a preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order referred to below or (b) the first to occur of (i) the fourth Business
Day following Receipt by Financial Security from the Indenture Trustee of (A) a
certified copy of the order of the court or other governmental body which
exercised jurisdiction to the effect that (x) the Holder is required to return
payments of principal of or interest paid on the Obligations or (y) the
Indenture Trustee is required to return payments of the RIC Payment Amount or
the Supplemental RIC Payment Amount paid under the RIC, during (in each case)
the Term of this Policy because such distributions or payments were avoidable as
preference payments under applicable bankruptcy law (the "Order"), (B) a
certificate of the Holder (or, in the case of the RIC, by the Indenture Trustee)
that the Order has been entered and is not subject to any stay and (C) an
assignment duly executed and delivered by the Holder, in such form as is
reasonably required by Financial Security and provided by Financial Security (x)
to the Holder irrevocably assigning to Financial Security all rights and claims
of the Holder relating to or arising under the Obligations or (y) to the
Indenture Trustee irrevocably assigning to Financial Security all rights and
claims of the Indenture Trustee relating to or arising under the RIC, to the
extent of the RIC Payment Amount and the Supplemental RIC Payment Amount, as the
case may be, in each case (as to clauses (x) and (y)) against the debtor which
made such preference payment or otherwise with respect to such preference
payment or (ii) the date of Receipt by Financial Security from the Indenture
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Indenture Trustee that such items were to be
delivered on such date and such date was specified in such notice. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order, and not to the Indenture

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Trustee or any Holder directly (unless a Holder (or, in the case of the RIC, the
Indenture Trustee) has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Indenture Trustee for distribution to
such Holder (or, in the case of the RIC, for application in accordance with the
Sale and Servicing Agreement) upon proof of such payment reasonably satisfactory
to Financial Security). In connection with the foregoing, Financial Security
shall have the rights provided pursuant to Section 5.19 of the Indenture.

               4. Governing Law. This Policy shall be governed by, and shall be
construed in accordance with, the laws of the State of New York, without giving
effect to the conflict of laws principles thereof.

               5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Indenture Trustee at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Indenture Trustee, (i) copies of all notices and documents required to be
delivered to Financial Security pursuant to this Policy shall be simultaneously
delivered to the Fiscal Agent and to Financial Security and shall not be deemed
Received until Received by both and (ii) all payments required to be made by
Financial Security under this Policy may be made directly by Financial Security
or by the Fiscal Agent on behalf of Financial Security. The Fiscal Agent is the
agent of Financial Security only and the Fiscal Agent shall in no event be
liable to any Holder for any acts of the Fiscal Agent or any failure of
Financial Security to deposit, or cause to be deposited, sufficient funds to
make payments when due under this Policy.

               6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, set-off or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.

               7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:

                      Financial Security Assurance Inc.
                      350 Park Avenue
                      New York, NY  10022
                      Attention:  Senior Vice President - Surveillance
                      Telecopy No.:  (212) 339-3518
                      Confirmation:  (212) 826-0100

               Financial Security may specify a different address or addresses
by writing mailed or delivered to the Trustee.

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               8. Priorities. In the event that any term or provision of the
face of this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.

               9. Exclusions from Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event that Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.

               10.Surrender of Policy. The Indenture Trustee shall, upon
request, surrender this Policy to Financial Security for cancellation upon
expiration of the Term of this Policy.

               IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused
this Endorsement No. 1 to be executed by its Authorized Officer.

                                    FINANCIAL SECURITY ASSURANCE INC.

                                    By
                                      ------------------------------------------
                                            Authorized Officer

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                                    EXHIBIT A

                              CERTIFICATE OF CLAIM

                             (Letterhead of Trustee)

                                     Dated:
                                           ------------------------

Financial Security Assurance Inc.
350 Park Avenue
New York, New York  10022
Attention:  Senior Vice President

               Re:    WFS Financial ______Owner Trust

               The undersigned, a duly authorized officer of Bankers Trust
Company (the "Indenture Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. _________ dated _______________ (the "Policy") issued by
Financial Security in respect of the $_______________ ____% Auto Receivable
Backed Notes, Class A-1, $_______________ ___% Auto Receivable Backed Notes,
Class A-2, $_______________ ____% Auto Receivable Backed Notes, Class A-3, and
$_______________ ____% Auto Receivable Backed Notes, Class A-4, (collectively,
the "Obligations") that:

               (i) The Indenture Trustee is the Indenture Trustee under the
        Indenture for the Holders.

               (ii) the sum of all amounts on deposit (or scheduled to be on
        deposit) in the Collection Account and Spread Account and available for
        application in accordance with the Sale and Servicing Agreement will be
        $_________ (the "RIC Shortfall") less than the Guaranteed RIC Payment.
        Of such RIC Shortfall, $__________ is attributable to the Guaranteed RIC
        Payment amount to be paid to the Indenture Trustee for deposit into the
        Collection Account and $__________ is attributable to Guaranteed RIC
        Payment amount to be paid to the Indenture Trustee as collateral agent
        for deposit into the Spread Account.

               (iii) The sum of all amounts on deposit (or scheduled to be on
        deposit) in the Note Distribution Account and available for distribution
        to the Holders pursuant to the Indenture will be $ (the "Note
        Shortfall") less than the aggregate amount of Scheduled Payments with
        respect to [DISTRIBUTION DATE]. Of such Note Shortfall, $__________ is
        attributable to Scheduled Payments to be made to Holders of the
        Obligations.

               (iv) The Indenture Trustee is making a claim under the Policy
        [(i) for the RIC Shortfall to be applied to payment of the Guaranteed
        RIC Payment and (ii)] for the Note

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        Shortfall to be applied to distributions of principal or interest or
        both with respect to the Obligations.

               (v) The Indenture Trustee agrees that, following receipt of funds
        from Financial Security, it shall (a) hold such amounts in trust and
        apply the same directly to the payment of Guaranteed Payments; (b) not
        apply such funds for any other purpose; (c) not commingle such funds
        with other funds held by the Indenture Trustee; and (d) maintain an
        accurate record of such payments with respect to each Obligation and
        with respect to the RIC and the corresponding claim on the Policy and
        proceeds thereof and, if the Obligation is required to be surrendered or
        presented for such payment, shall stamp on each such Obligation the
        legend $"[insert applicable amount] paid by Financial Security and the
        balance hereof has been cancelled and reissued" and then shall deliver
        such Obligation to Financial Security.

               (vi) The Indenture Trustee, on behalf of the Holders, hereby
        assigns to Financial Security the rights of the Holders with respect to
        the Obligations to the extent of any payments under the Policy,
        including, without limitation, any amounts due to the Holders in respect
        of securities law violations arising from the offer and sale of the
        Obligations and any amounts due and owing but unpaid under the RIC. The
        foregoing assignment is in addition to, and not in limitation of, rights
        of subrogation otherwise available to Financial Security in respect of
        such payments. Payments to Financial Security in respect of the
        foregoing assignment shall in all cases be subject to and subordinate to
        the rights of the Holders to receive all Guaranteed Payments in respect
        of the Obligations. The Indenture Trustee shall take such action and
        deliver such instruments as may be reasonably requested or required by
        Financial Security to effectuate the purpose or provisions of this
        clause (vi).

               (vii) The Indenture Trustee, on its behalf and on behalf of the
        Holders, hereby appoints Financial Security as agent and
        attorney-in-fact for the Indenture Trustee and each such Holder in any
        legal proceeding with respect to the Obligations. The Indenture Trustee
        hereby agrees that Financial Security may at any time during the
        continuation of any proceeding by or against any debtor with respect to
        which a preference claim (as defined below) or other claim with respect
        to the Obligations or the RIC is being asserted under the United States
        Bankruptcy Code or any other applicable bankruptcy, insolvency,
        receivership, rehabilitation or similar law (an "Insolvency Proceeding")
        direct all matters relating to such Insolvency Proceeding, including
        without limitation, (A) all matters relating to any claim in connection
        with an Insolvency Proceeding seeking the avoidance as a preferential
        transfer of any payment made with respect to the Obligations or the RIC
        (a "Preference Claim"), (B) the direction of any appeal of any order
        relating to any Preference Claim at the expense of Financial Security
        but subject to reimbursement as provided in the Insurance Agreement and
        (C) the posting of any surety, supersedeas or performance bond pending
        any such appeal. In addition, the Indenture Trustee hereby agrees that
        Financial Security shall be subrogated to, and the Indenture Trustee on
        its behalf and on behalf of each Holder, hereby delegates and assigns,
        to the fullest extent permitted by law, the rights of the Indenture
        Trustee and each Holder in the conduct of any Insolvency Proceeding,
        including, without limitation, all

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        rights of any party to an adversary proceeding or action with respect to
        any court order issued in connection with any such Insolvency
        Proceeding.

               (viii) Payment should be made by wire transfer directed to
        [SPECIFY ACCOUNT].

               Unless the context otherwise requires, any capitalized term used
in this Certificate of Claim shall have the meaning assigned thereto in the
Policy, including in the Endorsement thereto.

               IN WITNESS WHEREOF, the Indenture Trustee has executed and
delivered this Certificate of Claim as of the day of , 20 .

                                            ------------------------------------
                                            not in its individual capacity
                                            but solely as Indenture Trustee

                                            By:
                                               ---------------------------------
                                                Name:
                                                Title:

--------------------------------------------------------------------------------
For Financial Security Assurance Inc. or Fiscal Agent use only. Wire transfer
sent on _________________ by ____________________________Confirmation Number
____________.

                                       3<PAGE>   1
                                                                  EXHIBIT 10.5.1

                            INDEMNIFICATION AGREEMENT

                             dated as of ___________

                                  by and among

                        FINANCIAL SECURITY ASSURANCE INC.

                         WFS FINANCIAL AUTO LOANS, INC.

                                WFS FINANCIAL INC

                                       and

                         -------------------------------
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                       <C>
1.      Definitions.........................................................................1

2.      Representations and Warranties of the Insurer.......................................3

3.      Agreements, Representations and Warranties of the Underwriters......................4

4.      Representation and Warranty of the Seller and WFS...................................4

5.      Indemnifications....................................................................5

6.      Insurer Undertaking.................................................................5

7.      Notice To Be Given Insurer..........................................................5

8.      Notice To Be Given Underwriters.....................................................6

9.      Contribution........................................................................7

10.     Notices.............................................................................8

11.     Governing Law, Etc..................................................................8

12.     Insurance Agreement; Underwriter Agreement..........................................8
</TABLE>

<PAGE>   3
                            INDEMNIFICATION AGREEMENT

               This Agreement, effective as of ______________, by and among
FINANCIAL SECURITY ASSURANCE INC. (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy issued in connection with the Notes (as
hereinafter defined), WFS FINANCIAL AUTO LOANS, INC. (the "Seller"), WFS
FINANCIAL INC ("WFS") and _______________________, as representative (the
"Representative") of the several Underwriters named in the Underwriting
Agreement referred to below.

               1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings stated below:

                      "Agreement" means this Indemnification Agreement by and
               among the Insurer, the Seller, WFS and the Representative.

                      "Certificates" means the trust certificates evidencing the
               undivided beneficial ownership interests in the Trust.

                      "Federal Securities Laws" means the Securities Act of 1933
               (the "1933 Act"), the Securities Exchange Act of 1934, the Trust
               Indenture Act of 1939, the Investment Company Act of 1940, the
               Investment Advisers Act of 1940 and the Public Utility Holding
               Company Act of 1935, all as amended from time to time, and any
               rule or regulation in effect from time to time under any such
               act.

                      "Indemnified Party" means any party entitled to any
               indemnification pursuant to Section 5 below, as the context
               requires.

                      "Indemnifying Party" means any party required to provide
               indemnification pursuant to Section 5 below, as the context
               requires.

                      "Indenture" means the Indenture, dated as of the date
               hereof, by and between the Trust and Bankers Trust Company, as
               Indenture Trustee.

                      "Insurance Agreement" means the Insurance, Indemnity and
               Pledge Agreement, dated as of the date hereof, by and among the
               Trust, the Seller, WFS, WFS Investments, Inc. ("WII"), the
               Insurer and Bankers Trust Company, as Collateral Agent, Proceeds
               Agent and Indenture Trustee.

                      "Insurance Laws" means any state, local or foreign
               statute, and any rule or regulation thereunder, regulating (i)
               transactions and dealings in insurance or (ii) any Person or
               entity engaging in the business of issuing, selling or otherwise
               providing insurance.

                      "Insurer Party" means any of the Insurer and/or its
               parent, subsidiaries and affiliates, and any shareholder,
               director, officer, employee, agent or "controlling person" (as
               such term is defined under any Federal Securities Law) of any of
               the foregoing.

<PAGE>   4
                      "Losses" means (i) any actual out-of-pocket loss paid by
               the party entitled to indemnification or contribution, (ii) any
               actual out-of-pocket costs or expenses paid by such party,
               including reasonable fees and expenses of its counsel, to the
               extent not paid, satisfied or reimbursed from funds provided by
               any other Person (provided that the foregoing shall not create or
               imply any obligation to pursue recourse against any such other
               Person), plus (iii) interest on the amount paid by the party
               entitled to indemnification or contribution from the date of such
               payment to the date of payment by the party who is obligated to
               indemnify or contribute hereunder at the statutory rate
               applicable to judgments for breach of contract.

                      "Notes" means $________ ____% Auto Receivable Backed
               Notes, Class A-1, $________ ____% Auto Receivable Backed Notes,
               Class A-2, $________ ____% Auto Receivable Backed Notes, Class
               A-3 and $__________ ____% Auto Receivable Backed Notes, Class
               A-4.

                      "Offering Documents" means the Prospectus and any
               materials or documents delivered by an Underwriter or any
               Underwriter Party to any Person in connection with the offer or
               sale of the Notes.

                      "Person" means any individual, partnership, joint venture,
               limited liability company, corporation, trust or unincorporated
               organization or any government or agency or political subdivision
               thereof.

                      "Policy" means the financial guaranty insurance policy
               (including the endorsement thereto) (Policy No. ________) issued
               by the Insurer in support of the Notes.

                      "Prospectus" means the Prospectus dated _____________
               relating to the Notes, as supplemented by the Prospectus
               Supplement dated ____________ as filed with the Securities and
               Exchange Commission pursuant to Rule 424(b) under the Securities
               Act of 1933, as amended.

                      "Seller Party" means the Seller and WFS and any director,
               officer, employee, agent or "controlling person" (as such term is
               defined under any Federal Securities Law) of either the Seller or
               WFS.

                      "Trust" means WFS Financial ______ Owner Trust.

                      "Trust Agreement" means the Trust Agreement dated as of
               ___________, by and among the Seller, WII, the Insurer and Chase
               Manhattan Bank Delaware, as Owner Trustee.

                      "Underwriter Party" means any of the Underwriters, their
               parents, subsidiaries and affiliates and any shareholder,
               director, officer, employee, agent or "controlling person" (as
               such term is defined under any Federal Securities Law) of any of
               the foregoing.

                      "Underwriters" means _____________________________.

                      "Underwriting Agreement" means the Underwriting Agreement
               dated ______________, among the Seller, WFS and the
               Representative.

                                       2
<PAGE>   5
               2. Representations and Warranties of the Insurer. The Insurer
represents and warrants as follows:

                      (a) Organization and Licensing. The Insurer is a duly
               incorporated and existing New York financial guaranty insurance
               company licensed to do business in the State of New York.

                      (b) Corporate Power. The Insurer has the corporate power
               and authority to issue the Policy and execute and deliver this
               Agreement, the Trust Agreement and the Insurance Agreement and to
               perform all of its obligations hereunder and thereunder.

                      (c) Authorization; Approvals. The issuance of the Policy
               and the execution, delivery and performance of this Agreement,
               the Trust Agreement and the Insurance Agreement have been duly
               authorized by all necessary corporate proceedings. No further
               approvals or filings of any kind, including, without limitation,
               any further approvals of or further filing with any governmental
               agency or other governmental authority, or any approval of the
               Insurer's board of directors or stockholders, are necessary for
               the Policy, this Agreement, the Trust Agreement and the Insurance
               Agreement to constitute the legal, valid and binding obligations
               of the Insurer.

                      (d) Enforceability. The Policy, when issued, this
               Agreement, the Trust Agreement and the Insurance Agreement will
               each constitute a legal, valid and binding obligation of the
               Insurer, enforceable in accordance with its terms subject, as to
               the enforcement of remedies, to bankruptcy, insolvency,
               reorganization, moratorium and other similar laws affecting the
               enforceability of creditors' rights generally applicable in the
               event of the bankruptcy, insolvency or reorganization of the
               Insurer and to general principles of equity.

                      (e) Financial Information. The consolidated balance sheet
               of the Insurer as of December 31, ____ and as of December 31,
               ____, and the related consolidated statements of income, changes
               in shareholder's equity, and cash flows for the three fiscal
               years then ended, and the accompanying footnotes, together with
               the report thereon of Coopers & Lybrand LLP, independent
               auditors, and the unaudited interim consolidated balance sheet of
               the Insurer as of June 30, ____ and the related consolidated
               statements of income, changes in shareholder's equity and
               cashflows for the three-month periods ended June 30, ____ and
               June 30, ____, copies of which are included in the Prospectus
               (collectively, the "Insurer Financial Statements"), fairly
               present in all material respects the financial condition of the
               Insurer as of such dates and for the periods covered by such
               statements in accordance with generally accepted accounting
               principles consistently applied and, since June 30, ____, there
               has been no material change in the financial condition of the
               Insurer that would materially and adversely affect its ability to
               perform its obligations under the Policy.

                      (f) Insurer. The information in the Prospectus as of the
               date hereof under the caption "Financial Security Assurance Inc."
               that describes the Insurer and certain aspects of the principal
               business in which the Insurer is engaged (collectively, the
               "Insurer Information"), is true and correct in all material
               respects

                                       3
<PAGE>   6
               and does not contain any untrue statement of a fact that is
               material to the Insurer's ability to perform its obligations
               under the Policy or omit to state a fact (i) required to be
               stated therein that is material to the Insurer's ability to
               perform its obligations under the Policy or (ii) necessary in
               order to make statements therein that are material to the
               Insurer's ability to perform its obligations under the Policy, in
               light of the circumstances under which such statements are being
               made, not materially misleading.

                      (g) No Litigation. There are no actions, suits,
               proceedings or investigations pending, or to the best of the
               Insurer's knowledge, threatened against it at law or in equity or
               before or by any court, governmental agency, board or commission
               or any arbitrator that, if decided adversely, would materially
               and adversely affect its condition (financial or otherwise) or
               operations or would materially and adversely affect its ability
               to perform its obligations under this Agreement, the Trust
               Agreement, the Indenture or the Policy.

               Nothing in this Agreement shall be construed as a representation
or undertaking by the Insurer concerning the rating currently assigned to its
claims-paying ability by Moody's Investors Service, Inc. ("Moody's") and/or
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or any
other rating agency (collectively, the "Rating Agencies"). The Rating Agencies,
in assigning such rating, may take into account facts and assumptions not
described in the Prospectus and the facts and assumptions that are considered by
the Rating Agencies are subject to change over time. The Insurer has not
attempted to disclose all facts and assumptions that the Rating Agencies deem
relevant in assigning a rating within a particular rating category to the
Insurer's claims-paying ability. Notwithstanding the foregoing, the Insurer is
not aware of any facts that, if disclosed to Moody's or S&P, would be reasonably
expected to result in a downgrade of the rating of the claims-paying ability of
the Insurer by either of such Rating Agencies.

               3. Agreements, Representations and Warranties of the
Underwriters. The Underwriters, severally and not jointly, represent, warrant
and agree with the Insurer as follows:

                      (a) Each of the Underwriters agrees not to use any
               information relating to the Insurer (other than the information
               contained in the Prospectus) unless such information has been
               approved by the Insurer in writing, such approval not to be
               unreasonably withheld.

                      (b) Each of the Underwriters represents and warrants that
               all material provided by the Underwriter for inclusion in the
               Prospectus (being the information set forth in the second, third
               and sixth paragraphs under "Underwriting" in the Prospectus,
               including any information in any amendment or supplement to the
               Prospectus furnished that amends or supplements such
               information), insofar as such information relates to the
               Underwriter (all such information being collectively referred to
               herein as the "Underwriter Information"), is true and correct in
               all material respects.

               4. Representation and Warranty of the Seller and WFS. The Seller
and WFS jointly and severally represent and warrant to the Insurer and the
Underwriters that the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the circumstances under which

                                       4
<PAGE>   7
they were made, not misleading (except that no representation or warranty is
made with respect to the Insurer Information, the Insurer Financial Statements
or the Underwriter Information).

               5. Indemnifications.

                      (a) The Insurer hereby agrees, upon the terms and subject
               to the conditions of this Agreement, to indemnify, defend and
               hold harmless each Seller Party and each Underwriter Party
               against any and all Losses incurred by them with respect to the
               offer and sale of the Notes and resulting from the Insurer's
               breach of any of its representations and warranties set forth in
               Section 2 of this Agreement.

                      (b) Each of the Underwriters hereby agrees, severally and
               not jointly, upon the terms and subject to the conditions of this
               Agreement, to indemnify, defend and hold harmless each Insurer
               Party and each Seller Party against any and all Losses incurred
               by them with respect to the offer and sale of the Notes and
               resulting from such Underwriter's breach of any of its
               representations and warranties set forth in Section 3 of this
               Agreement.

                      (c) Upon the incurrence of any Losses for which a party is
               entitled to indemnification hereunder, the Indemnifying Party
               shall reimburse the Indemnified Party promptly upon establishment
               by the Indemnified Party to the Indemnifying Party of the Losses
               incurred.

               6. Insurer Undertaking. The Insurer hereby agrees that, for a
period of seven years hereafter, the Insurer will furnish to the Underwriters or
the Seller, upon request and at the expense of the Underwriters or the Seller,
as the case may be, copies of the Insurer's most recent financial statements
(annual or interim, as the case may be) prepared in accordance with generally
accepted accounting principles (subject, as to interim statements, to normal
year-end adjustments) within a reasonable time after they are available. In
addition, until the ninety-first (91st) day following the date of the
Prospectus, the Insurer will promptly provide the Underwriters and the Seller
with any revisions to the Insurer Information that are in the judgment of the
Insurer necessary to prepare an amended Prospectus or a supplement to the
Prospectus or to be incorporated by reference into the Prospectus (as may then
be amended or supplemented) as described in the Prospectus under "Incorporation
of Certain Documents by Reference".

               7. Notice To Be Given Insurer. Except as provided in Section 9,
the indemnification provided herein by the Insurer shall be the exclusive remedy
of any Underwriter Party or Seller Party for the Insurer's breach of a
representation or warranty hereunder; provided, however, that any Underwriter
Party or Seller Party shall be entitled to pursue any other remedy at law or in
equity for any such breach so long as the damages sought to be recovered shall
not exceed the Losses incurred thereby resulting from such breach. In the event
that any action or regulatory proceeding shall be commenced or claim asserted
that may entitle an Underwriter Party or Seller Party to be indemnified under
this Agreement, such party shall give the Insurer written or telegraphic notice
of such action or claim reasonably promptly after receipt of written notice
thereof. The Insurer shall be entitled to participate in the defense of any such
action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Seller Party or Underwriter Party, as the case may be. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Insurer, but the fees and expenses of
such counsel will be at the expense of such Indemnified Party, unless (1) the

                                       5
<PAGE>   8
employment of counsel by the Indemnified Party at its expense has been
authorized in writing by the Insurer, (2) the Insurer has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (3) the named parties to
any such action or proceeding (including any impleaded parties) include both the
Insurer and the Indemnified Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the Insurer (it
being understood, however, that the Insurer shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnified Party,
which firm shall be designated in writing by the Indemnified Party), in each of
which cases the fees and expenses of counsel will be at the expense of the
Insurer and all such fees and expenses will be reimbursed promptly as they are
incurred. No settlement of any such claim or action shall be entered into
without the consent of the Seller Party or Underwriter Party, as the case may
be, on the one hand and each Insurer Party who is subject to such claim or
action on the other hand. Any failure by a Seller Party or Underwriter Party, as
the case may be, to comply with the provisions of this Section shall relieve the
Insurer of liability only if such failure is substantially prejudicial to the
Insurer's position and then only to the extent of such prejudice.

               8. Notice To Be Given Underwriters. Except as provided in Section
9, the indemnification provided herein by the Underwriters shall be the
exclusive remedy of any Insurer Party for any Underwriter's breach of a
representation, warranty or agreement hereunder; provided, however, that each
Insurer Party shall be entitled to pursue any other remedy at law or in equity
for any such breach so long as the damages sought to be recovered shall not
exceed the Losses incurred thereby resulting from such breach. In the event that
any action or regulatory proceeding shall be commenced or claim asserted that
may entitle an Insurer Party to be indemnified under this Agreement, such party
shall give the Underwriters written or telegraphic notice of such action or
claim reasonably promptly after receipt of written notice thereof. The
Underwriters shall be entitled to participate in the defense of any such action
or claim in reasonable cooperation with, and with the reasonable cooperation of,
the Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Underwriters, but
the fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (1) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Underwriters; (2) the Underwriters
have not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action; or (3)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Insurer and the Indemnified Party, and the Insurer
shall have been advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Indemnified Party (it being understood, however, that the Indemnified Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Insurer, which firm shall be designated in writing by the Insurer),
in each of which cases the fees and expenses of counsel will be at the expense
of the Underwriters and all such fees and expenses will be reimbursed promptly
as they are incurred. No settlement of any such claim or action shall be entered
into without the consent of the Insurer and each Underwriter Party. Any

                                       6
<PAGE>   9
failure by an Insurer Party to comply with the provisions of this Section shall
relieve the Underwriters of liability only if such failure is substantially
prejudicial to the Underwriters' position and then only to the extent of such
prejudice.

               9. Contribution. To provide for just and equitable contribution
if the indemnification provided for pursuant to this Agreement is determined to
be unavailable for any Underwriter Party, Insurer Party or Seller Party (other
than due to application of this Section), the Insurer, the Seller, WFS and the
Underwriters, as the case may be, shall contribute to the aggregate costs of
liabilities arising from any breach of a representation or warranty set forth in
this Agreement (i) in such proportion as is appropriate to reflect the relative
benefits received by the Insurer, the Seller and WFS pursuant to the
Underwriting Agreement and the Underwriters from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Insurer, the Seller, WFS and the Underwriters in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Seller and WFS, the Insurer and the
Underwriters shall be deemed to be, respectively, in the same proportions as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Seller, the premiums on the
Policy to be paid to the Insurer and the underwriting discounts and commissions
received by the Underwriters. The relative fault of each Indemnifying Party, on
the one hand, and of each Indemnified Party, on the other, shall be determined
by reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth in Section 2, 3 or 4 of
this Agreement relates to information supplied by, or an action within the
control of, the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and the opportunity to correct
or prevent such breach. The parties agree that the Insurer shall be solely
responsible for the Insurer Information, the Underwriters shall be solely
responsible for the Underwriter Information and the Seller and WFS shall be
jointly and severally responsible for all other information in the Prospectus.

               Notwithstanding anything in this Section 9 to the contrary, with
respect to contribution between any Seller Party and any Underwriter Party, the
Underwriter Parties shall not be required to contribute an amount in excess of
the amount by which the total price of the sum of the Notes sold by such
Underwriter Parties exceeds the amount of any damages that such Underwriter
Parties have otherwise been required to pay in respect of such untrue or alleged
untrue statement or omission or alleged omission; provided, however, that the
terms of the contribution between any Seller Party and any Underwriter Party
contained in the Underwriting Agreement shall control to the extent they are
inconsistent with or in addition to the terms of this Section 9. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

               The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (a)
any investigation made by or on behalf of any Underwriter Party or any Insurer
Party (b) the issuance of the Notes or the Policy or (c) any termination of this
Agreement. The indemnification provided in this Agreement will be in addition to
any liability that the parties may otherwise have.

                                       7
<PAGE>   10
               Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution of the Losses
incurred.

               10. Notices. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.

If to the Insurer:                  Financial Security Assurance Inc.
                                    350 Park Avenue
                                    New York, New York  10022
                                    Attention:  Senior Vice President -
                                                Surveillance

If to the Seller:                   WFS Financial Auto Loans, Inc.
                                    23 Pasteur
                                    Irvine, California  92618
                                    Attention:  Thomas A. Wolfe

If to WFS:                          WFS Financial Inc
                                    23 Pasteur
                                    Irvine, California  92618
                                    Attention:  Guy DuBose, Esq.

If to the Underwriters:

               11. Governing Law, Etc. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York. This Agreement
may not be assigned by any party without the express written consent of each
other party. Any assignment made in violation of this Agreement shall be null
and void. Amendments of this Agreement shall be in writing signed by each party.
This Agreement shall not be effective until executed by each of the Insurer, the
Seller, WFS and the Representative.

               12. Insurance Agreement; Underwriter Agreement. This Agreement in
no way limits or otherwise affects the indemnification and contribution
obligations of the Seller and WFS under the Insurance Agreement.

                                       8
<PAGE>   11
               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.

                                       FINANCIAL SECURITY ASSURANCE INC.

                                       By:
                                           -------------------------------------
                                                      Authorized Officer

                                       WFS FINANCIAL AUTO LOANS, INC.

                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------

                                       WFS FINANCIAL INC

                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------

                                               as Representative of the several
                                               Underwriters

                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------

                                       9

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