EXECUTION COPY
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RECEIVABLES SALE AGREEMENT
Dated as of October 29, 1997,
as amended and restated as of March 25, 1999,
Between
AAM RECEIVABLES CORP.,
as Company
and
AMERICAN AXLE & MANUFACTURING, INC.
as Seller and Servicer
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TABLE OF CONTENTS
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ARTICLE I
Definitions ............................................ 2
SECTION 1.01 Defined Terms .................................................. 2
SECTION 1.02 Other Definitional Provisions .................................. 6
ARTICLE II
Purchase and Sale of Receivables .......................... 7
SECTION 2.01 Purchase and Sale of Receivables ............................... 7
SECTION 2.02 Purchase Price ................................................. 10
SECTION 2.03 Payment of Purchase Price ...................................... 10
SECTION 2.04 No Repurchase .................................................. 11
SECTION 2.05 Rebates, Adjustments, Returns, Reductions and Modifications .... 12
SECTION 2.06 Seller Repurchase Payments ..................................... 12
SECTION 2.07 Certain Charges ................................................ 13
SECTION 2.08 Certain Allocations ............................................ 13
SECTION 2.09 Further Assurances ............................................. 13
SECTION 2.10 GMT/PPAP Rejection Period ...................................... 14
ARTICLE III
Conditions to Purchase and Sale .......................... 14
SECTION 3.01 Conditions Precedent to the Company's Purchase of Receivables
on the Effective Date .......................................... 14
SECTION 3.02 Conditions Precedent to All the Company's Purchases of
Receivables .................................................... 15
SECTION 3.03 Conditions Precedent to the Seller's Obligations on the
Effective Date ................................................. 16
SECTION 3.04 Conditions Precedent to All the Seller's Obligations ........... 16
ARTICLE IV
Representations and Warranties ........................... 17
SECTION 4.01 Representations and Warranties of the Seller Relating to
Itself ......................................................... 17
SECTION 4.02 Representations and Warranties of the Seller Relating to
the Receivables ................................................ 21
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SECTION 4.03 Representations and Warranties of the Company .................. 21
ARTICLE V
Affirmative Covenants ................................ 22
SECTION 5.01 Certificates; Other Information ................................ 22
SECTION 5.02 Compliance with Law and Policies ............................... 23
SECTION 5.03 Preservation of Corporate Existence ............................ 23
SECTION 5.05 Maintaining Records; Access to Properties and Inspections ...... 24
SECTION 5.06 Location of Records ............................................ 24
SECTION 5.07 Computer Files ................................................. 25
SECTION 5.08 Payment of and Compliance with Obligations ..................... 25
SECTION 5.09 Collections .................................................... 25
SECTION 5.10 Furnishing Copies, Etc. ........................................ 26
SECTION 5.11 Obligations with Respect to Obligors and Receivables ........... 26
SECTION 5.12 Responsibilities of the Seller ................................. 26
SECTION 5.13 Assessments .................................................... 26
SECTION 5.14 Further Action ................................................. 26
SECTION 5.15 Sale of Receivables ............................................ 27
SECTION 5.16 GMT/PPAP Rejection Period ...................................... 27
ARTICLE VI
Negative Covenants ................................. 27
SECTION 6.01 Limitations on Transfers of Receivables, Etc. .................. 28
SECTION 6.02 Extension or Amendment of Receivables .......................... 28
SECTION 6.03 Change in Payment Instructions to Obligors ..................... 28
SECTION 6.04 Change in Name ................................................. 28
SECTION 6.05 Policies ....................................................... 28
SECTION 6.06 Modification of Ledger ......................................... 29
SECTION 6.07 Accounting for Purchases ....................................... 29
SECTION 6.08 Instruments .................................................... 29
SECTION 6.09 Ineligible Receivables ......................................... 29
SECTION 6.10 Business of the Seller ......................................... 29
SECTION 6.11 Limitation on Fundamental Changes .............................. 29
SECTION 6.12 Amendment of GM Agreements ..................................... 30
ARTICLE VII
Purchase Termination Events ............................. 30
SECTION 7.01 Purchase Termination Events .................................... 30
SECTION 7.02 Remedies ....................................................... 32
ARTICLE VIII
Seller Note ..................................... 33
ii
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SECTION 8.01 Seller Note .................................................... 33
SECTION 8.02 Restrictions on Transfer of Seller Note ........................ 34
SECTION 8.03 Aggregate Amount ............................................... 34
ARTICLE IX
Miscellaneous .................................... 34
SECTION 9.01 Payments ....................................................... 34
SECTION 9.02 Costs and Expenses ............................................. 35
SECTION 9.03 Successors and Assigns ......................................... 36
SECTION 9.04 Governing Law .................................................. 36
SECTION 9.05 No Waiver; Cumulative Remedies ................................. 36
SECTION 9.06 Amendments and Waivers ......................................... 36
SECTION 9.07 Severability ................................................... 36
SECTION 9.08 Notices ........................................................ 36
SECTION 9.09 Counterparts ................................................... 37
SECTION 9.10 Waivers of Jury Trial .......................................... 37
SECTION 9.11 Jurisdiction; Consent to Service of Process .................... 37
SECTION 9.12 Integration .................................................... 38
SECTION 9.13 No Bankruptcy Petition ......................................... 38
SECTION 9.14 Termination .................................................... 38
SECTION 9.15 Construction of Agreement ...................................... 39
Exhibit A Form of Seller Note
SCHEDULES
Schedule 1 Receivables
Schedule 2 Lockboxes
Schedule 3 Chief Executive Office
Schedule 4 Names
Schedule 5 Discounted Percentage
Schedule 6 Financial Statement Note
RECEIVABLES SALE AGREEMENT, dated as of October 29, 1997,
as amended and restated as of March 25, 1999 (this
"Agreement"), between AMERICAN AXLE & MANUFACTURING, INC., a
Delaware corporation, as seller (in such capacity, the
"Seller") and as servicer (in such capacity, the "Servicer")
and AAM RECEIVABLES CORP., a Delaware corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, the Seller
generates Receivables (such term and all other capitalized terms being defined
or referenced in Article I);
WHEREAS, the Seller is willing to sell to the Company, and the
Company is willing to purchase from the Seller, all of the Seller's right, title
and interest in, to and under the Receivables then existing and thereafter
created and all other Receivable Assets;
WHEREAS, the Seller and the Company desire the sale of
Receivables and Receivable Assets from the Seller to the Company to be a true
sale providing the Company with the full benefits of ownership of the
Receivables;
WHEREAS, the parties hereto have entered into the Receivables
Sale Agreement, dated as of October 29, 1997 (the "Existing Receivables Sale
Agreement"), pursuant to which the Seller sells to the Company, and the Company
purchases from the Seller, all the Seller's right, title and interest in, to and
under the Receivables then existing and thereafter created and all other
Receivable Assets;
WHEREAS, the Servicer, the Company and The Chase Manhattan
Bank, as Trustee, have entered into a Pooling Agreement dated as of October 29,
1997, as amended and restated as of March 25, 1999 (as amended, modified or
otherwise supplemented from time to time, the "Pooling Agreement") in order to
create a master trust into which the Company will transfer all its right, title
and interest in, to and under the Receivables and certain other assets then or
hereafter owned by the Company; and
WHEREAS, the parties hereto wish to amend and restate the
Existing Receivables Sale Agreement in its entirety.
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NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged, the
parties hereto agree that the Existing Receivables Sales Agreement shall be and
hereby is amended and restated in its entirety follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms. Capitalized terms defined or
referenced in the Pooling Agreement shall be used herein as therein defined
(unless otherwise defined or referenced herein), and the following terms shall
have the following meanings:
"Adjustment Amount" shall have the meaning specified in
subsection 2.06(a).
"Applicable Insolvency Laws" shall have the meaning specified
in subsection 7.01(d).
"Collections" shall mean all collections and all amounts
received in respect of the Receivables assigned to the Company, including
Recoveries, Adjustment Payments, indemnification payments made by the Servicer
and payments received in respect of Dilution Adjustments, together with all
collections received in respect of the Related Property in the form of cash,
checks, wire transfers or any other form of cash payment, and all proceeds of
Receivables and collections thereof (including, without limitation, collections
evidenced by an account, note, instrument, letter of credit, security, contract,
security agreement, chattel paper, general intangible or other evidence of
indebtedness or security, whatever is received upon the sale, exchange,
collection or other disposition of, or any indemnity, warranty or guaranty
payable in respect of, the foregoing and all "proceeds" as defined in Section
9-306 of the UCC as in effect in the State of New York).
"Credit Agreement" shall mean the Credit Agreement dated as of
October 27, 1997, among American Axle & Manufacturing of Michigan, Inc., the
Seller, the lenders named therein, The Chase Manhattan Bank, as Administrative
Agent and Collateral Agent, and Chase Manhattan Bank of Delaware, as Fronting
Bank (including any amendments or modifications thereto or refinancing thereof).
"Cut-Off Date" shall mean the close of business on October
24, 1997.
"Discounted Percentage" shall have the meaning specified in
Schedule 5.
"Documents" shall have the meaning specified in subsection
7.02(b)(iii).
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"Early Termination" shall have the meaning specified in
Article VII.
"Effective Date" shall mean October 29, 1997.
"ERISA Affiliate" shall mean with respect to any Person, any
trade or business (whether or not incorporated) that is a member of a group of
which such Person is a member and which is treated as a single employer under
Section 414 of the Internal Revenue Code.
"GM Agreements" shall mean (i) the Component Supply Agreement,
as amended, dated as of February 29, 1994, between the Seller and General Motors
Corporation, (ii) the GMCL Purchase Order Agreement, as amended, dated as of
February 17, 1994, and effective on March 1, 1994, between the Seller and
General Motors of Canada Limited ("GMCL"), (iii) the Amended and Restated
Memorandum of Understanding dated as of September 22, 1997, as amended pursuant
to an Extension Agreement dated as of September 22, 1997 between the Seller and
General Motors Corporation, (iv) the letter agreement, dated as of February 20,
1996, between the Seller and General Motors Corporation and (v) any agreements
entered into between the Seller and General Motors or GMCL succeeding or
replacing the agreements in clauses (i) and (ii), including "Lifetime Program
Contracts".
"Ineligibility Event" shall have the meaning specified in
subsection 2.06.
"Ineligible Receivable" shall have the meaning specified in
subsection 2.06.
"Insolvency Event" with respect to the Seller, shall mean the
occurrence of any one or more of the Purchase Termination Events specified in
subsection 7.01(d).
"Multiemployer Plan" shall mean with respect to any Person, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA to which such
Person or any ERISA Affiliate of such Person (other than one considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Internal
Revenue Code) is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Payment Date" shall have the meaning specified in subsection
2.03(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any successor
thereto.
"Plan" shall mean, with respect to any Person, any pension
plan (other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Internal
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Revenue Code which is maintained for employees of such Person or any ERISA
Affiliate of such Person.
"Pooling Agreement" shall have the meaning specified in the
recitals hereto.
"Potential Purchase Termination Event" shall mean any
condition or act specified in Article VII that, with the giving of notice or the
lapse of time or both, would become a Purchase Termination Event.
"Purchase Price" shall have the meaning specified in Section
2.02.
"Purchase Termination Event" shall have the meaning specified
in Section 7.01.
"Purchased Receivable" shall mean, at any time, any Receivable
sold to the Company by the Seller pursuant to, and in accordance with the terms
of, this Agreement.
"Receivable" shall mean the indebtedness and payment
obligations of any Person to the Seller (including, without limitation,
obligations constituting an account or general intangible or evidenced by a
note, instrument, contract, security agreement, chattel paper or other evidence
of indebtedness or security and whether or not any invoice or other ▇▇▇▇ has
been rendered by the Seller or any other Person) arising from (x) a sale of
merchandise or services by the Seller (including, without limitation, any right
to payment for goods sold or for services rendered), (y) an obligation of any
Person to provide rebates to the Seller with respect to, or to reimburse the
Seller for, a portion of the costs of materials and parts to be used in the
manufacturing of products for such Person or its affiliates, or (z) an
obligation of any Person to pay for tooling or equipment purchased or built by
the Seller for the purpose of manufacturing products for such Person, including
the right to payment of any interest, sales taxes, finance charges, returned
check or late charges and other obligations of such Person with respect thereto;
provided that any Tooling Receivable that is not generated as part of the GMT
800 program or any other program providing for periodic payments to the Seller
shall not constitute a "Receivable" until the Production Part Approval Process
(PPAP) has been completed with respect to the tooling giving rise to such
Tooling Receivable; provided further that in no event shall any intercompany or
intracompany obligation owed to the Seller by any of its Subsidiaries, divisions
or other operating units constitute a "Receivable".
"Receivable Assets" shall have the meaning specified in
subsection 2.01(a).
"Reference Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day
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plus 1/2 of 1%. If The Chase Manhattan Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the failure
of the Federal Reserve Bank of New York to publish rates or the inability of The
Chase Manhattan Bank to obtain quotations in accordance with the terms of the
definition thereof, the Reference Rate shall be determined without regard to
clause (b) of the immediately preceding sentence, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Reference Rate due to a change in the Prime Rate or the Federal Funds Effective
Rate shall be effective on the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively. The term "Prime Rate" shall
mean the rate of interest per annum publicly announced from time to time by The
Chase Manhattan Bank as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such
change is publicly announced as being effective. The term "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
the day for such transactions received by The Chase Manhattan Bank from three
Federal funds brokers of recognized standing selected by it.
"Related Property" shall mean, with respect to each
Receivable:
(a) all of the Seller's interest in the goods (including
returned goods), if any, relating to the sale which gave rise to such
Receivable;
(b) all other security interests or Liens, and the Seller's
interest in the property subject thereto, from time to time purporting to secure
payment of such Receivable, whether pursuant to the contract related to such
Receivable or otherwise, together with all financing statements signed by an
Obligor describing any collateral securing such Receivable; and
(c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the contract related to
such Receivable or otherwise;
including in the case of clauses (b) and (c), without limitation, pursuant to
any obligations evidenced by a note, instrument, contract, security agreement,
chattel paper or other evidence of indebtedness or security.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder with respect to
a Plan (other than a Plan maintained by an ERISA Affiliate which is considered
an ERISA Affiliate only
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pursuant to subsection (m) or (o) of Section 414 of the Internal Revenue Code).
"Sale Documents" shall mean this Agreement and the Seller
Note.
"Sale Termination Date" shall have the meaning specified in
subsection 9.13(b).
"Seller" shall have the meaning specified in the recitals
hereto.
"Seller Dilution Adjustment Payment" shall have the meaning
specified in Section 2.05.
"Seller Note" shall have the meaning specified in Section
8.01.
"Seller Repurchase Payment" shall have the meaning specified
in subsection 2.06.
"Tooling Receivable" shall mean any Receivable described in
clause (z) of the definition thereof.
"Transactions" shall have the meaning specified in subsection
4.01(b).
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Other Definitional Provisions. (a) The words
"hereof", "herein", "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Seller and
the Company, unless otherwise defined herein, shall have the respective meanings
given to them under GAAP.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) Any reference herein to a Schedule or Exhibit to this
Agreement shall be deemed to be a reference to such Schedule or Exhibit as it
may be amended, modified or supplemented from time to time to the extent that
such Schedule or Exhibit may be amended, modified or supplemented (or any term
or provision of any Transaction Document may be amended that would have the
effect of amending, modifying or supplementing information
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contained in such Schedule or Exhibit) in compliance with the terms of the
Transaction Documents.
(e) Any reference in this Agreement to any representation,
warranty or covenant "deemed" to have been made is intended to encompass only
representations, warranties or covenants that are expressly stated to be
repeated on or as of dates following the execution and delivery of this
Agreement, and no such reference shall be interpreted as a reference to any
implicit, inferred, tacit or otherwise unexpressed representation, warranty or
covenant.
(f) The words "include", "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation".
ARTICLE II
Purchase and Sale of Receivables
SECTION 2.01 Purchase and Sale of Receivables. (a) The Seller
hereby sells, transfers, assigns, and conveys, without recourse (except as
expressly provided herein), to the Company, all its present and future right,
title and interest in, to and under:
(i) all Receivables, including those existing at the close of
business on the Effective Date and all such Receivables thereafter
arising from time to time until but not including the date an Early
Termination occurs;
(ii) the Related Property;
(iii) all Collections;
(iv) all rights (including rescission, replevin or reclamation)
relating to any Receivable or arising therefrom;
(v) all proceeds of or payments in respect of any and all of the
foregoing clauses (i) through (iv) (including Collections).
Such property described in the foregoing clauses (i) through (v) shall be
referred to herein as the "Receivable Assets". Subject to the terms and
conditions of this Agreement, the Company hereby agrees to purchase the
Receivables Assets.
(b) On the Effective Date and on the date of creation of
each newly created Receivable (but only so long as no Early Termination shall
have occurred and be continuing), all of the Seller's right, title and interest
in and to (i) in the case of the Effective Date, all then existing Receivables
and all other Receivable Assets in respect of such Receivables and (ii) in the
case of each such date of creation, all such newly created
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Receivables and all other Receivable Assets in respect of such Receivables shall
be considered to be part of the assets that have been sold, transferred,
assigned, set over and otherwise conveyed to the Company pursuant to paragraph
(a) above without any further action by the Seller or any other Person. Anything
herein to the contrary notwithstanding, to the extent the Seller shall not have
received payment from the Company of the Purchase Price for any Receivable and
other related Receivable Assets in accordance with the terms of Section 2.03,
such Receivable and Receivable Assets shall, upon receipt of notice from the
Seller of such failure to receive payment, immediately and automatically be
sold, assigned, transferred and reconveyed by the Company to the Seller without
any further action by the Company or any other Person.
(c) The parties to this Agreement intend that, for
accounting and commercial purposes, the transactions contemplated by Section
2.01 hereby shall be, and shall be treated as, a purchase by the Company and a
sale by the Seller of the Purchased Receivables and other Receivable Assets and
not a lending transaction. All sales of Receivables and other Receivable Assets
by the Seller hereunder shall be without recourse to, or representation or
warranty of any kind (express or implied) by, the Seller, except as otherwise
specifically provided herein. The foregoing sale, assignment, transfer and
conveyance does not constitute and is not intended to result in the creation or
assumption by the Company of any obligation of the Seller or any other Person in
connection with the Receivables, the other Receivable Assets or any agreement or
instrument relating thereto, including any obligation to any Obligor. Although
it is the intent of the parties to this Agreement that the conveyance of the
Seller's right, title and interest in, to and under the Receivables and other
Receivable Assets pursuant to this Agreement shall constitute purchases and
sales and not loans, in the event that any such conveyance is deemed to be a
loan, it is the intent of the parties to this Agreement that the Seller hereby
grants to the Company a security interest (as defined in the UCC as in effect in
the States of New York and Michigan) in all of the Seller's present and future
right, title and interest in, to and under the Receivables, the Related
Property, all Collections, all rights (including rescission, replevin or
reclamation) relating to any Receivable or arising therefrom and all proceeds or
payments in respect of any of the foregoing (it is understood and agreed that
the parties intend that such security interest shall be perfected and first
priority upon the filing of UCC-1 financing statements with the appropriate
authorities) and that this Agreement shall constitute a security agreement under
applicable law in favor of the Company.
(d) In connection with the foregoing conveyances, the Seller
agrees to record and file, or cause to be recorded and filed, at its own
expense, financing statements (and continuation statements with respect to such
financing statements when applicable), (i) with respect to the Receivables now
existing and hereafter acquired pursuant to this Agreement by the Company from
the Seller and (ii) with respect to any other Receivable Assets
9
for which a security interest may be perfected under the relevant UCC,
legislation or similar statute by such filing, in each case meeting the
requirements of applicable law in such manner and in such jurisdictions as are
necessary to perfect and maintain perfection of the conveyance of such
Receivables and any other Receivable Assets to the Company, and to deliver to
the Company no later than 10 days after the Effective Date (i) where available,
a file-stamped copy or certified statement of such financing statement or other
evidence of such filing and (ii) otherwise, a photocopy, certified by a
Responsible Officer to be a true and correct copy, of each such financing
statement or other filing made no later than 10 days after the Effective Date.
(e) In connection with the foregoing sales, transfers,
assignments and conveyances, the Seller agrees at its own expense, no later than
30 days after the Effective Date with respect to the Receivables and any other
similar receivables that it will, as agent of the Company, (i) indicate or cause
to be indicated on the computer files (but not on individual invoices or
individual collection files) relating to such Receivables and any such other
receivables (by means of a general legend that will automatically appear at or
near the beginning of any screen, list or print-out of such Receivables) that,
unless otherwise specifically identified on such screen, list or print-out as a
receivable not so sold, transferred, assigned and conveyed, all Receivables (and
any such other receivables) included in such screen, list or print-out and all
other Receivable Assets (and any other similar related property) have been sold,
transferred, assigned and conveyed to the Company in accordance with this
Agreement and (ii) deliver or transmit or cause to be delivered or transmitted
to the Company a computer tape, diskette or data transmission containing at
least the information specified in Schedule 1 as to all such Receivables, as of
a date no later than the Cut-Off Date.
(f) As further confirmation of the sale of the Receivables,
but subject to Section 7.02, it is understood and agreed that the Company shall
have the following rights:
(i) the Company (and its assignees) shall have the right at
any time to notify, or require that the Seller at its own expense
notify, the respective Obligors of the Company's ownership of the
Purchased Receivables and other Receivable Assets and may direct that
payment of all amounts due or to become due under the Purchased
Receivables be made directly to the Company or its designee;
(ii) the Company (and its assignees) shall have the right to
(A) ▇▇▇ for collection on any Purchased Receivables or (B) sell any
Purchased Receivables to any Person for a price that is acceptable to
the Company.
(iii) the Seller shall, upon the Company's written request
and at the Seller's expense, (A) assemble all of the Seller's
documents, instruments and other records (including
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credit files and computer tapes or disks) that (1) evidence or will
evidence or record Receivables sold by the Seller and (2) are otherwise
necessary or desirable to effect Collections of such Purchased
Receivables (collectively, the "Documents") and (B) deliver the
Documents to the Company or its designee at a place designated by the
Company. In recognition of the Seller's need to have access to any
Documents which may be transferred to the Company hereunder, whether as
a result of its continuing business relationship with any Obligor for
Receivables purchased hereunder or as a result of its responsibilities
as a Servicer, the Company hereby grants to the Seller an irrevocable
license to access the Documents transferred by the Seller to the
Company and to access any such transferred computer software in
connection with any activity arising in the ordinary course of the
Seller's business or in performance of the Seller's duties as a
Servicer; provided that the Seller shall not disrupt or otherwise
interfere with the Company's use of and access to the Documents and its
computer software during such license period;
(iv) the Seller hereby grants to the Company an irrevocable
power of attorney (coupled with an interest) to take any and all steps
in the Seller's name necessary or desirable, in the reasonable opinion
of the Company, to collect all amounts due under the Purchased
Receivables, including, without limitation, enforcing the Purchased
Receivables and exercising all rights and remedies in respect thereof
and (without regard to the limitation set forth in subsection 7.02(b))
endorsing the Seller's name on checks and other instruments
representing Collections; and
(v) upon written request of the Company, the Seller will (A)
deliver to the Company all licenses, rights, computer programs, related
material, computer tapes, disks, cassettes and data necessary for the
immediate collection of the Purchased Receivables by the Company, with
or without the participation of the Seller (excluding software licenses
which by their terms are not permitted to be so delivered; provided
that the Seller shall use reasonable efforts to obtain the consent of
the relevant licensor to such delivery) and (B) make such arrangements
with respect to the collection of the Purchased Receivables as may be
reasonably required by the Company.
SECTION 2.02 Purchase Price. The aggregate purchase price
payable by the Company to the Seller (the "Purchase Price") for Receivables and
other Receivable Assets on any Payment Date under this Agreement shall be equal
to the product of (a) the aggregate outstanding Principal Amount of Receivables
as set forth in the applicable Daily Report created since the previous Daily
Report and (b) the Discounted Percentage then in effect.
SECTION 2.03 Payment of Purchase Price. (a) The Company shall
pay or provide for the Purchase Price for Receivables and other Receivable
Assets (net of the deductions
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referred to in Section 2.03(d)) in the manner provided below on each day for
which Daily Reports are prepared and delivered to the Company (each such day, a
"Payment Date").
(b) The Purchase Price (net of the deductions referred to in
Section 2.03(d)) shall be paid by the Company to the Seller or to such accounts
or such Persons as the Seller may direct in writing (which direction may consist
of standing instructions provided by the Seller that shall remain in effect
until changed by the Seller in writing), on each Payment Date as follows:
(i) to the extent available for such purpose, in cash from the
net proceeds of a transfer of such Purchased Receivables by the Company
to other Persons (including the Trustee pursuant to the Pooling
Agreement);
(ii) to the extent available for such purpose, in cash from
Collections received by the Company from other Persons (including from
the Trustee pursuant to the Pooling Agreement and any Supplement
thereto);
(iii) at the option of the Company (subject to the provisions of
Sections 8.03), by incurring Indebtedness to the Seller evidenced by
the Seller Note; and
(iv) in cash from the proceeds of capital contributed by the
Seller to the Company, if any, in respect of its equity interest in the
Company.
(c) Any increase in the principal amount of the Seller Note,
in payment of any Purchase Price pursuant to Section 2.03(b), shall be applied
to the Purchase Price in an amount equal to such increase.
(d) The Company shall deduct from the Purchase Price
otherwise payable to the Seller on any Payment Date, any outstanding Seller
Dilution Adjustment Payments and Seller Repurchase Payments pursuant to Section
2.05, and 2.06, respectively.
(e) All cash payments under this Agreement shall be made not
later than 3:30 p.m. (New York City time) on the date specified therefor in same
day funds.
(f) Whenever any payment to be made under this Agreement
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day. Amounts not paid when due in
accordance with the terms of this Agreement shall bear interest at a rate equal
at all times to the Reference Rate, payable on demand.
SECTION 2.04 No Repurchase. Except to the extent expressly set
forth herein, the Seller shall not have any right or obligation under this
Agreement, by implication or otherwise, to repurchase from the Company any
Purchased Receivables or other Receivable Assets or to rescind or otherwise
retroactively effect
any purchase of any such Purchased Receivables or other Receivable Assets after
the Payment Date relating thereto.
SECTION 2.05 Rebates, Adjustments, Returns, Reductions and
Modifications. From time to time the Seller may make Dilution Adjustments to
Receivables in accordance with this Section 2.05 and Section 6.02.
The Seller agrees to pay to the Company, on the Payment Date
immediately succeeding the date of the grant of any Dilution Adjustment, the
amount of any such Dilution Adjustment (a "Seller Dilution Adjustment Payment").
The amount of any Dilution Adjustment shall be set forth on the first Daily
Report prepared after the date of the grant thereof.
SECTION 2.06 Seller Repurchase Payments. If (i) any
representation or warranty under subsection 4.02(a) or (b) is not true and
correct in any material respect as of the date specified therein with respect to
any Receivable sold to the Company or any Receivable encompassed by the
representation or warranty under subsection 4.02(c) is determined not to be an
Eligible Receivable as of its date of purchase, (ii) there is a breach of any
covenant under Section 6.01 with respect to any Receivable and such breach has a
material adverse effect on the Company's interest in such Receivable, (iii) the
Company's interest in any Receivable is not a first priority perfected ownership
or security interest at any time as a result of any action taken by, or the
failure to take action by, the Seller, (iv) any Eligible Receivable becomes
subject to any asserted defense, dispute, offset or counterclaim of any kind as
a result of any action taken by, any failure to take action by, or any event
relating to the Seller (other than as expressly permitted by this Agreement or
the Pooling Agreement)(provided that in the case of any Eligible Receivable that
becomes subject only in part to any of the foregoing, this Section 2.06 shall
apply only to the portion thereof that is so subject) or (v) there is a breach
by the Seller of any covenant contained in Section 5.02, 5.08, 5.09, 6.02, 6.03,
6.04 or 6.05 with respect to any Receivable, and as a result thereof such
Receivable (or a portion thereof) ceases to be an Eligible Receivable on the
date on which such breach occurs (each event referred to in clauses (i), (ii),
(iii), (iv) and (v) of this Section 2.06 shall be referred to herein as an
"Ineligibility Event" and any Receivable (or portion thereof) as to which an
Ineligibility Event applies shall be referred to herein as an "Ineligible
Receivable"), then the Seller agrees to pay to the Company, upon the request of
the Company or the Seller obtaining knowledge thereof, an amount (the
"Adjustment Amount") equal to the Principal Amount of such Receivable (or
portion thereof) (whether the Company paid the related Purchase Price in cash or
otherwise) less Collections received by the Company in respect of such
Receivable; provided that in no event shall an Ineligibility Event arise solely
from any Receivable becoming a Defaulted Receivable or any other default by an
Obligor with respect to any Receivable. Such payment shall be made on or prior
to the 30th day after the day the Company requests payment or the Seller obtains
knowledge thereof (except that if such day
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is not a Business Day, then such payment shall be made on the Business Day
immediately succeeding such day) (unless such breach or incorrectness shall have
been cured or waived on or before such day); provided that in the event that (x)
an Early Termination has occurred and is continuing or (y) the Company shall be
required to make a payment in respect of such Receivable pursuant to Section
2.05 of the Pooling Agreement and the Company has insufficient funds to make
such payment, the Seller shall make such payment immediately. Any payment by the
Seller pursuant to this Section 2.06 is referred to as a "Seller Repurchase
Payment". If, on or prior to such 30th day (or the Business Day immediately
succeeding such 30th day, as applicable), the Seller shall make a Seller
Repurchase Payment in respect of any such Ineligible Receivable, then the
Company shall have no further remedy against the Seller in respect of the
Ineligibility Event with respect to such Receivable. Simultaneously with any
Seller Repurchase Payment with respect to any Receivable, such Receivable and
the Receivable Assets with respect thereto shall immediately and automatically
be sold, assigned, transferred and conveyed by the Company to the Seller without
any further action by the Company or any other Person.
SECTION 2.07 Certain Charges. Each of the Seller and the
Company agrees that late charge revenue, reversals of discounts, other fees and
charges and other similar items, whenever created, accrued in respect of
Purchased Receivables shall be the property of the Company notwithstanding the
occurrence of an Early Termination and all Collections with respect thereto
shall continue to be allocated and treated as Collections in respect of
Purchased Receivables.
SECTION 2.08 Certain Allocations. The Seller hereby agrees
that, following the occurrence of an Early Termination, all Collections and
other proceeds received in respect of Receivables generated by the Seller shall
be applied, first, to pay the outstanding Principal Amount of Purchased
Receivables (as of the date of such Early Termination) of the Obligor to whom
such Collections are attributable until such Purchased Receivables are paid in
full and, second, to the Seller to pay Receivables of such Obligor not sold to
the Company; provided, however, that notwithstanding the foregoing, if the
Seller can attribute a Collection to a specific Obligor and a specific
Receivable, then such Collection shall be applied to pay such Receivable of such
Obligor; and the Company and the Servicer shall take such action as the Seller
may reasonably request, at the expense of the Seller, to assure that any
Receivable not sold to the Company, the Related Property and Collections with
respect thereto do not remain commingled with other Collections hereunder and
are immediately paid to the Seller.
SECTION 2.09 Further Assurances. From time to time at the
request of the Seller, the Company shall deliver to the Seller such documents,
assignments, releases and instruments of termination as the Seller may
reasonably request to evidence the reconveyance by the Company to the Seller of
a Receivable pursuant to the terms of Section 2.01(b) or 2.06, provided that
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the Company shall have been paid all amounts due thereunder; and the Company and
the Servicer shall take such action as the Seller may reasonably request, at the
expense of the Seller, to assure that any receivable not sold to the Company,
the Related Property and Collections with respect thereto do not remain
commingled with other Collections hereunder and are immediately paid to the
Seller.
SECTION 2.10 GMT/PPAP Rejection Period. Notwithstanding
anything to the contrary contained herein, during any GMT/PPAP Rejection Period,
no Tooling Receivable shall be sold, assigned, transferred or otherwise conveyed
hereunder; provided that immediately upon the cessation of any GMT/PPAP
Rejection Period all existing Tooling Receivables relating to the GMT 800
Program shall immediately be sold hereunder.
ARTICLE III
Conditions to Purchase and Sale
SECTION 3.01 Conditions Precedent to the Company's Purchase of
Receivables on the Effective Date. The obligation of the Company to purchase the
Receivables and the other Receivable Assets hereunder on the Effective Date from
the Seller is subject to the conditions precedent, which may be waived by the
Company, that (a) each of the Sale Documents shall be in full force and effect
and (b) the conditions set forth below shall have been satisfied on or before
the Effective Date:
(i) the Company shall have received copies of duly adopted
resolutions of the Board of Directors of the Seller, as in effect on
such Effective Date, authorizing this Agreement, the documents to be
delivered by the Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of the
Seller;
(ii) the Company shall have received duly executed certificates
of the Secretary or an Assistant Secretary of the Seller, dated the
Effective Date, and in form and substance reasonably satisfactory to
the Company, certifying the names and true signatures of the officers
authorized on behalf of the Seller to sign this Agreement and any
instruments or documents in connection with this Agreement (on which
certificates the Company may conclusively rely until such time as the
Company shall receive from the Seller a revised certificate with
respect to the Seller meeting the requirements of this subsection
(ii));
(iii) the Seller shall have made available for filing and
recordation, at its own expense, UCC-1 financing statements with
respect to the Receivables and other Receivable Assets in such manner
and in such jurisdictions as are necessary to perfect the Company's
ownership interest thereof under the UCC; and all other action
necessary, in the reasonable judgment of the Company, to perfect under
the UCC (to the
15
extent applicable) the Company's ownership of the Receivables and
other Receivable Assets shall have been duly taken;
(iv) the Seller shall have delivered or transmitted to the
Company, with respect to the Receivables originated by it, a computer
tape, diskette or data transmission reasonably acceptable to the
Company showing, as of a date no later than the Cut-Off Date, at least
the information specified in Schedule 1 as to all Receivables to be
transferred by the Seller to the Company on such Effective Date;
(v) the Company shall have received reports of UCC-1 and other
searches of the Seller with respect to the Receivables and the other
Receivable Assets reflecting the absence of Liens thereon, except for
Liens created in connection with the sale by the Seller to the Company,
and by the Company to the Trust, of such Receivables and other
Receivable Assets.
(vi) the Company shall be satisfied that the Seller's systems,
procedures and record keeping relating to the Purchased Receivables
originated by the Seller are sufficient and satisfactory in order to
permit the purchase and administration of such Purchased Receivables in
accordance with the terms and intent of this Agreement; and
(vii) the Company shall have received such other approvals,
opinions or documents as the Company may reasonably request.
SECTION 3.02 Conditions Precedent to All the Company's
Purchases of Receivables. The obligation of the Company to purchase any
Receivable and the other related Receivable Assets on each date (including the
Effective Date) shall be subject to the further conditions precedent, which may
be waived by the Company, that, on and as of the related Payment Date, the
following statements shall be true (and the acceptance by the Seller of the
Purchase Price for such Receivable on such Payment Date shall constitute a
representation and warranty by the Seller that on such Payment Date the
statements in clauses (i) and (ii) below are true):
(i) the representations and warranties of the Seller contained
in Sections 4.01 and 4.02 shall be true and correct in all material
respects on and as of such Payment Date as though made on and as of
such date, except insofar as such representations and warranties are
expressly made only as of another date (in which case they shall be
true and correct in all material respects as of such other date);
(ii) after giving effect to such purchase, no (A) Early
Termination or (B) Potential Purchase Termination Event with respect to
a Purchase Termination Event set forth in clause (d)(i) or (ii) of
Section 7.01 shall have occurred and be continuing; and
16
(iii) the Company shall have received such other approvals, opinions
or documents as the Company may reasonably request;
provided, however, that the failure of the Seller to satisfy any of the
foregoing conditions shall not prevent the Seller from subsequently selling
Receivables originated by it upon satisfaction of all such conditions.
SECTION 3.03 Conditions Precedent to the Seller's Obligations on
the Effective Date. The obligations of the Seller on the Effective Date shall be
subject to the conditions precedent, which may be waived by the Seller, that the
Seller shall have received on or before the Effective Date the following, each
dated such Effective Date and in form and substance satisfactory to the Seller:
(i) a copy of duly adopted resolutions of the Board of Directors
of the Company authorizing this Agreement, the documents to be
delivered by the Company hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of the
Company; and
(ii) a duly executed certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true signatures of
the officers authorized on its behalf to sign this Agreement and the
other documents to be delivered by it hereunder.
SECTION 3.04 Conditions Precedent to All the Seller's
Obligations. The obligation of the Seller to sell any Receivable on any date
(including on the Effective Date) shall be subject to the further conditions
precedent, which may be waived by the Seller, that, on the related Payment Date,
the following statement shall be true (and the payment by the Company of the
Purchase Price for such Receivable on such date shall constitute a
representation and warranty by the Company on such Payment Date that the
statement in clause (ii) below is true): after giving effect to such purchase,
(i) no Purchase Termination Event set forth in paragraph (d) of Section 7.01
hereof, and (ii) no Early Amortization Event set forth in paragraph (a) of
Section 7.01 of the Pooling Agreement (as in effect on the date hereof and
without giving effect to any amendment or supplement to, or modification or
waiver of, or departure from, such paragraph unless, in each case, the Seller
shall have consented thereto) shall have occurred and be continuing.
ARTICLE IV
Representations and Warranties
SECTION 4.01 Representations and Warranties of the Seller
Relating to Itself. The Seller represents and warrants as to itself on the
Effective Date and each Payment Date as follows:
(a) Organization; Powers. It (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority, to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified to do business in, and is in good
standing in, every jurisdiction where the nature of its business so requires,
except where the failure so to qualify could not reasonably be expected to
result in a Material Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform its obligations under each of the
Transaction Documents and each other agreement or instrument contemplated hereby
or thereby to which it is or will be a party.
(b) Authorization. The execution, delivery and performance
by the Seller of each of the Transaction Documents to which the Seller is a
party and the other transactions contemplated hereby and thereby (collectively,
the "Transactions") (i) have been duly authorized by all requisite corporate
and, if required, stockholder action and (ii) will not (A) violate (1) any
Requirement of Law or the certificate or articles of incorporation or other
constitutive document or by-laws of any Subsidiary or (2) any provision of any
Contractual Obligation to which it or any Subsidiary is a party or by which any
of them or any of their property is or may be bound, (B) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or
both) a default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such
Contractual Obligation except where any such conflict, violation, breach or
default referred to in clause (A) or (B), individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect or (C) result
in the creation or imposition of any Lien upon or with respect to any property
or assets now owned or hereafter acquired by it or any Subsidiary (other than
any Lien created hereunder or contemplated or permitted hereby).
(c) Enforceability. This Agreement has been duly executed
and delivered by the Seller and constitutes, and each other Transaction Document
to which the Seller is a party when executed and delivered by the Seller will
constitute, a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its respective terms, subject (a) as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally, from time to time in effect and (b) to general principles of equity
18
(whether enforcement is sought by a proceeding in equity or at law).
(d) Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(i) the filing of Uniform Commercial Code financing statements, (ii) such as
have been made or obtained and are in full force and effect and (iii) such
actions, consents, approvals and filings the failure of which to obtain or make
could not reasonably be expected to result in a Material Adverse Effect.
(e) Litigation; Compliance with Laws. (i) There are no
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Seller,
threatened against or affecting the Seller or any Subsidiary or any business,
property or rights of any such Person (A) that involve any Transaction Document
or the Transactions or (B) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(ii) Neither it nor any Subsidiary is in default with
respect to any judgment, writ, injunction, decree or order of any Governmental
Authority, where such violation or default could reasonably be expected to
result in a Material Adverse Effect.
(f) Agreements. (i) Neither it nor any Subsidiary is a party
to any agreement or instrument or subject to any corporate restriction that has
resulted or could reasonably be expected to result in a Material Adverse Effect.
(ii) Neither it nor any Subsidiary is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or instrument (including
the GM Agreements) to which it is a party or by which it or any of its
properties or assets are bound, where such default could reasonably be expected
to result in a Material Adverse Effect.
(iii) As of the Effective Date, neither it nor any Subsidiary
is a party to any contract with GM relating to Receivables other than the GM
Agreements. Each of the GM Agreements (other than Lifetime Program Contracts) is
in full force and effect in accordance with its terms except as could not
reasonably be expected to have a Material Adverse Effect.
(g) Federal Reserve Regulations. (i) Neither it nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(ii) No part of the proceeds from the sale of Receivables
hereunder will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (A) to purchase
or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (B) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
(h) Investment Company Act. It is not an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940.
(i) Tax Returns. It and each Subsidiary has filed or caused
to be filed all federal, state and other material tax returns and has paid or
caused to be paid all taxes due and payable by it and all assessments received
by it, in each case to the extent that nonpayment could reasonably be expected
to result in a Material Adverse Effect.
(j) Employee Benefit Plans. Except to the extent failure to
comply could not reasonably be expected to result in a Material Adverse Effect,
the Seller and its ERISA Affiliates are in compliance in all material respects
with the applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder. No Reportable Event has occurred or is
reasonably expected to occur that, when taken together with all other such
Reportable Events, could reasonably be expected to result in a Material Adverse
Effect.
(k) Indebtedness to Company. Immediately prior to
consummation of the transactions contemplated hereby on such Effective Date, it
had no outstanding Indebtedness to the Company other than amounts permitted by
this Agreement.
(l) Lockboxes. Set forth in Schedule 2 is a complete and
accurate description as of the Effective Date of each Lockbox Account currently
maintained by the Seller. Each of the Lockbox Agreements to which the Seller is
a Party is the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms.
(m) Chief Executive Office. The offices at which the Seller
keeps its records concerning the Receivables originated by it either (x) are
located as set forth on Schedule 3 hereto or (y) the Seller has notified the
Company of the location thereof in accordance with Section 5.06. The chief
executive office of the Seller is listed opposite its name on Schedule 3 and is
the place where the Seller is "located" for the purposes of Section 9-103(3)(d)
of the UCC as in effect in the State of New York. As of the Effective Date, the
state and county where the chief executive office of the Seller is "located" for
the purposes of 9-103(3)(d) of the UCC as in effect in the State of New York has
not changed in the past four months.
(n) Bulk Sales Act. No transaction contemplated hereby with
respect to the Seller requires compliance with, or
20
will be subject to avoidance under, any bulk sales act or similar law.
(o) Names. The legal name of the Seller is as set forth in
this Agreement. It has no trade names, fictitious names, assumed names or "doing
business as" names except as set forth on Schedule 4.
(p) Solvency. No Insolvency Event with respect to the Seller
has occurred and the sale of the Receivables by it to the Company has not been
made in contemplation of the occurrence thereof. Both prior to and after giving
effect to the transactions occurring on the Effective Date and after giving
effect to each subsequent transaction contemplated hereunder (i) the fair value
of the assets of the Seller at a fair valuation will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Seller; (ii) the
present fair salable value of the property of the Seller will be greater than
the amount that will be required to pay the probable liability of the Seller on
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (iii) the Seller will
be able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (iv) the Seller
will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted. For all purposes of clauses (i) through (iv) above, the amount of
contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
The Seller does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature, taking into account the
timing of and amounts of cash to be received by it and the timing of the amounts
of cash to be payable on or in respect of its Indebtedness.
(q) No Purchase Termination Event. As of the Effective Date,
no Purchase Termination Event or Potential Purchase Termination Event with
respect to the Seller has occurred and is continuing.
(r) No Fraudulent Transfer. The Seller is not entering into
this Agreement with the intent (whether actual or constructive) to hinder,
delay, or defraud its present or future creditors and is receiving reasonably
equivalent value and fair consideration for the Receivables originated by it
being transferred hereunder.
(s) Collection Procedures. The Seller has in place
procedures pursuant to the Transaction Documents which are either necessary or
advisable to ensure the timely collection of Receivables originated by it.
21
(t) Filings. On or prior to the date that is 10 days after
the Effective Date, all filings and other acts (including but not limited to all
filings and other acts necessary or advisable under the UCC) shall have been
made or performed such that the Company has on such date a first priority
perfected ownership or security interest in respect of all Receivables.
SECTION 4.02 Representations and Warranties of the Seller
Relating to the Receivables. The Seller hereby represents and warrants to
the Company on each Payment Date that with respect to the Receivables originated
by it being paid for as of such date:
(a) Receivables Description. As of the Cut-Off Date, the
computer tape, diskette or data transmission delivered or transmitted
pursuant to Section 2.01(e) sets forth in all material respects an
accurate and complete listing of all Receivables sold to the Company as
of the Cut-Off Date and the information contained therein in accordance
with Schedule 1 with respect to each such Receivable is true and
correct as of the Cut-Off Date. As of the Cut-Off Date, the aggregate
amount of Receivables owned by the Seller is accurately set forth on
such computer tape, diskette or data transmission.
(b) No Liens. Each Receivable existing on the Effective Date
or, in the case of Receivables sold to the Company after the Effective
Date, on the date that each such Receivable shall have been sold to the
Company, has been conveyed to the Company free and clear of any Liens,
except for Permitted Liens specified in clauses (i), (iii) or (iv) of
the definition thereof.
(c) Eligible Receivable. On the Effective Date, each
Receivable that is represented to be an Eligible Receivable sold to the
Company on such date is an Eligible Receivable on the Effective Date
and, in the case of Receivables sold to the Company after the Effective
Date, each such Receivable that is represented to be an Eligible
Receivable sold to the Company on such later date is an Eligible
Receivable on such later date.
SECTION 4.03 Representations and Warranties of the Company.
The Company represents and warrants as to itself as follows:
(a) Organization; Powers. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified to do business in, and is in good
standing in, every jurisdiction where the nature of its business so requires,
except where the failure so to qualify would not have a Material Adverse Effect
and (iv) has the corporate power and authority to execute, deliver and perform
its
22
obligations under each of the Transaction Documents and each other agreement
or instrument contemplated hereby or thereby to which it is or will be a party.
(b) Authorization. The execution, delivery and performance
by the Company of each of the Transactions (i) have been duly authorized by all
requisite corporate and, if required, stockholder action and (ii) will not (A)
violate (1) any Requirement of Law or (2) any provision of any Transaction
Document or any other material Contractual Obligation to which the Company is a
party or by which it or any of its property is or may be bound, (B) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any Transaction Document or any other material Contractual Obligation or (C)
result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by the Company (other than
any Lien created hereunder or contemplated or permitted hereby).
(c) Enforceability. This Agreement has been duly executed
and delivered by the Company and constitutes, and each other Transaction
Document to which the Company is a party when executed and delivered by the
Company will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its respective terms, subject
(a) as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally, from time to time in effect and (b) to general
principles of equity whether enforcement is sought by a proceeding in equity or
at law.
(d) Accounting Treatment. The Company will not prepare any
financial statements that shall account for the transactions contemplated
hereby, in a manner that is inconsistent with the Company's ownership interest
in the Receivables.
ARTICLE V
Affirmative Covenants
The Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Receivables originated by it
previously sold by the Seller to the Company or until an Early Termination,
whichever is later, the Seller shall:
SECTION 5.01 Certificates; Other Information. Furnish to the
Company:
(a) not later than 120 days after the end of each fiscal
year and not later than 90 days after the end of each of the first
three fiscal quarters of each fiscal year, a certificate of a
Responsible Officer of the Seller stating
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that, to the knowledge of such Responsible Officer (after due inquiry),
the Seller during such period has observed or performed in all material
respects all of its covenants and other agreements, and satisfied in
all material respects every condition, contained in the Sale Documents
to which it is a party to be observed, performed or satisfied by it,
and that such Responsible Officer has obtained no knowledge of any
Purchase Termination Event or Potential Purchase Termination Event
except as specified in such certificate; and
(b) promptly, such additional financial and other
information as the Company may from time to time reasonably request.
SECTION 5.02 Compliance with Law and Policies. (i) Comply in
all material respects with the Requirements of Law and Contractual Obligations
applicable to it.
(ii) Perform its obligations in all material respects in
accordance and compliance with the Policies, as amended from time to time in
accordance with the Transaction Documents, in regard to the Receivables
originated by it and the other Receivable Assets.
SECTION 5.03 Preservation of Corporate Existence. (i) Preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation and (ii) qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the nature of its
business so requires, except where the failure so to qualify would not,
individually or in the aggregate with other such failures, have a Material
Adverse Effect.
SECTION 5.04 Separate Corporate Existence.
(i) Maintain its deposit account or accounts, separate from
those of the Company and ensure that its funds will not be diverted to the
Company, nor will such funds be commingled with the funds of the Company;
(ii) To the extent that it shares any officers or other
employees with the Company, the salaries of and the expenses related to
providing benefits to such officers and other employees shall be fairly
allocated among it and the Company, and it and the Company shall bear their fair
shares of the salary and benefit costs associated with all such common officers
and employees;
(iii) To the extent that it jointly contracts with the
Company to do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing shall be allocated fairly between it
and the Company, and it and the Company shall bear their fair shares of such
costs. To the extent that it contracts or does business with vendors or service
providers where the goods and services provided are partially for
24
the benefit of the Company, the costs incurred in so doing shall be fairly
allocated between it and the Company in proportion to the benefit of the goods
or services each is provided, and it and the Company shall bear their fair
shares of such costs. All material transactions between it and the Company,
whether currently existing or hereafter entered into, shall be only on an arm's
length basis, it being understood and agreed that the transactions contemplated
in the Transaction Documents meet the requirements of this clause (iii);
(iv) Maintain office space separate from the office space of
the Company (but which may be located at the same address as the Company). To
the extent that it and the Company have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs between them, and
each shall bear its fair share of such expenses;
(v) Not assume or guarantee any of the liabilities of the
Company;
(vi) Include in notes to its consolidated financial statements
a note substantially to the effect of Schedule 6 hereto; and
(vii) Take, or refrain from taking, as the case may be, all
other actions that are necessary to be taken or not to be taken in order (x) to
ensure that the assumptions and factual recitations set forth in the Specified
Bankruptcy Opinion Provisions remain true and correct with respect to it (and,
to the extent within its control, to ensure that the assumptions and factual
recitations set forth in the Specified Bankruptcy Opinion Provisions remain true
and correct with respect to the Company) and (y) to comply with those procedures
described in such provisions that are applicable to it.
SECTION 5.05 Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP and permit
any persons designated by the Company to visit and inspect its financial records
and properties at reasonable times, upon reasonable prior notice to it, and as
often as reasonably requested and to make extracts from and copies of such
financial records, and permit any persons designated by the Company upon
reasonable prior notice to discuss the affairs, finances and condition of the
Seller with the officers thereof and independent accountants therefor (subject
to reasonable requirements of confidentiality, including requirements imposed by
law or by contract).
SECTION 5.06 Location of Records. Keep its chief place of
business and chief executive office, and the offices where it keeps the records
concerning the Purchased Receivables (and all original documents relating
thereto), at the locations referred to for it on Schedule 3 hereto or upon 30
days' prior written notice to the Company, at such other locations in a
jurisdiction where all action required by Section 5.14 shall have been taken and
completed and be in full force and effect;
25
provided, however, that the Rating Agency shall be notified of any such changes
in location and such location shall not be changed to a state which is within
the Tenth Circuit unless it delivers an opinion of counsel reasonably acceptable
to the Rating Agencies to the effect that Octagon Gas Systems, Inc. ▇. ▇▇▇▇▇▇,
995 F.2d 948 (10th Cir. 1993), is no longer controlling precedent in the Tenth
Circuit.
SECTION 5.07 Computer Files. At its own cost and expense,
retain the ledger used by it as a master record of the Obligors and retain
copies of all documents relating to each Obligor as custodian and agent for the
Company and other Persons with interests in the Purchased Receivables and ▇▇▇▇
the computer tape or other physical records of the Purchased Receivables to the
effect that interests in the Purchased Receivables existing with respect to the
Obligors listed thereon have been sold to the Company and that the Company has
sold an interest therein and, subsidiarily, has granted a security interest
therein.
SECTION 5.08 Payment of and Compliance with Obligations. Pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on its books or except where the failure to so pay,
discharge or otherwise satisfy such obligations would not have a Material
Adverse Effect in respect of the Seller and would not subject any of its
properties to a Lien which is not a Permitted Lien. The Seller shall defend the
right, title and interest of the Company in, to and under the Receivables
originated by it and the other Receivable Assets, whether now existing or
hereafter created, against all claims of third parties claiming through the
Seller. The Seller will duly fulfill all obligations on its part to be fulfilled
under or in connection with each Receivable originated by it and will do nothing
to impair the rights of the Company in such Receivable.
SECTION 5.09 Collections. Instruct each Obligor to make
payments in respect of its Receivables to a Lockbox or a Lockbox Account or by
wire transfer to a Lockbox Account or the Collection Account and to comply in
all material respects with procedures with respect to Collections reasonably
specified from time to time by the Company. In the event that any payments in
respect of any such Receivables are made directly to the Seller (including,
without limitation, any employees thereof or independent contractors employed
thereby), the Seller shall, within two Business Days of receipt thereof, deliver
(which may be via regular mail) or deposit such amounts to a Lockbox, a Lockbox
Account or the Collection Account and, prior to forwarding such amounts, the
Seller shall hold such payments in trust as custodian for the Company and the
Trustee.
26
SECTION 5.10 Furnishing Copies, Etc. Furnish to the Company:
(a) within five Business Days of the Company's request, a
certificate of the chief financial officer of the Seller or of the
Servicer, on behalf of the Seller, certifying, as of the date thereof,
to the knowledge of such officer, that no Purchase Termination Event
has occurred and is continuing or if one has so occurred, specifying
the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto;
(b) promptly after a Responsible Officer of the Seller
obtains knowledge of the occurrence of any Purchase Termination Event
or Potential Purchase Termination Event, written notice thereof
specifying the nature and extent thereof and the corrective action (if
any) proposed to be taken with respect thereto;
(c) promptly following request therefor, such other
information, documents, records or reports regarding or with respect to
the Purchased Receivables of the Seller, as the Company may from time
to time reasonably request; and
(d) promptly upon determining that any Purchased Receivable
originated by it designated as an Eligible Receivable on the applicable
Daily Report or Monthly Settlement Statement was not an Eligible
Receivable as of the date provided therefor, written notice of such
determination.
SECTION 5.11 Obligations with Respect to Obligors and
Receivables. Take all actions on its part reasonably necessary to maintain in
full force and effect its rights under all contracts relating to the Purchased
Receivables originated by it.
SECTION 5.12 Responsibilities of the Seller. Notwithstanding
anything herein to the contrary, the Seller shall perform or cause to be
performed in all material respects all its obligations under the Policies
related to the Purchased Receivables to the same extent as if such Purchased
Receivables had not been transferred to the Company hereunder.
SECTION 5.13 Assessments. Promptly pay and discharge all
taxes, assessments, levies and other governmental charges imposed upon it except
such taxes, assessments, levies and charges which are being contested in good
faith and for which the Seller has set aside on its books adequate reserves.
SECTION 5.14 Further Action. In addition to the foregoing:
(a) The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary in
the Seller's reasonable judgment or that
27
the Company may reasonably request, in order to more fully effect the
purposes of this Agreement and the transfer of the Receivables
hereunder, to protect or more fully evidence the Company's right, title
and interest in the Purchased Receivables, or to enable the Company to
exercise or enforce any of its rights in respect thereof. Without
limiting the generality of the foregoing, the Seller will upon the
request of the Company (i) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the opinion of the
Company, advisable and (ii) obtain the agreement of any Person having
a Lien on any Receivables owned by the Seller (other than any Lien
created or imposed hereunder or under the Pooling Agreement or any
Permitted Lien) to release such Lien upon the purchase of any such
Receivables by the Company.
(b) The Seller hereby irrevocably authorizes the Company to
file one or more financing or continuation statements (and other
similar instruments), and amendments thereto, relative to all or any
part of the Purchased Receivables and the other Receivable Assets sold
or to be sold by the Seller without the signature of the Seller to the
extent permitted by applicable law.
(c) If the Seller fails to perform any of its agreements or
obligations under this Agreement, the Company may (but shall not be
required to) perform, or cause performance of, such agreements or
obligations, and the expenses of the Company incurred in connection
therewith shall be payable by the Seller as provided in Section 9.02.
The Company agrees promptly to notify the Seller after any such
performance; provided, however, that the failure to give such notice
shall not affect the validity of any such performance.
SECTION 5.15 Sale of Receivables. Sell Receivables solely in
accordance with the terms of this Agreement.
SECTION 5.16 GMT/PPAP Rejection Period. (i) Immediately notify
the Company and the Servicer if in connection with any Supplier Quality
Assurance review relating to the GMT 800 Program, any officer of the Seller
receives notice from GM that such review is unsatisfactory in any material
respect, (ii) keep the Company and the Servicer reasonably informed of the
corrective actions being taken by Seller and (iii) promptly notify the Company
and the Servicer of the commencement and termination of any GMT/PPAP Rejection
Period.
ARTICLE VI
Negative Covenants
The Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Receivables
28
originated by it previously sold by the Seller to the Company or until an Early
Termination with respect to the Seller, whichever is later, the Seller shall
not, directly or indirectly:
SECTION 6.01 Limitations on Transfers of Receivables, Etc. At
any time sell, transfer or otherwise dispose of any of the Receivables or other
Receivable Assets pursuant to:
(i) any Lien Creation except for Permitted Liens; or
(ii) any Investment.
SECTION 6.02 Extension or Amendment of Receivables. Extend,
make any Dilution Adjustment to, rescind, cancel, amend or otherwise modify, or
attempt or purport to extend, amend or otherwise modify, the terms of any
Purchased Receivables, or otherwise take any action to cause, or which would
permit, a Receivable that was designated as an Eligible Receivable on the
Payment Date relating to such Receivable to cease to be an Eligible Receivable,
except in any such case (a) in accordance with the terms of the Policies, (b) as
required by any Requirement of Law or (c) in the case of Dilution Adjustments,
upon making a Seller Dilution Adjustment Payment pursuant to Section 2.05.
SECTION 6.03 Change in Payment Instructions to Obligors.
Instruct any Obligor of any Purchased Receivables to make any payments with
respect to any Receivables other than, in accordance with Section 5.09, to a
Lockbox, a Lockbox Account or the Collection Account; provided, however, that,
in accordance with Section 2.03 of the Servicing Agreement, (i) it may terminate
any Lockbox Agreements or Lockbox Accounts and (ii) it may execute additional
Lockbox Agreements or Lockbox Accounts and instruct Obligors to make payments in
respect of any Receivables to such additional accounts; provided, however, upon
the satisfaction of the Rating Agency Condition (or, if no Outstanding Series
has been rated by a Rating Agency, with the consent of the Agent) the Seller may
enter into any amendments or modifications of a Lockbox Agreement that the
Seller reasonably deems necessary to conform such Lockbox Agreement to the cash
management system of the Company or the Seller.
SECTION 6.04 Change in Name. Change its name, use an
additional name, or change its identity or corporate structure in any manner
which would or might make any financing statement or continuation statement (or
other similar instrument) relating to this Agreement seriously misleading within
the meaning of Section 9-402(7) of the UCC, or impair the perfection of the
Company's interest in any Receivable under any other similar law, without 30
days' prior written notice to the Company.
SECTION 6.05 Policies. Make any change or modification (or
permit any change or modification to be made) to the Policies that is materially
adverse to the interests of the Company or its assigns (including the Trustee
and the Investor Certificateholders), except (i) if such changes or
modifications
29
are necessary under any Requirement of Law, (ii) if such changes or
modifications would not reasonably be likely to have a Material Adverse Effect
with respect to the Company, or (iii) if the Rating Agency Condition is
satisfied with respect thereto.
SECTION 6.06 Modification of Ledger. Delete or otherwise
modify the marking on the ledger referred to in Section 2.01(e).
SECTION 6.07 Accounting for Purchases. Prepare any financial
statements which shall account for the transactions contemplated hereby (other
than capital contributions and the Seller Note contemplated hereby) in any
manner other than as a sale of the Purchased Receivables by the Seller to the
Company or in any other respect account for or treat the transactions
contemplated hereby (including for financial accounting purposes, except as
required by law) (other than capital contributions and the Seller Note
contemplated hereby) in any manner other than as sales of the Purchased
Receivables originated by the Seller to the Company.
SECTION 6.08 Instruments. Subject to the delivery requirements
set forth in Section 2.01(b) of the Pooling Agreement, take any action to cause
any Receivable not evidenced by an "instrument" (as defined in the UCC as in
effect in the State of New York or other similar statute or legislation) upon
origination to become evidenced by an instrument, except in connection with the
enforcement or collection of an overdue Receivable.
SECTION 6.09 Ineligible Receivables. Without the prior written
approval of the Company, take any action to cause, or which would permit, a
Receivable that was designated as an Eligible Receivable on the Payment Date
relating to such Receivable to cease to be an Eligible Receivable, except as
otherwise expressly provided by this Agreement; provided that in no event shall
an Eligible Receivable becoming a Defaulted Receivable constitute a breach of
this Section 6.09.
SECTION 6.10 Business of the Seller. Fail to maintain and
operate the business currently conducted by the Seller and business activities
reasonably incidental or related thereto in substantially the manner in which it
is presently conducted and operated if such failure would materially adversely
affect the interests of the Company under the Transaction Documents.
SECTION 6.11 Limitation on Fundamental Changes. Enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or make any material change
in its present method of conducting business, or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets other than the assignments and transfers contemplated hereby.
39
SECTION 6.12 Amendment of GM Agreements. Amend, supplement,
modify or waive any of the provisions of the GM Agreements relating to the
Receivables or consent or agree to suffer to exist or permit any such amendment,
supplement, modification or waiver or exercise any consent rights granted to it
thereunder unless such amendment, supplement, modification or waiver or such
exercise of consent rights (a) could not reasonably be expected to have a
Material Adverse Effect with respect to the Seller or (b) has been consented to
in writing by the Company.
ARTICLE VII
Purchase Termination Events
SECTION 7.01 Purchase Termination Events. If any of the
following events (herein called "Purchase Termination Events") shall have
occurred and be continuing:
(a) the Seller shall fail (i) to pay any amount due pursuant
to Section 2.06 in accordance with the provisions thereof and such
failure shall continue unremedied for a period of five Business Days
from the earlier of (A) the date any Responsible Officer of the Seller
obtains knowledge of such failure and (B) the date the Seller receives
notice of such failure from the Company, the Servicer or the Trustee or
(ii) to pay any other amount required to be paid by the Seller
hereunder within five Business Days of the date when due; or
(b) the Seller shall fail to observe or perform in any
material respect any covenant or agreement applicable to it contained
herein (other than as specified in paragraph (a) of this Section 7.01);
provided that no such failure shall constitute a Purchase Termination
Event under this paragraph (b) unless such failure shall continue
unremedied for a period of 30 consecutive days from the date the Seller
receives notice of such failure from the Company, the Servicer or the
Trustee; or
(c) any representation, warranty, certification or statement
made or deemed made by the Seller in this Agreement or in any
statement, record, certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made or deemed made; provided that no such
event shall constitute a Purchase Termination Event unless such event
shall continue unremedied for a period of 30 days from the earlier of
(A) the date any Responsible Officer of the Seller obtains knowledge
thereof and (B) the date the Seller receives notice of the
incorrectness of such representation or warranty from the Company, the
Servicer or the Trustee; provided, further, that a Purchase Termination
Event shall not be deemed to have occurred under this paragraph (c)
based upon a breach of any representation or
31
warranty set forth in Section 4.02 if the Seller shall have complied
with the provisions of Section 2.06 in respect thereof; or
(d) (i) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Seller in an
involuntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect
(the Bankruptcy Code and all other such applicable laws being
collectively, "Applicable Insolvency Laws"), which decree or order is
not stayed or any other similar relief shall be granted under any
applicable federal or state law now or hereafter in effect and shall
not be stayed; (ii)(A) an involuntary case is commenced against the
Seller under any Applicable Insolvency Law now or hereafter in effect,
a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Seller, or
over all or a substantial part of the property of the Seller, shall
have been entered, an interim receiver, trustee or other custodian of
the Seller for all or a substantial part of the property of the Seller
is involuntarily appointed, a warrant of attachment, execution or
similar process is issued against any substantial part of the property
of the Seller, and (B) any event referred to in clause (ii)(A) above
continues for 60 days unless dismissed, bonded or discharged; (iii) the
Seller shall at its request have a decree or an order for relief
entered with respect to it or commence a voluntary case under any
Applicable Insolvency Law now or hereafter in effect, or shall consent
to the entry of a decree or an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under
any such Applicable Insolvency Law, consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or
a substantial part of its property; (iv) the making by the Seller of
any general assignment for the benefit of creditors; or (v) the Board
of Directors of the Seller authorizes action to approve any of the
foregoing; or
(e) there shall have occurred (i) an Early Amortization
Event set forth in Section 7.01 of the Pooling Agreement or (ii) the
Amortization Period with respect to all Outstanding Series shall have
occurred and be continuing; or
(f) the Seller has been terminated as Servicer following a
Servicer Default with respect to the Seller under the Servicing
Agreement; or
(g) a notice of Lien shall have been filed by the PBGC
against the Seller under Section 412(n) of the Code or Section 302(f)
of ERISA for a failure to make a required installment or other payment
to a plan to which Section 412(n) of the Code or Section 302(f) of
ERISA
32
applies and such notice could reasonably be expected to have a
Material Adverse Effect with respect to the Seller unless there shall
have been delivered to the Trustee and the Rating Agencies proof of
release of such Lien; or
(h) any Lien in an amount equal to or greater than
$1,000,000 has been asserted against or imposed on the Receivables
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9607(l), or any equivalent or
comparable state law, relating to or arising from the costs of,
response to, or investigation, remediation or monitoring of, any
environmental contamination resulting from the current or past
operations of the Seller, unless such Lien is being contested in
compliance with the standard set forth in Section 5.13; or
(i) a federal tax notice of Lien, in an amount equal to or
greater than $2,000,000, shall have been filed against the Seller,
unless such Lien is being contested in compliance with the standard set
forth in Section 5.13 or there shall have been delivered to the Trustee
and the Rating Agencies proof of release of such Lien; or
(j) any "Event of Default", as such term is defined in
paragraph (b), (c) or (d) (but only with respect to Article VI of the
Credit Agreement in the case of paragraph (d)) of Article VII of the
Credit Agreement, after giving effect to any grace period applicable
thereto under the Credit Agreement, shall have occurred and be
continuing;
then, (i) in the case of any Purchase Termination Event described in paragraph
(d), (e) or (g) above, the obligation of the Company to purchase Receivables
shall thereupon automatically terminate without further notice of any kind,
which is hereby waived by the Seller and (ii) in the case of any other Purchase
Termination Event, so long as such Purchase Termination Event shall be
continuing, the Company may terminate its obligation to purchase Receivables
from the Seller by written notice to the Seller (any termination pursuant to
clause (i) or (ii) of this Article VII is herein called an "Early Termination");
provided, however, that in the event of an involuntary petition or proceeding as
described in paragraphs (d)(i) and (d)(ii) above, the Company shall not purchase
Receivables from the Seller until such time, if any, as such involuntary
petition or proceeding has been dismissed, provided that such dismissal shall
have occurred within 60 days of the filing of such petition or the commencement
of such proceeding.
SECTION 7.02 Remedies. (a)If an Early Termination has occurred
and is continuing:
(i) the Company (and its assignees) shall have all of the
rights and remedies provided to a secured creditor or a purchaser of
accounts under the UCC by applicable law in respect thereto.
(ii) If required by the terms of Section 9-504 or 9-505 of
the UCC (or analogous provisions of any other similar law applicable to
the Receivables), the Company (and its assignees) may offer to sell any
Purchased Receivable to any Person, together, at its option, with all
other Receivables created by the same Obligor. Any Purchased Receivable
sold hereunder (other than pursuant to the Pooling Agreement) shall
cease to be a Receivable for all purposes under this Agreement as of
the effective date of such sale;
(b) In the absence of a Purchase Termination Event under
Section 7.01(d) or (e)(i), it is understood and agreed that the Company will not
exercise the rights granted to it pursuant to Section 2.01(f) in its own
capacity.
ARTICLE VIII
Seller Note
SECTION 8.01 Seller Note. On the Effective Date, the Company
shall issue to the Seller a subordinated note substantially in the form of
Exhibit A (as amended, supplemented or otherwise modified from time to time, the
"Seller Note"). The Company may incur Indebtedness evidenced by the Seller Note
on any date only (i) if such date is a Payment Date; (ii) in payment to the
Seller of all or a portion of the Purchase Price (net of such deductions as
provided in Section 2.03(d)) for Receivables and other Receivable Assets
required to be paid for by the Company to the Seller on such Payment Date in
accordance with Section 2.02; (iii) to the extent that cash was not available to
pay such Purchase Price (net of such deductions) in accordance with subsections
2.03(b)(i), 2.03(b)(ii) and 2.03(b)(iii) (as applicable); and (iv) subject, in
any event, to Section 8.03. The aggregate principal amount of the Seller Note at
any time shall be equal to the difference between (i) the sum of the aggregate
principal amount on the issuance thereof and each addition to the principal
amount of such Seller Note pursuant to Section 2.03 as of such time and (ii) the
aggregate amount of all payments made in respect of the principal of such Seller
Note as of such time. All payments made in respect of the Seller Note shall be
allocated, first, to pay accrued and unpaid interest thereon, and second, to pay
the outstanding principal amount thereof. Interest on the principal amount of
the Seller Note (as such principal amount may have been increased pursuant to
the following proviso) shall accrue at the Reference Rate in effect from time to
time plus 1.50% from and including the Effective Date and shall be paid on each
Distribution Date with respect to amounts accrued and not paid as of the last
day of the preceding Settlement Period and the maturity date thereof; provided,
however, that, to the maximum extent permitted by law, accrued interest on the
Seller Note which is not so paid shall be added, at the request of the Seller,
to the principal amount of the Seller Note. The principal amount of the Seller
Note (as such principal amount may have been increased pursuant to the proviso
to the preceding sentence) shall be payable on the maturity date
34
of the Seller Note (unless sooner prepaid pursuant to the terms thereof and of
the other Transaction Documents). Default in the payment of principal or
interest under the Seller Note shall not constitute a default or event of
default or a Purchase Termination Event hereunder, a Servicer Default under the
Servicing Agreement or an Early Amortization Event under the Pooling Agreement
or any Supplement thereto.
SECTION 8.02 Restrictions on Transfer of Seller Note. Neither
the Seller Note, nor any right of the Seller to receive payments thereunder,
shall be assigned, transferred, exchanged, pledged, hypothecated, participated
or otherwise conveyed, except as provided in the Credit Agreement and the
security documents related thereto.
SECTION 8.03 Aggregate Amount. Anything herein to the contrary
notwithstanding, the Company may not make any payment of any Purchase Price in
the form of Indebtedness of the Company under the Seller Note unless (i) at the
time of such payment and after giving effect thereto, the fair market value of
the Company's assets, including any beneficial interests in or indebtedness of a
trust and all Receivables and Receivable Assets the Company owns, is greater
than the amount of its liabilities, including its liabilities on the Seller Note
and all interest and other fees due and payable under the Pooling Agreement and
the other Transaction Documents plus $12,000,000 and (ii) the Seller reasonably
believes that the Seller Note will be paid in the ordinary course of business of
the Company, and in the absence of notice to the contrary, the Seller shall be
deemed to have such reasonable belief. In addition, and without limiting the
foregoing, the aggregate principal amount of Indebtedness evidenced by the
Seller Note outstanding on any Payment Date (after giving effect to all
additions thereto and repayments thereof on or before such Payment Date) may not
exceed 25% of the outstanding balance of the Receivables on such Payment Date;
provided, however, such limitation shall not apply for the period from March 5,
1999 until June 1, 1999 or, subject to obtaining the prior consent of the Rating
Agency, during any two-month period occurring in each calendar year, commencing
with the calendar year 2000. The principal amount of Indebtedness evidenced by
the Seller Note incurred on any Payment Date shall not, in any event, be greater
than the excess, if any, of (x) the Purchase Price for Receivables and other
Receivable Assets required to be paid for by the Company on such Payment Date
pursuant to Section 2.03 over (y) the portion of such Purchase Price paid in
cash pursuant to sub-sections 2.03(b)(i), 2.03(b)(ii) and 2.03(b)(iii).
ARTICLE IX
Miscellaneous
SECTION 9.01 Payments. Each cash payment to be made by either
the Company or the Seller hereunder shall be made on the required payment date
and in immediately available funds at
35
the office of the payee set forth below its signature hereto or to such other
office as may be specified by either party in a notice to the other party
hereto.
SECTION 9.02 Costs and Expenses. The Seller agrees (a) to pay
or reimburse the Company for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights against the Seller under this
Agreement and the other Sale Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Company, (b) to pay,
indemnify, and hold the Company harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay
caused by the Seller in paying, stamp, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or any amendment, supplement or modification of, or
any waiver or consent under or in respect of, this Agreement and any such other
documents, and (c) to pay, indemnify, and hold the Company harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which would not have been imposed on, incurred by or asserted
against the Company but for its having acquired the Receivables hereunder (all
such other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements being herein called
"Indemnified Liabilities"); provided, however, that such indemnity shall not be
available to the extent that such Indemnified Liabilities result from the gross
negligence or wilful misconduct of the Company; and provided, further, that the
Seller shall have no obligation under this Section 9.02 to the Company with
respect to Indemnified Liabilities arising from (i) any action taken, or omitted
to be taken, by a Servicer that is not an Affiliate of the Seller, (ii) any
action taken by the Trustee or the Company in collecting from an Obligor or
(iii) a delay in payment, or a default, by an Obligor with respect to any
Purchased Receivable (other than arising out of (x) any discharge, claim, offset
or defense (other than discharge in bankruptcy of the Obligor or otherwise in
respect of Charged-Off Receivables) of the Obligor to the payment of any
Purchased Receivable (including, without limitation, a defense based on such
Purchased Receivable not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms) or any other claim
resulting from the sale of the merchandise or services related to any such
Purchased Receivable or the furnishing or failure to furnish such merchandise or
services, (y) a failure by the Seller to perform its duties or obligations under
this Agreement or (z) the sale of any Purchased Receivable that is designated on
the applicable Daily Report to be an Eligible Receivable and is determined to
have been at the date of such sale an Ineligible Receivable). The agreements in
this Section 9.02 shall survive the collection of all Receivables, the
termination of this Agreement and the payment of all amounts payable hereunder.
36
SECTION 9.03 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Seller and the Company and their
respective successors (whether by merger, consolidation or otherwise) and
assigns. The Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written consent
of the Company. The Seller acknowledges that the Company shall assign all of its
rights hereunder to the Trustee. The Seller consents to such assignment and
agrees that the Trustee, to the extent provided in the Pooling Agreement, shall
be entitled to enforce the terms of this Agreement and the rights (including,
without limitation, the right to grant or withhold any consent or waiver) of the
Company directly against the Seller, whether or not a Purchase Termination
Event, a Potential Purchase Termination Event, an Early Amortization Event or a
Potential Early Amortization Event has occurred. The seller further agrees that,
in respect of its obligations hereunder, it will act at the direction of and in
accordance with all requests and instructions from the Trustee until all amounts
due to the Investor Certificateholders are paid in full. The Trustee, on behalf
of the Investor Certificateholders, shall have the rights of a third-party
beneficiary under this Agreement.
SECTION 9.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.05 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Company, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 9.06 Amendments and Waivers. Neither this Agreement
nor any terms hereof may be amended, supplemented or modified except in a
writing signed by the Company and the Seller. Any amendment, supplement or
modification shall not be effective until the Rating Agency Condition has been
satisfied.
SECTION 9.07 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 9.08 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless other-
37
wise expressly provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as follows
in the case of the Company and the Seller, or to such other address as may be
hereafter notified by the respective parties hereto:
The Company: AAM Receivables Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
The Seller: American Axle & Manufacturing, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
in each case, with a copy to
Trustee: The Chase Manhattan Bank, as Trustee
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance
Services, AAM Master Trust
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.09 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Company.
SECTION 9.10 Waivers of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER SALE
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER SALE DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.10.
SECTION 9.11 Jurisdiction; Consent to Service of Process. (a)
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER SALE
DOCUMENTS OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT
THE COMPANY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR THE OTHER SALE DOCUMENTS AGAINST THE SELLER OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
SALE DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.08. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.12 Integration. This Agreement and the other
Transaction Documents contain a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
thereof and shall together constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof, superseding all
prior oral or written understandings.
SECTION 9.13 No Bankruptcy Petition. The Seller, by entering
into this Agreement, and any present or future holder of the Seller Note, by its
acceptance thereof, covenants and agrees that, prior to the date which is one
year and one day after the date of termination of this Agreement pursuant to
Section 9.14, it will not institute against, or join any other Person in
instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any Applicable
Insolvency Laws.
SECTION 9.14 Termination. This Agreement will terminate at
such time as (a) the commitment of the Company to purchase Receivables from the
Seller hereunder shall have terminated and (b) all Receivables purchased
hereunder have been collected, and the proceeds thereof turned over to the
Company and all other amounts owing to the Company hereunder shall have been
paid in full or, if Receivables sold hereunder have not been
collected, such Receivables have become Defaulted Receivables and the Company
shall have completed its collection efforts in respect thereto; provided,
however, that the indemnities of the Seller to the Company set forth in this
Agreement shall survive such termination and provided, further that, to the
extent any amounts remain due and owing to the Company hereunder, the Company
shall remain entitled to receive any collections on Receivables sold hereunder
which have become Defaulted Receivables after it shall have completed its
collection efforts in respect thereof.
SECTION 9.15 Construction of Agreement. (a) The Seller hereby
grants to the Company a security interest in all of the Seller's right, title
and interest in, to and under the Receivables and other Receivable Assets now
existing and hereafter created, all monies due or to become due and all amounts
received with respect thereto and all "proceeds" thereof (including Recoveries),
to secure all of the Seller's obligations hereunder.
(b) This Agreement shall constitute a security agreement
under applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.
AMERICAN AXLE & MANUFACTURING, INC.,
as Seller and Servicer
by
---------------------------------
Name:
Title:
AAM RECEIVABLES CORP.
by
----------------------------------
Name:
Title:
1
Exhibit A to the
Receivables Sale Agreement
[FORM OF
SELLER NOTE]
New York, New York
__________, 1997
AAM Receivables Corp., a Delaware corporation (the "Company"),
hereby promises to pay to the order of American Axle & Manufacturing, Inc., a
Delaware corporation, in its capacity as Seller under the Receivables Sale
Agreement described below the principal amount of this Seller Note, determined
as described below, together with interest thereon at a rate per annum equal
to the Reference Rate in effect from time to time plus 1.50% (provided that
the portion of the outstanding principal amount of the Seller Note in excess
of an amount equal to 25% of the outstanding balance of the Receivables at any
time shall bear interest during each calendar month at a rate per annum equal
to One-Month LIBOR in effect on the first day of each calendar month plus
1.50% per annum) in lawful money of the United States of America. Capitalized
terms used herein but not defined herein shall have the meanings assigned to
such terms in the Receivables Sale Agreement, dated as of October 29, 1997, as
amended and restated as of March 25, 1999, between the Company and American
Axle & Manufacturing, Inc., as seller (in such capacity, the "Seller") and as
servicer (in such capacity, the "Servicer") (as amended, supplemented or
otherwise modified from time to time in accordance with its terms, the
"Receivables Sale Agreement") and in the Pooling Agreement, dated as of
October 29, 1997, as amended and restated as of March 25, 1999, among the
Company, the Servicer, and The Chase Manhattan Bank, a New York banking
corporation, as Trustee (as amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "Pooling Agreement"). This
Seller Note is the Seller Note referred to in the Receivables Sale Agreement
and is subject to the terms and conditions thereof.
1. Principal Amount. The aggregate principal amount of this
Seller Note at any time shall be calculated in accordance with Section 8.01 of
the Receivables Sale Agreement and shall be recorded by the Servicer (the
authority to so record such amounts being hereby granted to the Servicer) on
the schedule annexed to and constituting a part of this Seller Note.
2. Payments of Principal and Interest. (a) Principal on this
Seller Note may be prepaid at any time. Principal not prepaid shall be due and
payable on the Trust Termination Date (as defined in the Pooling Agreement).
2
(b) Payments of interest on this Seller Note shall be paid on
each Distribution Date (with respect to interest accrued and not paid as of
the preceding Distribution Date (or, in the case of the first Distribution
Date, as of the date on which this Seller Note is issued)) and on the Trust
Termination Date by depositing such payment in such account of the Seller as
the Seller may designate in writing; provided, however, that accrued interest
on this Seller Note which is not so paid may (to the maximum extent permitted
by law) be added to the principal amount of this Seller Note as indicated on
the schedule annexed to and constituting a part of this Seller Note.
Notwithstanding the foregoing, no payments of interest or principal may be
made under this Seller Note at the times and to the extent prohibited under
the Subordination Provisions and Certain Termination Events described in
Sections 3 and 6 below.
3. Subordination Provisions. The Company covenants and agrees,
and the Seller, by its acceptance of this Seller Note, likewise covenants and
agrees, that the payment of all obligations of the Company to the Seller under
this Seller Note from or with the proceeds (such proceeds being the
"Proceeds") of Receivables (as defined in the Pooling Agreement) or Related
Property (as defined in the Pooling Agreement)(and any extensions, renewals,
financing, refundings and replacements of all or any part of such obligations)
(the "Seller Subordinated Debt") are hereby expressly subordinated in right of
payment to the payment and performance of the obligations of the Company to
the Trustee for the benefit of the Holders (as defined in the Pooling
Agreement) howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to
become due (the "Senior Obligations") to the extent and in the manner set
forth in this paragraph including each of the following subparts:
(a) Insolvency Events; Priority of Senior
Obligations; Payments Made Directly to the Trustee. In the
event of any bankruptcy, dissolution, winding up,
liquidation, readjustment, reorganization or other similar
event relating to the Company, whether voluntary or
involuntary, partial or complete, and whether in bankruptcy,
insolvency, receivership or other similar proceedings, or
upon an assignment for the benefit of creditors, or any other
marshalling of the assets and liabilities of the Company
(each an "Insolvency Event") or any sale of all or
substantially all the assets of the Company (except pursuant
to the Pooling Agreement and any Supplement thereto),
(i) the Senior Obligations shall first be
paid and performed in full and in cash before the
Seller shall be entitled to receive and to retain
any payment or distribution from or with the
Proceeds in respect of the Seller Subordinated Debt,
whether of principal, interest or otherwise; and
(ii) any payment or distribution from or
with the Proceeds of any kind (including cash or
property arising
3
from Proceeds which may be payable or deliverable
by reason of the payment of any other
indebtedness of the Company being subordinated to
the payment of the Seller Subordinated Debt) in
respect of the Seller Subordinated Debt that
otherwise would be payable or deliverable with
respect to the Seller Subordinated Debt directly or
indirectly, by set-off or in any other manner to the
Seller, shall be paid or delivered by the Person
making such payment or delivery (whether a trustee
in bankruptcy, a receiver, custodian, liquidating
trustee or otherwise) directly to the Trustee on
behalf of the Holders for application to (in the
case of cash) or as collateral for (in the case of
noncash property or securities) the payment of the
Senior Obligations until the Senior Obligations
shall have been paid in full in cash.
(b) Payments Received by Seller. In the event that
the Seller receives any payment or other distribution of any
kind or character arising from Proceeds from the Company or
from any other source whatsoever in respect of the Seller
Subordinated Debt after the commencement of an Insolvency
Event, such payment or other distribution shall be deemed to
be property of the Holders and shall be received and held by
the Seller in trust for the Trustee on behalf of the Holders
and shall be turned over by the Seller to the Trustee for the
benefit of the Holders forthwith, until all Senior
Obligations have been paid and performed in full and in cash.
(c) Application of Payments. All payments and
distributions arising from Proceeds received by the Trustee
in respect of the Seller Subordinated Debt, to the extent
received in or converted into cash, may be applied by the
Trustee for the benefit of the Holders (i) first to the
payment of any and all reasonable expenses (including
reasonable attorneys' fees and legal expenses) paid or
incurred by the Trustee or any Holder in enforcing these
Subordination Provisions, or in endeavoring to collect or
realize upon the Seller Subordinated Debt, and (ii) any
balance remaining therefrom shall be applied by the Trustee
toward the payment of the Senior Obligations in a manner
determined by the Trustee to be in accordance with the
Pooling Agreement.
(d) Seller's Rights of Subrogation. The Seller agrees
that no payment or distribution to Holders pursuant to these
Subordination Provisions shall entitle the Seller to exercise
any right of subrogation in respect thereof until the Senior
Obligations shall have been paid in full in cash. The Seller
agrees that these Subordination Provisions herein shall not
be affected by any action, or failure to act, by any holder
of Senior Obligations which results, or may result, in
affecting, impairing or extinguishing any right of
reimbursement or subrogation or other right or remedy of the
Seller.
4
(e) Company's Obligations Absolute. The provisions of
this paragraph are intended solely for the purpose of
defining the relative rights with respect to Proceeds of the
Seller, on the one hand, and the Holders, on the other hand.
Nothing contained in these provisions or elsewhere in this
Seller Note is intended to or shall impair, as between the
Company, its creditors (other than the Trustee) and the
Seller, the Company's obligation, which is unconditional and
absolute, to pay the Seller Subordinated Debt as and when the
same shall become due and payable in accordance with the
terms hereof and of the Receivables Sale Agreement or to
affect the relative rights of the Seller and creditors of the
Company (other than the Certificateholders); provided that
any payments made by the Company pursuant to this subsection
shall be made solely from funds available to the Company
which are not otherwise needed to be applied to the payment
of any amounts by the Company pursuant to any Pooling and
Servicing Agreements, and the Seller shall make no claim
against the Company for payment in contravention of this
proviso.
(f) Avoided Payments. If, at any time, any payment
(in whole or in part) made with respect to any Senior
Obligations is rescinded or must be restored or returned by a
Holder or the Trustee on behalf of the Holders, the
provisions of this paragraph shall continue to be effective
or shall be reinstated, as the case may be, as though such
payment had not been made.
(g) Subordination Not Affected by Certain Actions of
Holders or the Trustee. As between the Seller, on the one
hand, and the Holders and the Trustee, on the other hand,
each of the Holders or the Trustee may, from time to time, at
its sole discretion, without notice to the Seller, and
without waiving any of its rights under these Subordination
Provisions, take any or all of the following actions: (i)
retain or obtain an interest in any property to secure any of
the Senior Obligations; (ii) extend or renew for one or more
periods (whether or not longer than the original period),
alter, increase or exchange any of the Senior Obligations, or
release or compromise any obligation of any nature with
respect to any of the Senior Obligations; (iii) amend,
supplement, amend and restate, or otherwise modify any
Transaction Document; and (iv) release its security interest
in, or surrender, release or permit any substitution or
exchange for all or any part of any rights or property
securing any of the Senior Obligations.
(h) Waiver of Notice. By its acceptance hereof, the
Seller hereby waives: (i) notice of acceptance of the
provisions of this paragraph by any of the Holders or the
Trustee; (ii) notice of the existence, creation, non-payment
or non-performance of all or any of the Senior Obligations;
and (iii) all diligence in enforcement, collection or
protection of, or realization upon, the Senior Obligations or
any security therefor.
5
4. Restrictions on Assignment. Neither this Seller Note, nor
any right of the Seller to receive payments hereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or otherwise
conveyed, except as provided in the Credit Agreement and in the security
documents related thereto.
5. No Bankruptcy Petition. The Seller covenants and agrees
that, prior to the date which is one year and one day after the date of
termination of the Receivables Sale Agreement pursuant to Section 9.13 thereof,
it will not institute against, or join any other Person in instituting against,
the Company any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
6. Certain Termination Events. During the continuance of any
Early Amortization Event set forth in paragraphs (a) or (b) of Section 7.01 of
the Pooling Agreement, until all Senior Obligations have been paid in full:
(a) the Company shall cease making any payments to
the Seller under this Seller Note;
(b) the Trustee (on behalf of the Holders) may
demand, ▇▇▇ for, collect and receive every payment or
distribution of any kind made in respect of the Seller
Subordinated Debt and file claims and proofs of claim and
take such other action (including enforcing any security
interest or other lien securing payment of the Seller
Subordinated Debt) as the Trustee (on behalf of the Holders)
may deem necessary for the exercise or enforcement of any of
the rights or interests of Holders; provided that in the
event the Trustee takes such action, it shall apply all
proceeds first to the payment of costs under this Seller
Note, then to the payment of the Senior Obligations and any
surplus proceeds remaining thereafter to be paid over to
whosoever may be lawfully entitled thereto; and
(c) the Seller shall promptly take such action as the
Trustee (on behalf of the Holders) may request (i) to file
appropriate claims or proofs of claim in respect of the
Seller Subordinated Debt; (ii) to execute and deliver to the
Trustee (on behalf of the Holders) such powers of attorney,
assignments, or other instruments as the Trustee may request
in order to enable it to enforce any and all claims with
respect to, and any security interests and other liens
securing payment of, the Seller Subordinated Debt, and (iii)
to collect and receive any and all payments or distributions
which may be payable or deliverable upon or with respect to
the Seller Subordinated Debt for account of the Trustee (on
behalf of the Holders).
7. The Company covenants and agrees that, at any time that the
outstanding principal amount of this Seller Note is greater than zero, it shall
not declare or pay any dividend on, or make any payment on account of, or set
apart assets for a sinking
6
or other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of the Company,
whether now or hereafter outstanding, or make any other distribution in respect
thereof.
THIS SELLER NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ANY
CONFLICT OF LAW PRINCIPLES.
AAM RECEIVABLES CORP.,
by
---------------------------
Name:
Title:
Schedule 1 to
Seller Note
Subordinated Loans and Payments of Principal(1)
Amount of Unpaid
Amount of Principal Principal Notation
Date Loans Repaid Balance Made by
-------- --------- --------- --------- --------
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-------- --------- --------- --------- --------
-------- --------- --------- --------- --------
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-------- --------- --------- --------- --------
-------- --------- --------- --------- --------
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--------
(1) The grid below may be maintained electronically by the Seller, rather than
in written form.
Schedule 1 to the
Receivables Sale Agreement
Receivables
American Axle & Manufacturing, Inc. aged trial balance as of October 29,1997 on
computer diskette.
Schedule 2 to the
Receivables Sale Agreement
Lockboxes
Lockbox Account
Name Bank Name Number Number
---- --------- ------ ------
American Axle Mellon Bank 360254 091-8591
& Manufacturing, ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Schedule 3 to the
Receivables Sale Agreement
Chief Executive Office
Jurisdiction of Location of Chief Office Where
Seller Incorporation Executive Office Records are kept
------ ------------- ---------------- ----------------
American Axle & ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
Manufacturing, Inc. Delaware ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Finance Dept.
Other Locations where Records
Concerning Receivables are Located
A. Detroit Gear & Axle and Detroit Forge
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
B. Buffalo Gear & Axle
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
C. Tonawanda Forge
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
D. Three Rivers Plant
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
E. Engineering, Sales & Marketing
Technical Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Schedule 4 to the
Receivables Sale Agreement
Names
Seller Trade Names
------ -----------
American Axle & Manufacturing, Inc. AAM*
The corporation is frequently referred to as "AAM" and, for this reason, it is
claimed as a trade name. The corporation does not have any "doing business as"
names or "assumed names".
Schedule 5 to the
Receivables Sale Agreement
Discounted Percentage
All terms defined or referenced in the Receivables Sale
Agreement, the Pooling Agreement or a Supplement and not otherwise defined or
referenced herein are used herein as therein defined or referenced.
The Discounted Percentage applicable to the Receivables
purchased on any date from the Seller shall equal (a) during the initial Accrual
Period, 99.25% and (b) thereafter, the percentage obtained from the following
formula:
100% - (A + B + C + D)
all determined by the Company as of the Related Payment Date,
Where
A = Adjusted Loss Reserve Percentage, which as of such Payment
Date will equal the ratio obtained by dividing (a)
Charged-Off Receivables (net of recoveries in respect of
Charged-Off Receivables) during the six-fiscal month period
immediately preceding the Settlement Report Date most
recently preceding such Payment Date by (b) two times the
aggregate amount of Collections during the three-fiscal month
period immediately preceding the Settlement Report Date most
recent to such Payment Date.
B = Adjusted Carrying Cost Reserve Percentage, which as of such
Payment Date will equal the amount obtained by dividing (a)
the product of (i) 1.5, (ii) the average of the Days Sales
Outstanding for the three Settlement Report Dates most recent
to such Payment Date and (iii) the Reference Rate as of the
Settlement Report Date most recent to such Payment Date by
(b) 365.
C = The Servicing Fee Percentage divided by 360.
D = Processing Expense Reserve Percentage, which will equal
1/20 of 1% and reflects the cost of the Company's overhead,
including costs of processing the purchase of Receivables and
other normal operation costs and a reasonable profit margin.
None of the elements of the above-referenced formula, in
respect of any purchase of Receivables, will be adjusted following the related
Payment Date.
With respect to each calculation set forth above with respect
to a Settlement Report Date, such calculation as calculated on such Settlement
Report Date and included in the applicable Monthly Settlement Statement shall
remain in effect
2
from and including the related Settlement Report Date to but excluding the
following Settlement Report Date.
3
Schedule 6 to the
Receivables Sale Agreement
FORM OF CONSOLIDATED FINANCIAL STATEMENT FOOTNOTE--TO BE INCLUDED
IN CONSOLIDATED FINANCIALS
American Axle & Manufacturing, Inc. (the "Seller") established a
receivables financing facility (the "Receivables Facility") through AAM
Receivables Corp. ("ARC"), a wholly-owned, bankruptcy-remote subsidiary of
American Axle & Manufacturing, Inc. Pursuant to the Receivables Facility, the
Seller sells certain customer trade receivables created from time to time to ARC
which, in turn, transfers all of such receivables to a trust, which issues
variable funding certificates (the "VFC Certificates") representing an undivided
interest in the receivables pool to certain purchasers. Under the VFC
Certificates, certain purchasers provide a revolving financing commitment,
subject to the terms and conditions of the Receivables Facility, of up to $153
million through October 2003. These receivables are not available to the
Company's general creditors.