EXECUTION COPY
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SERVICING AGREEMENT
Among
AAM RECEIVABLES CORP.,
AMERICAN AXLE & MANUFACTURING, INC.
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee
Dated as of October 29, 1997
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TOC Servicing Agreement
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Other Definitional Provisions.............................................................2
ARTICLE II
Administration and Servicing of Receivables
SECTION 2.01. Appointment of Servicer...................................................................3
SECTION 2.02. Servicing Procedures......................................................................3
SECTION 2.03. Collections...............................................................................6
SECTION 2.04. Reconciliation of Deposits................................................................7
SECTION 2.05. Servicing Compensation....................................................................7
ARTICLE III
Representations and Warranties of the Servicer
SECTION 3.01. Organization; Powers......................................................................9
SECTION 3.02. Authorization; No Conflict................................................................9
SECTION 3.03. Enforceability...........................................................................10
SECTION 3.04. Governmental Approvals...................................................................10
SECTION 3.05. Litigation; Compliance with Laws.........................................................10
SECTION 3.06. Agreements...............................................................................11
SECTION 3.07. No Servicer Default......................................................................11
SECTION 3.08. Servicing Ability........................................................................11
SECTION 3.09. Location of Records......................................................................11
ARTICLE IV
Covenants of the Servicer
SECTION 4.01. Delivery of Daily Reports................................................................12
SECTION 4.02. Delivery of Monthly Settlement Statement.................................................12
SECTION 4.03. Delivery of Annual Servicer's Certificates...............................................13
SECTION 4.04. Delivery of Independent Public Accountants' Servicing Reports............................14
SECTION 4.05. Extension, Amendment and Adjustment of Receivables; Amendment of Policies................14
SECTION 4.06. Protection of Holders' Rights............................................................15
SECTION 4.07. Security Interest........................................................................15
TOC Servicing Agreement Contents page ii
SECTION 4.08. Location of Records......................................................................15
SECTION 4.09. Visitation Rights........................................................................16
SECTION 4.10. Lockbox Agreement; Lockbox Accounts......................................................16
SECTION 4.11. Delivery of Financial Statements.........................................................17
SECTION 4.12. Notices..................................................................................19
ARTICLE V
Other Matters Relating to the Servicer
SECTION 5.01. Merger, Consolidation, etc...............................................................19
SECTION 5.02. Indemnification of the Trust and the Trustee.............................................20
SECTION 5.03. Servicer Not to Resign...................................................................21
SECTION 5.04. Access to Certain Documentation and Information Regarding the Receivables................21
ARTICLE VI
Servicer Defaults;
Servicer Termination
SECTION 6.01. Servicer Defaults........................................................................22
SECTION 6.02. Trustee To Act; Appointment of Successor.................................................26
SECTION 6.03. Waiver of Past Defaults..................................................................28
ARTICLE VII
Miscellaneous Provisions
SECTION 7.01. Amendment................................................................................28
SECTION 7.02. Termination..............................................................................28
SECTION 7.03. Governing Law............................................................................29
SECTION 7.04. Notices..................................................................................29
SECTION 7.05. Counterparts.............................................................................29
SECTION 7.06. Third-Party Beneficiaries................................................................29
SECTION 7.07. Merger and Integration...................................................................30
SECTION 7.08. Headings.................................................................................30
SECTION 7.09. No Set-Off...............................................................................30
SECTION 7.10. No Bankruptcy Petition...................................................................30
Exhibit A Form of Annual Servicer's Certificate
Exhibit B Form of Agreed Upon Procedures
SERVICING AGREEMENT, dated as of
October 29, 1997 (this "Agreement"), among
AAM RECEIVABLES CORP., a Delaware corporation
(the "Company"), AMERICAN AXLE & MANUFACTURING, INC.,
a Delaware corporation ("AAMI", in its capacity as
Seller under the Receivables Sale Agreement referred
to below, the "Seller"), as servicer (the
"Servicer"), and THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as trustee
(in such capacity, the "Trustee").
W I T N E S S E T H:
WHEREAS the Company and the Seller have entered into a
Receivables Sale Agreement, dated as of the date hereof (the "Receivables Sale
Agreement");
WHEREAS pursuant to the Receivables Sale Agreement, 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 and other
Receivable Assets (as defined in the Receivables Sale Agreement);
WHEREAS, the Company in turn has transferred the Receivables
now existing or hereafter created and the rights of the Company in, to and under
all Related Property related thereto to a master trust pursuant to a Pooling
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "Pooling Agreement"), among the Company, the
Servicer and the Trustee; and
WHEREAS, the parties hereto wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Unless otherwise defined herein,
capitalized terms that are used herein shall
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have the meanings assigned to such terms in the Pooling Agreement and each
Supplement thereto.
SECTION 1.02. Other Definitional Provisions. (a) All terms
defined in this Agreement (directly or by incorporation by reference pursuant to
Section 1.01) shall have the defined meanings when used in any certificates or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined
herein (directly or by incorporation by reference pursuant to Section 1.01) and
accounting terms partly defined herein (directly or by incorporation by
reference pursuant to Section 1.01), to the extent not defined, shall have the
respective meanings given to them under GAAP. To the extent that the definitions
of accounting terms herein are inconsistent with the meanings of such terms
under GAAP, the definitions contained herein shall control.
(c) The words "hereof", "herein" and "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 Section,
subsection, Schedule and Exhibit references contained in this Agreement are
references to Sections, subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
(d) The definitions contained herein are applicable to the
singular as well as the plural forms of such terms and to the masculine, the
feminine and the neuter genders of such terms.
(e) Where reference is made in this Agreement to the principal
amount of Receivables, such reference shall, unless explicitly stated otherwise,
be deemed a reference to the Principal Amount of such Receivables.
(f) Any reference herein or in any other Transaction Document
to a provision of the Internal Revenue Code or ERISA shall be deemed to be also
a reference to any successor provision thereto.
(g) 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
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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 contained in such Schedule or Exhibit) in
compliance with the terms of the Transaction Documents.
(h) 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
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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.
(i) The words "include", "includes" or "including" shall be
interpreted as if followed, in each case, by the phrase "without limitation".
ARTICLE II
Administration and Servicing of Receivables
SECTION 2.01. Appointment of Servicer. The Company hereby
appoints AAMI to act as, and AAMI hereby accepts its appointment and agrees to
act as, Servicer under the Pooling and Servicing Agreements, and the Investor
Certificateholders, by their acceptance of the Investor Certificates, consent to
AAMI acting as Servicer. The Servicer shall have responsibility for the
management of the servicing and receipt of collections in respect of the
Receivables and will have the authority to make any management decisions
relating to the Receivables to the extent such authority is granted to the
Servicer under any Pooling and Servicing Agreement. The Company, the Trustee and
the Holders shall treat AAMI as the Servicer and may conclusively rely on the
instructions, notices and reports of AAMI as Servicer for so long as AAMI is the
Servicer.
SECTION 2.02. Servicing Procedures. (a) The Servicer shall
manage the servicing and administration of the Receivables, the collection of
payments due under the Receivables and charging off of any Receivables as
uncollectible, all in accordance with its Policies and the terms of the Pooling
and Servicing Agreements. The Servicer
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shall have full power and authority, acting alone or through any party properly
designated by it hereunder, to do any and all things in connection with such
servicing and administration that it may deem necessary or desirable, but
subject to the terms of this Agreement and the other Transaction Documents.
Without limiting the generality of the foregoing and subject to Section6.01,
the Servicer or its designee is hereby authorized and empowered (i) to execute
and deliver, on behalf of the Trust for the benefit of the Holders, any and all
instruments of satisfaction or cancelation, or of partial or full release or
discharge, and all other comparable instruments, and, after the delinquency of
any Receivable and to the extent permitted under and in compliance with
applicable Requirements of Law, to commence enforcement proceedings with respect
to such Receivable and (ii) to make any filings, reports, notices, applications,
registrations with, and to seek any consents or authorizations from, the
Securities and Exchange Commission and any state securities authority on behalf
of the Trust as may be necessary or advisable to comply with any Federal or
state securities or reporting requirements or laws.
(b) Without limiting the generality of the foregoing and
subject to Section 6.01, the Servicer or its designee is hereby authorized and
empowered to give written direction to the Trustee with respect to withdrawals
from, and payments to, the Collection Account in accordance with the Daily
Report and as otherwise specified in the Pooling and Servicing Agreements.
(c) The Servicer shall, at its cost and expense and as agent
for the Company and the Trust, use its best efforts to collect, consistent with
its past practices, as and when the same becomes due, the amount owing on each
Receivable. The Servicer shall not make any material change in its
administrative, servicing and collection systems that deviates from its
Policies, except as expressly permitted by the terms of any applicable Pooling
and Servicing Agreement and after giving written notice to the Trustee. In the
event of default under any Receivable, the Servicer shall have the power and
authority, on behalf of the Company and the Trust, for the benefit of the
Holders, to take such action in respect of such Receivable as the Servicer may
deem advisable. In the enforcement or collection of any Receivable, the Servicer
shall be entitled to xxx thereon in (i) its own name or (ii) if, but only if,
the Company consents in writing (which consent shall not be unreasonably
withheld), as agent for the Company. In no event shall the Servicer be entitled
to take any action that would make the
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Company, the Trustee, any Agent or any Holder a party to any litigation without
the express prior written consent of such Person.
(d) Without limiting the generality of the foregoing and
subject to Section 6.01, the Servicer is hereby authorized and empowered to
delegate any or all of its servicing, collection, enforcement and administrative
duties hereunder with respect to the Receivables to a Person who agrees to
conduct such duties in accordance with its Policies; provided, however, that the
Servicer shall give prior written notice to the Company, the Trustee, each Agent
and the Rating Agencies of any such delegation relating to a material duty prior
to such delegation being effective, the Servicer shall have received notice that
the Rating Agency Condition shall be satisfied after giving effect to such
delegation and the consent of the Company, the Trustee and each Agent to such
delegation shall have been obtained. No delegation of duties by the Servicer
permitted hereunder shall relieve the Servicer of its liability and
responsibility with respect to such duties.
(e) Except as provided in any Pooling and Servicing Agreement,
neither the Servicer nor any Successor Servicer shall be obligated to use
separate servicing procedures, offices, employees or accounts for servicing the
Receivables transferred to the Company (and, subsequently, to the Trust) from
the procedures, offices, employees and accounts used by the Servicer or such
Successor Servicer, as the case may be, in connection with servicing other
receivables.
(f) The Servicer shall comply with and perform its servicing
obligations with respect to the Receivables in accordance with the contracts, if
any, relating to the Receivables and its Policies except insofar as any failure
to so comply or perform would not have a Material Adverse Effect with respect to
the Servicer.
(g) The Servicer shall not take any action to cause any
Receivable not evidenced by any "instrument" (as defined in the UCC as in effect
in the State of New York) upon origination to become evidenced by an instrument
and the Servicer shall not take any action to cause any interest in any
Receivable to be evidenced by any title documents in bearer form, except in
connection with its enforcement or collection of a Defaulted Receivable, in
which event the Servicer shall deliver such instrument or title documents to the
Trustee as soon as reasonably practicable, but in no
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event more than five days after execution thereof; provided that any origination
of Receivables by the Servicer, in its capacity as the Seller, in compliance
with applicable Pooling and Servicing Agreements shall not constitute a breach
of this subsection 2.02(h).
SECTION 2.03. Collections. (a) The Servicer shall have
instructed all Obligors to make all payments in respect of the Receivables to a
Lockbox or a Lockbox Account. Each of the Company and the Servicer represents,
warrants and agrees that all Collections shall be collected, processed and
deposited by it pursuant to, and in accordance with the terms of, the Pooling
and Servicing Agreements and Lockbox Agreements. Without limiting the generality
of the foregoing, the Servicer shall comply with the provisions of subsection
3.01(d) of the Pooling Agreement as to remittance of funds available in any
Lockbox Account. In the event that any payments in respect of any Receivable are
made directly to the Servicer (including any employees thereof or independent
contractors employed thereby), the Servicer 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 Servicer shall hold such payments in trust as
custodian for the Company and the Trustee.
(b) Each Lockbox Agreement shall provide that the Lockbox
Processor thereunder is irrevocably directed, and such Lockbox Processor
irrevocably agrees, (i) to deposit funds received in the Lockbox directly into
the Lockbox Account and (ii) to transfer all available funds on deposit in the
Lockbox Account within one Business Day of the Business Day Received to the
Trustee for deposit in the Collection Account. Each Lockbox Agreement shall be
substantially in the form specified in the Pooling Agreement, subject to
modifications thereof as provided in the Pooling Agreement and applicable
Supplements. Prior to any resignation of the Lockbox Processor or termination of
the Lockbox Processor by the Company or the Trustee with respect to any
Receivables, the Servicer hereby agrees to obtain a replacement Lockbox
Processor. The Servicer may enter into any amendments or modifications of a
Lockbox Agreement that the Servicer reasonably deems necessary to conform such
Lockbox Agreement to the cash management system of the Company or the Servicer
and that are reasonably acceptable to the Trustee and each Agent.
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(c) The Trustee shall administer amounts on deposit in the
Collection Account in accordance with the terms of the Pooling and Servicing
Agreements. Each of the Company and the Servicer acknowledges and agrees that
(i)it shall not have any right to withdraw any funds on deposit in the
Collection Account or any Lockbox Account and (ii) all amounts deposited in the
Collection Account or any Lockbox Account shall be under the sole dominion and
control of the Trustee (subject to the Servicer's rights to direct the
application of any such amounts as provided by the terms of any Pooling and
Servicing Agreement or to the extent funds are deposited in error (as certified
to the Trustee in writing by the Servicer)).
(d) As soon as practicable, but in any event not later than
the Business Day following the date that the Servicer identifies any of the
collected funds received in the Collection Account as funds that do not
constitute Collections on account of the Receivables, such moneys that do not
constitute such Collections shall be remitted to the Servicer and then by the
Servicer to the Seller.
(e) Unless otherwise required by law or unless an Obligor
designates that a payment be applied to a specific Receivable, all Collections
received from an Obligor shall be applied to the oldest Receivables of such
Obligor.
SECTION 2.04. Reconciliation of Deposits. If in respect of
Collections on account of a Receivable the Servicer deposits into the Lockbox
Account or the Collection Account (a) a check that is not honored for any reason
or (b) an amount that is less than or more than the actual amount of such
Collections, the Servicer shall, in lieu of making a reconciling withdrawal or
deposit, as the case may be, adjust the amount subsequently deposited into such
Lockbox Account or the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid; provided, that no adjustments made pursuant to
this Section 2.04 shall change any amount previously reported pursuant to
Section 4.02.
SECTION 2.05. Servicing Compensation. (a) As full
compensation for the Servicer's servicing activities hereunder and reimbursement
for its expenses as set forth in subsection 2.05(b), the Servicer shall be
entitled to receive on each Distribution Date, for the preceding Settlement
Period prior to the termination of the Trust pursuant to Section 9.01 of the
Pooling Agreement, a
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servicing fee (the "Servicing Fee"). The Servicing Fee shall be an amount equal
to (i) the product of (A) the Servicing Fee Percentage and (B) the average
aggregate Principal Amount of the Receivables in the Trust for such Settlement
Period and (C) the number of days in such Settlement Period, divided by
(ii) 360. Except as otherwise set forth in the related Supplement, the share of
the Servicing Fee allocable to each Outstanding Series for any Settlement Period
shall be an amount equal to the product of (i) the Servicing Fee for such
Settlement Period and (ii) a fraction (expressed as a percentage) (A) the
numerator of which is the daily average Invested Amount for such Settlement
Period with respect to such Outstanding Series and (B) the denominator of which
is the daily average Aggregate Invested Amount for such Settlement Period (with
respect to any such Series, the "Monthly Servicing Fee"). The Servicing Fee
shall be payable to the Servicer solely pursuant to the terms of, and to the
extent amounts are available for payment under, Article III of the Pooling
Agreement.
(b) The Company hereby authorizes the Servicer to pay amounts
due to the Trustee pursuant to Section 8.05(a) of the Pooling Agreement and the
reasonable fees and disbursements of independent accountants, and all other
reasonable fees and expenses of the Trust (including counsel fees, if any) not
expressly stated herein to be for the account of the Holders; provided, however,
that in no event shall the Servicer or the Trustee be liable for any Federal,
state or local income or franchise tax, or any interest or penalties with
respect thereto, assessed on the Trust or the Holders except in accordance with
Section 5.02 and as otherwise expressly provided herein and provided further
that the Company shall promptly reimburse the Servicer upon request for any
amounts paid by the Servicer pursuant to this Section 2.05(b). It is understood
and agreed that the Servicer shall not be obligated to make any such payment if,
in the reasonable judgment of the Servicer, the Company will be unable to meet
its reimbursement obligations pursuant to the further proviso in the immediately
preceding sentence. Notwithstanding anything to the contrary herein or in any
other Pooling and Servicing Agreement, in the event that the Servicer fails to
pay any amount due to the Trustee pursuant to Section 8.05(a) of the Pooling
Agreement, or following the commencement and continuation of an Early
Amortization Period, the Trustee shall be entitled, in addition to any other
rights it may have under law and under the Pooling Agreement, to receive
directly such amounts owing to it under the Pooling and Servicing Agreements
from, and in the
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same order of priority as, the Servicing Fee before payment to the Servicer of
any portion thereof; provided, that in the event the Servicer shall have elected
to waive its rights to payment of its portion of the Servicing Fee, the Trustee
shall nonetheless be entitled to receive such amounts from payments that would
ordinarily be applied to the payment of the Servicing Fee, in the same order of
priority as though such portion of the Servicing Fee were payable. The Servicer
shall be required to pay expenses for its own account, and shall not be entitled
to any payment therefor other than its portion of the Servicing Fee. Nothing
contained herein shall be construed to limit the obligation of the Servicer or
the Company to pay any amounts due the Trustee pursuant to Section 8.05(a) of
the Pooling Agreement.
ARTICLE III
Representations and Warranties of the Servicer
As of (a) the date hereof and (b) each Issuance Date, the
Servicer hereby makes the following representations and warranties to each of
the other parties hereto:
SECTION 3.01. Organization; Powers. The Servicer (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, to lease the properties it operates as
lessee 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 in which the servicing of Receivables as required by this
Agreement requires such qualification except in the case of clauses (ii) and
(iii) to the extent that a failure to have such power and authority or to
qualify could not reasonably be expected to result in a Material Adverse Effect
with respect to the Servicer and (iv) has the corporate power and authority to
execute, deliver and perform its obligations under each Transaction Document to
which it is or will be a party.
SECTION 3.02. Authorization; No Conflict. The execution,
delivery and performance by the Servicer of each of the Transaction Documents to
which it is a party and the other transactions contemplated hereby and thereby
(collectively, the "Transactions") (i) have been duly
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authorized by all requisite corporate action and (ii) will not (A) violate
(1) NY Requirement of Law or (2) any provision of any Contractual Obligation to
which the Servicer 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 with respect to the Servicer, or (C) result in the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any property or assets now owned or hereafter acquired by the
Servicer or any Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly
executed and delivered by the Servicer and consti tutes, and each other
Transaction Document to which it is a party when executed and delivered by it
will constitute, its legal, valid and binding obligation enforceable against it
in accordance with such document's 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).
SECTION 3.04. 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) those that
may be required under state securities or "blue sky" laws in connection with the
offering or sale of Investor Certificates and (iii) such as have been made or
obtained and are in full force and effect.
SECTION 3.05. 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 its knowledge, threatened against or
affecting the Servicer 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
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determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect with
respect to the Servicer.
(ii) Neither the Servicer 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 with respect to the Servicer.
SECTION 3.06. Agreements. (i) The Servicer is not 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
with respect to the Servicer.
(ii) The Servicer is not in default in any manner under any
provision of any Contractual Obligation 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 with respect to the Servicer.
SECTION 3.07. No Servicer Default. No Servicer Default or
Potential Servicer Default has occurred and is continuing.
SECTION 3.08. Servicing Ability. As of the related Issuance
Date, there has not been since the date of this Agreement any material adverse
change in the Servicer's ability to perform its obligations as Servicer under
any Transaction Document to which it is a party.
SECTION 3.09. Location of Records. The office at which the
Servicer keeps its records concerning any Receivables either (i) is located at
the address set forth for it on Schedule 1 to the Receivables Sale Agreement or
(ii) has been notified to the Company and the Trustee in accordance with the
provisions of Section 4.08. The chief executive office of the Servicer is
located at such location and such office is the place where it is "located" for
the purposes of Section 9-103(3)(d) of the UCC as in effect in the State of
New York.
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ARTICLE IV
Covenants of the Servicer
SECTION 4.01. Delivery of Daily Reports. Unless otherwise
specified in the Supplement with respect to any Series, for each Business Day
(the "Reported Day") and with respect to each Outstanding Series, the Servicer
shall submit to the Company, the Trustee and the relevant Agent, if any, no
later than 1:30 p.m., New York City time, on the next Business Day following
each Reported Day, a written report substantially in the form attached to the
related Supplement for each such Series (the "Daily Report") setting forth for
the Reported Day total Collections on the Receivables, the amount of Collections
attributable to previously identified Ineligible Receivables for which an
Adjustment Payment and a Seller Adjustment Payment have been made pursuant to
the Pooling Agreement and the Receivables Sale Agreement, respectively (which
are payable by the Seller in accordance with subsection 2.06(a) of the
Receivables Sale Agreement), the amount of Receivables originated, the amount of
Ineligible Receivables (if any) identified on the Reported Day, and such other
information as the Company, the Trustee or such Agent may reasonably request.
The Daily Report may be delivered in an electronic format mutually agreed upon
by the Servicer and the Trustee, or pending such agreement, by facsimile. By
delivery of a Daily Report, the Servicer shall be deemed to have made a
representation and warranty that all information set forth therein is true and
correct in all material respects.
SECTION 4.02. Delivery of Monthly Settlement Statement. Unless
otherwise specified in the Supplement with respect to any Outstanding Series,
the Servicer hereby covenants and agrees that it shall deliver to the Company,
the Trustee, the relevant Agent, if any, and each Rating Agency by 11:00 a.m.,
New York City time, on each Settlement Report Date, a certificate of a
Responsible Officer of the Servicer substantially in the form attached to the
related Supplement for each such Outstanding Series (a "Monthly Settlement
Statement") setting forth, as of the last day of the Settlement Period most
recently ended and for such Settlement Period, (a) the information described in
the form of such Monthly Settlement Statement with such changes as may be agreed
to by the Servicer, the Company, the Trustee and the relevant Agent, if any,
subject to satisfaction of the Rating Agency Condition (unless a Responsible
Officer of the Servicer certifies that such changes could not reasonably be
expected to have a materially adverse effect
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on the interests of the Trust or the Investor Certificateholders for the
applicable Series under the Transaction Documents) and (b)such other information
as the Trustee or the relevant Agent, if any, may reasonably request. Such
certificate shall include a certification by a Responsible Officer of the
Servicer that, to such Responsible Officer's knowledge, the information
contained therein is true and correct in all material respects and the Servicer
has performed all of its respective obligations in all material respects under
each Transaction Document to which it is a party throughout such preceding
Settlement Period (or, if there has been a default in the performance of any
such obligation, specifying each such default known to such Responsible Officer
and the nature and status thereof). A copy of each Monthly Settlement Statement
may be obtained by any Holder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
SECTION 4.03. Delivery of Annual Servicer's Certificates. The
Servicer agrees that it shall deliver to the Company, the Trustee, each Agent
and each Rating Agency, a certificate of a Responsible Officer of the Servicer
substantially in the form of Exhibit A hereto, certifying that:
(a) a review of its activities during the preceding calendar
year (or in the case of the first such certificate issued after the
Initial Closing Date, during the period from such date) and of its
performance under each Transaction Document was made under the
supervision of such Responsible Officer;
(b) to such Responsible Officer's knowledge, based on such
review, it has performed its obligations in all material respects under
each Transaction Document throughout the period covered by such
certificate (or, if there has been a material default in the
performance of any such obligation, specifying each such default known
to such Responsible Officer and the nature and status thereof); and
(c) each Daily Report and Monthly Settlement Statement
delivered during such period was accurate and correct in all material
respects, except as specified in such certificate or as corrected in
any Daily Report subsequently delivered during such period.
Such certificate shall be delivered by the Servicer within 90 days after the end
of each calendar year commencing with
Servicing Agreement 14
the year ending December 31, 1998. A copy of each such certificate may be
obtained by any Holder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
SECTION 4.04. Delivery of Independent Public Accountants'
Servicing Reports. The Servicer shall cause Independent Public Accountants to
furnish to the Company, the Trustee, each Agent and each Rating Agency within
120 days following the last day of each of its fiscal years (commencing with the
fiscal year ending on or about December 31, 1998) a letter to the effect that
such firm has performed certain agreed-upon procedures (as set forth in
Exhibit B hereto) relating to it and its performance hereunder during the
preceding fiscal year and describing such accountants' findings with respect to
such procedures. A copy of such report may be obtained by any Holder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
SECTION 4.05. Extension, Amendment and Adjustment of
Receivables; Amendment of Policies. (a) The Servicer hereby covenants and
agrees with the Company and the Trustee that it shall not extend, rescind,
cancel, amend or otherwise modify, or attempt or purport to extend, rescind,
cancel, amend or otherwise modify, the terms of, or grant any Dilution
Adjustment to, any Receivable, or otherwise take any action that is intended to
cause or permit an Eligible Receivable to cease to be an Eligible Receivable,
except in any such case (i) in accordance with the terms of its Policies,
(ii) as required by any Requirement of Law or (iii) in the case of any Dilution
Adjustments (whether or not permitted by clause (i) or (ii)), upon the payment
by or on behalf of the Seller of a Seller Adjustment Payment pursuant to Section
2.05 of the Receivables Sale Agreement; provided that in no event shall an
Eligible Receivable becoming a Defaulted Receivable constitute a breach of this
Section 4.05. Any Dilution Adjustment authorized to be made pursuant to the
preceding sentence shall result in the reduction, on the Business Day on which
such Dilution Adjustment arises or is identified, in the aggregate Principal
Amount of Receivables used to calculate the Aggregate Receivables Amount and if
as a result of such a reduction the Aggregate Target Receivables Amount exceeds
the Aggregate Receivables Amount, the Company (in addition to the obligations of
the Seller under the Receivables Sale Agreement in respect of such Dilution
Adjustment) shall be required to pay into the Series Principal Collection Sub-
subaccount with respect to each Outstanding Series in
Servicing Agreement 15
immediately available funds, within one Business Day of such determination, the
pro rata share for such Series of the amount (the "Cash Dilution Payment") by
which the Aggregate Target Receivables Amount exceeds the Aggregate Receivables
Amount.
(b) The Servicer shall not change or modify its Policies in
any material respect, except (i) if such change or modification is necessary
under any Requirement of Law, (ii) if such change or modification would not
reasonably be expected to have a Material Adverse Effect with respect to the
Servicer or (iii) if the Rating Agency Condition is satisfied with respect
thereto. The Servicer shall provide notice to the Company, the Trustee, each
Agent and each Rating Agency of any change or modification of its Policies.
SECTION 4.06. Protection of Holders' Rights. The Servicer
hereby agrees with the Company and the Trustee that it shall take no action, nor
intentionally omit to take any action, that could reasonably be expected to
materially and adversely impair the rights, remedies or interests of the Holders
under the Transaction Documents in respect of the Receivables or any Related
Property nor shall it reschedule, revise or defer payments due on any Receivable
except in accordance with its Policies or Section 4.05 above.
SECTION 4.07. Security Interest. The Servicer hereby covenants
and agrees that it shall not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on, any
Receivable sold and assigned to the Company or the Trust, whether now existing
or hereafter created, or any interest therein, and the Servicer shall defend the
right, title and interest of the Company and the Trust in, to and under any
Receivable sold and assigned to the Company or the Trust, whether now existing
or hereafter created, against all claims of third parties claiming through or
under the Servicer or the Company; provided, however, that nothing in this
Section 4.07 shall prevent or be deemed to prohibit the Servicer from suffering
to exist upon any of the Receivables any Permitted Liens. The foregoing covenant
is in addition to any rights to require the Seller to repurchase any Ineligible
Receivable.
SECTION 4.08. Location of Records. The Servicer hereby
covenants and agrees that it (a) shall not move its chief executive office or
any of the offices where it keeps its records with respect to any Receivables
outside of the location specified in respect thereof on Schedule 1 to the
Servicing Agreement 16
Receivables Sale Agreement, in any such case, without giving 30 days prior
written notice to the Company, the Trustee, each Agent and the Rating Agencies
and (b) shall promptly take all actions (including any filings under the UCC)
required or reasonably necessary in order to continue the valid and enforceable
interest of the Company and the Trust in all Receivables.
SECTION 4.09. Visitation Rights. (a) The Servicer shall, at
any reasonable time during normal business hours on any Business Day and from
time to time, upon reasonable prior notice, and as often as may reasonably be
requested, subject to its security and confidentiality requirements, (i)
permit the Company, the Trustee, any Agent or any of their respective agents or
representatives, (A) to examine and make copies of and abstracts from its
records, books of account and documents (including computer tapes and disks)
relating to the Receivables and (B) following the termination of its appointment
as Servicer to be present at its offices and properties to administer and
control the Collection of the Receivables and to allow the Trustee access to
documents, instruments and other records (including the documents, instruments
and other records required to be transferred to a successor pursuant to Section
6.01 upon a Service Transfer, equipment and personnel that are necessary to
enable a Successor Servicer to continue servicing operations in accordance with
the terms of the Transaction Documents and (ii) permit the Company, the Trustee,
any Agent or any of their respective agents or representatives to visit its
properties to discuss its affairs, finances and accounts relating to the
Receivables or its performance hereunder or under any of the other Transaction
Documents to which it is a party with any of its officers or directors and with
its Independent Public Accountants; provided, that the Company, the Trustee or
the Agent, as the case may be, shall notify it prior to any contact with such
accountants and shall give it the opportunity to participate in such
discussions.
(b) The Servicer shall provide the Trustee with such other
information as the Trustee may reasonably request in connection with the
fulfillment of the Trustee's obligations under any Pooling and Servicing
Agreement.
SECTION 4.10. Lockbox Agreement; Lockbox Accounts. The
Servicer shall (a) maintain, and keep in full force and effect, each Lockbox
Agreement to which it is a party, except to the extent otherwise permitted under
the terms of the Transaction Documents, and (b)take all
Servicing Agreement 17
reasonable actions necessary to ensure that each related Lockbox Account shall
be free and clear of, and defend each such Lockbox Account against, any writ,
order, stay, judgment, warrant of attachment or execution or similar process.
SECTION 4.11. Delivery of Financial Statements. The Servicer
shall furnish to the Company, the Trustee, each Agent and the Rating Agencies:
(i) within 120 days after the end of fiscal 1997 and within 90
days after the end of each subsequent fiscal year, the Servicer's
consolidated balance sheet and related statements of operations, cash
flows and stockholders' equity showing the consolidated financial
condition of the Servicer and its consolidated subsidiaries as of the
close of such fiscal year and the consolidated results of its
operations and the operations of such subsidiaries during such year,
all audited by Deloitte & Touche or other independent public
accountants of recognized national standing acceptable to the
Administrative Agent(as defined in the Credit Agreement) and
accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of the Servicer and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP.
(ii) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, the Servicer's consolidated
balance sheet and related statements of operations, cash flows and
stockholders' equity showing the consolidated financial condition of
the Servicer and its consolidated subsidiaries as of the close of such
fiscal quarter and the consolidated results of their operations during
such fiscal quarter and the then-elapsed portion of the fiscal year,
all certified by a Financial Officer (as defined in the Credit
Agreement) of the Servicer as fairly presenting the consolidated
financial condition and results of operations of the Servicer and its
consolidated subsidiaries on a consolidated basis in accordance with
GAAP (except for the absence of footnotes) subject to normal year-end
audit adjustments;
(iii) concurrently with any delivery of financial statements
under sub-paragraph (i) or (ii) above, a
Servicing Agreement 18
certificate of the Financial Officer certifying such statements;
(iv) promptly after the same become publicly available, copies
of all periodic and other publicly available reports, proxy statements
and, to the extent provided by the Servicer under the Credit Agreement,
other materials filed by the Servicer or any Subsidiary thereof with
the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed to its shareholders
generally, as the case may be;
(v) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of the Servicer delivered pursuant to
paragraph (i) or (ii) above will differ in any material respect from
the consolidated financial statement that would have been delivered
pursuant to such clauses had no such change in accounting principles
and policies been made, then, together with the first delivery of
financial statements pursuant to paragraph (i) and (ii) above following
such change, a schedule prepared by a Financial Officer (as defined in
the Credit Agreement) on behalf of the Servicer reconciling such
changes to what the financial statements would have been without such
changes;
(vi) within 90 days after the beginning of each fiscal year, a
copy of an operating and capital expenditure budget for such fiscal
year;
(vii) promptly following the creation or acquisition of any
Subsidiary, a certificate from a Responsible Officer, identifying such
new Subsidiary and the ownership interest of the Servicer therein;
(viii) simultaneously with the delivery of any financial
statements pursuant to paragraph (i) or (ii) above, a balance sheet and
related statements of operations, cash flows and stockholder's equity
for each unconsolidated Subsidiary for the applicable period;
(ix) promptly, a copy of all reports submitted in connection
with any material interim or special audit
Servicing Agreement 19
made by independent accountants of the books of the Servicer or any
Subsidiary; and
(x) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Servicer or any Subsidi ary thereof, or compliance with the terms
of any Transaction Document, or such consolidating financial statements
in each case as the Agent or any Holder may reasonably request.
SECTION 4.12. Notices. The Servicer shall furnish to the
Company, the Trustee, each Agent and each Rating Agency, promptly upon obtaining
knowledge of the occurrence of any Purchase Termination Event, Potential
Purchase Termination Event, Early Amortization Event, Potential Early
Amortization Event or Servicer Default, written notice thereof.
ARTICLE V
Other Matters Relating to the Servicer
SECTION 5.01. Merger, Consolidation, etc. The Servicer shall
neither enter into any merger, consolidation or amalgamation, nor liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), nor make
any material change in its present method of conducting business, nor convey,
sell, transfer, lease, assign or otherwise dispose of, all or substantially all
of its property, business or assets other than the assignments and transfers
contemplated hereby; provided that the Servicer may merge into or consolidate
with any other corporation or convey, sell or transfer its property, business or
assets substantially as an entirety to another Person, if:
(a) the corporation into which it is merged or the corporation
formed by such consolidation or the Person that acquires by conveyance,
sale or transfer its property, business or assets substantially as an
entirety shall be a corporation organized and existing under the laws
of the United States of America or any State or the District of
Columbia, and, if it is not the surviving entity, such corporation
shall assume, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, the performance
of every one of its covenants and obligations hereunder; and
Servicing Agreement 20
(b) it has delivered to the Trustee an officer's certificate
executed by a Vice President or other senior officer and an Opinion of
Counsel addressed to the Trust and the Trustee each stating that such
consolidation, merger, conveyance or transfer complies with this
Section 5.01 and an officer's certificate executed by a Vice President
or other senior officer stating that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 5.02. Indemnification of the Trust and the Trustee.
(a) The Servicer hereby agrees to indemnify and hold harmless the Company, the
Trustee for the benefit of the Holders and the Trustee and their respective
directors, officers, agents and employees (each of the foregoing, an
"Indemnified Person") from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of any acts, omissions or alleged acts or
omissions of the Servicer arising out of, or relating to, its activities
pursuant to any Pooling and Servicing Agreement to which it is a party,
including but not limited to any judgment, award, settlement, reasonable
attorneys' fees and other reasonable costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided that the Servicer shall not indemnify any Indemnified Person for any
liability, cost or expense of such Indemnified Person (i) arising solely from a
default by an Obligor with respect to any Receivable (except that
indemnification shall be made to the extent that such default arises out of its
failure to perform its duties or obligations under this Agreement), or (ii) to
the extent that such liability, cost or expense arises from the gross
negligence, bad faith or wilful misconduct of such Indemnified Person (or any of
its respective directors, officers, agents or employees). The provisions of this
indemnity shall run directly to, and be enforceable by, an injured party and
shall survive the termination of the Agreement or the resignation of the
Servicer.
(b) In addition to and without giving effect to any
limitations set forth in subsection (a) above, the Servicer shall indemnify and
hold harmless each Indemnified Person from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of a breach by the
Servicer of any covenant contained in subsections 2.02(f) or 2.02(g) or Sections
4.05, 4.06 or 4.07 that materially and adversely affects the interest of the
Company or the Holders
Servicing Agreement 21
under the Transaction Documents with respect to any Receivable (an
"Indemnification Event"), in an amount equal to the outstanding Principal Amount
at such time of such Receivable; provided that the Servicer shall not indemnify
any Indemnified Person for any liability, cost or expense of such Indemnified
Person (i) arising solely from a default by an Obligor with respect to any
Receivable (except that indemnification shall be made to the extent that such
default arises out of its failure to perform its duties or obligations under
this Agreement or its gross negligence or willful misconduct), or (ii) to the
extent that such liability, cost or expense arises from the gross negligence,
bad faith or wilful misconduct of such Indemnified Person (or any of its
respective directors, officers, agents or employees). Payment shall occur on or
prior to the 30th Business Day after the day such Indemnification Event becomes
known to the Servicer unless such Indemnification Event shall have been cured on
or before such day. The obligation of the Servicer to indemnify the Trustee for
the benefit of the Holders for any such Receivables shall constitute the sole
remedy respecting any breach of the covenants set forth in subsections 2.02(g)
or (h) or Sections 4.05, 4.06 or 4.07 with respect to such Receivables available
to Holders.
SECTION 5.03. Servicer Not to Resign. The Servicer shall not
resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law, and (ii) there is no reasonable course of
action that it could take to make the performance of its duties hereunder
permissible under applicable law or (b) if the Servicer is terminated as
Servicer pursuant to Section 6.01. Any such determination permitting the
resignation of the Servicer shall be evidenced as to clause (a)(i) above by an
Opinion of Counsel to such effect delivered to the Company, the Trustee and each
Agent. No such resignation shall become effective until a Successor Servicer or
the Trustee shall have assumed the responsibilities and obligations of the
Servicer in accordance with Section 6.02. The Trustee, the Company, each Agent
and each Rating Agency shall be notified of such resignation by the resigning
Person.
SECTION 5.04. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall hold in trust for the Company and
the Trustee at the office of the Servicer such computer programs, books of
account and other records as are reasonably necessary to enable the
Servicing Agreement 22
Trustee to determine at any time the status of the Receivables and all
collections and payments in respect thereof (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof).
ARTICLE VI
Servicer Defaults;
Servicer Termination
SECTION 6.01. Servicer Defaults. If any one of the following
events (a "Servicer Default") shall occur and be continuing with respect to the
Servicer:
(a) failure by the Servicer to deliver, within two Business
Days of the earlier date set forth below in clause (i) or (ii), any
Daily Report or, within three Business Days of the earlier date set
forth below in clause (i) or (ii), any Monthly Settlement Statement, in
either case, conforming in all material respects to the requirement of
Section 4.01 or 4.02, as the case may be, in each case, after the
earlier to occur of (i) the date upon which a Responsible Officer of
the Servicer obtains knowledge of such failure or (ii) the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Company or the
Trustee, or to the Company, the Servicer and the Trustee from holders
of Investor Certificates evidencing 25% or more of the Aggregate
Invested Amount or by any Agent;
(b) failure by the Servicer to pay any amount required to be
paid by it under any Pooling and Servicing Agreement on or before the
date occurring five Business Days after the earlier to occur of (i) the
date upon which a Responsible Officer of the Servicer obtains knowledge
of such failure or (ii) the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Company or the Trustee, or to the Company, the
Servicer and the Trustee by holders of Investor Certificates evidencing
25% or more of the Aggregate Invested Amount or by any Agent;
(c) failure on the part of the Servicer duly to observe or to
perform in any material respect any other of its covenants or
agreements set forth in any Pooling
Servicing Agreement 23
and Servicing Agreement, which failure has a material adverse effect on
the holders of any Outstanding Series and which material adverse effect
continues unremedied for 30 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been
given to the Company and the Servicer by the Trustee, or to the
Company, the Servicer and the Trustee by holders of Investor
Certificates evidencing 25% or more of the Aggregate Invested Amount or
by any Agent; provided, that no Servicer Default shall be deemed to
occur under this subsection with respect to a failure on the part of
the Servicer if the Servicer shall have complied with the provisions of
Section 5.02(b) with respect thereto;
(d) any representation, warranty or certification made by the
Servicer in any Pooling and Servicing Agreement or in any certificate
delivered pursuant thereto shall prove to have been incorrect in any
material respect when made or deemed made, which incorrectness has a
material adverse effect on the holders of any Outstanding Series and
which material adverse effect continues unremedied for 30 days after
the date on which written notice thereof, requiring the same to be
remedied, shall have been given to the Company and the Servicer by the
Trustee, or to the Company, the Servicer and the Trustee by holders of
Investor Certificates evidencing 25% or more of the Aggregate Invested
Amount or by any Agent; provided, that no Servicer Default shall be
deemed to occur under this subsection with respect to a failure on the
part of the Servicer if the Servicer shall have complied with the
provisions of Section 5.02(b) with respect thereto;
(e)(i) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Servicer in an
involuntary case under any Applicable Insolvency Law, which decree or
order is not stayed, or any other similar relief shall be granted under
any applicable Federal or state law and shall not be stayed; (ii) an
involuntary case is commenced against the Servicer under any Applicable
Insolvency Law, 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
Servicer, or over all or a substantial part of the property of the
Servicer shall have been entered, an interim receiver,
Servicing Agreement 24
trustee or other custodian of the Servicer for all or a substantial
part of the property of the Servicer is involuntarily appointed or a
warrant of attachment, execution or similar process is issued against
any substantial part of the property of the Servicer, and the
continuance of any such events in this clause (ii) for 60 days unless
dismissed, bonded or discharged; (iii) the Servicer shall at its
request have a decree or an order for relief entered with respect to
it, commence a voluntary case under the Bankruptcy Code or any
Applicable Insolvency Law, 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 law, or consent to
the appointment of or taking possession by a receiver, trustee or other
custodian of all or a substantial part of its property; (iv) the making
by the Servicer of any general assignment for the benefit of creditors;
(v) the inability or failure of the Servicer generally to pay its debts
as such debts become due; or (vi) the Board of Directors of the
Servicer adopts any resolution or otherwise authorizes action to
approve any of the foregoing; or
(f) one or more judgments for the payment of money (to the
extent not bonded or covered by insurance to the reasonable
satisfaction of the Agent) shall be rendered against the Servicer (i)
in an aggregate amount greater than $10,000,000 or (ii) that,
individually or in the aggregate, have resulted or could reasonably be
expected to result in a Material Adverse Effect with respect to the
Servicer and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
levy upon assets or properties of the Servicer to enforce such judgment
or judgments;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied or waived, the Company (with the consent of the
Trustee) may, the Company at the direction of the Trustee shall, and the Company
and the Trustee shall, at the written direction of the holders of Investor
Certificates evidencing more than 50% of the Aggregate Invested Amount voting as
a single class, by notice then given in writing to the Servicer and each Rating
Agency (a "Termination Notice"), terminate all or any part of the rights and
obligations of the Servicer as Servicer
Servicing Agreement 25
under the Pooling and Servicing Agreements. Notwithstanding anything to the
contrary in this Section 6.01, a delay in or failure of performance referred to
under clause (b) above for a period of 10 Business Days after the applicable
grace period or a delay in or failure of performance referred to under clauses
(a), (c) or (d) above for a period of 30 Business Days after the applicable
grace period shall not constitute a Servicer Default, if such delay or failure
could not have been prevented by the exercise of reasonable diligence by the
Servicer and such delay or failure was caused by a Force Majeure Delay. After
receipt by the Servicer of a Termination Notice, and on the date that a
Successor Servicer shall have been appointed by the Company and the Trustee
pursuant to Section 6.02, all authority and power of the Servicer under any
Pooling and Servicing Agreement to the extent specified in such Termination
Notice shall pass to and be vested in a Successor Servicer (a "Service
Transfer"), as the case may be; and, without limitation, the Trustee is hereby
directed, authorized and empowered (upon the failure of the Servicer to
cooperate) to execute and deliver, on behalf of the Servicer, as attorney-
in-fact or otherwise, all documents and other instruments upon the failure of
the Servicer to execute or to deliver such documents or instruments, and to do
and to accomplish all other acts or things necessary or appropriate to effect
the purposes of such Service Transfer and the Trustee shall incur no liability
in connection with effecting such Service Transfer. The Servicer agrees to
cooperate with the Company and the Trustee and such Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer to
conduct its duties hereunder, including, without limitation, the transfer to
such Successor Servicer of all authority of the Servicer to service the
Receivables provided for under the Pooling and Servicing Agreements (including,
without limitation, all authority over all Collections that shall on the date of
transfer be held by the Servicer for deposit, or that have been deposited by the
Servicer, in the Collection Account, or that shall thereafter be received with
respect to the Receivables), and in assisting the Successor Servicer. Upon a
Service Transfer, the terminated Servicer shall (x) promptly assemble all of its
documents, instruments and other records (including credit files, licenses (to
the extent transferable), rights, copies of all relevant computer programs and
any necessary licenses (to the extent transferable) for the use thereof, related
material, computer tapes, disks, cassettes and data) that (i) evidence or record
Receivables sold and assigned to the Trust and (ii) are otherwise necessary to
enable a Successor Servicer
Servicing Agreement 26
to coordinate servicing of all such Receivables and to prepare and deliver Daily
Reports and Monthly Settlement Statements, with or without the participation of
the terminated Servicer, (y) promptly deliver or license (to the extent
transferable) the use of all of the foregoing documents, instruments and other
records to such Successor Servicer at a place designated by such Successor
Servicer and (z) provide the Successor Servicer with access to its facilities,
equipment, personnel, systems and leasehold agreements to assist the Successor
Servicer in performing its obligations hereunder. In recognition of the
terminated Servicer's need to have access to any such documents, instruments and
other records that may be transferred to a Successor Servicer hereunder, whether
as a result of its continuing responsibility as a servicer of accounts
receivable that are not sold and assigned to the Trust or otherwise, such
Successor Servicer shall provide to the terminated Servicer reasonable access to
such documents, instruments and other records transferred by the terminated
Servicer to it in connection with any activity arising in the ordinary course of
the terminated Servicer's business; provided that the terminated Servicer shall
not disrupt or otherwise interfere with the Successor Servicer's use of and
access to such documents, instruments and other records. To the extent that
compliance with this Section 6.01 shall require the terminated Servicer to
disclose to the Successor Servicer information of any kind that the terminated
Servicer reasonably deems to be confidential, the Successor Servicer shall be
required to enter into such customary licensing and confidentiality agreements
as the terminated Servicer shall reasonably deem necessary to protect its
interests. All costs and expenses incurred by the terminated Servicer, the
Successor Servicer and the Trustee in connection with any Service Transfer shall
be for the account of the terminated Servicer, as the case may be, and to the
extent any costs or expenses incurred by the Trustee are not so paid, the
Trustee shall be entitled to be paid such items from amounts that would
otherwise be distributable to the Company under Article III of the Pooling
Agreement.
SECTION 6.02. Trustee To Act; Appointment of Successor. (a) On
and after (i) the receipt by the Servicer of a Termination Notice pursuant to
Section 6.01 or (ii) the date on which the Servicer notifies the Trustee, the
Company and each Rating Agency in writing of its resignation pursuant to Section
5.03 (the "Resignation Notice"), the Servicer shall continue to perform all
servicing functions under the Pooling and Servicing
Servicing Agreement 27
Agreements until the earlier of (i) the date on which a Successor Servicer
accepts its appointment and (ii) 60 days after the delivery of such Termination
Notice or Resignation Notice, as the case may be. The Trustee and the Company,
or the Company (with the consent of the Trustee) shall, as promptly as
reasonably possible after the receipt of a Termination Notice or Resignation
Notice, as the case may be, in accordance with the preceding sentence, appoint
an Eligible Successor Servicer as Successor Servicer (the "Successor Servicer").
The Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Trustee and the Company.
(b) In the event that a Successor Servicer has not been
appointed or has not accepted its appointment at the time when the Servicer
ceases to act as Servicer, the Trustee without further action shall be appointed
Successor Servicer; provided, that the Trustee shall only be responsible for the
duties and liabilities of such Successor Servicer that are consistent with an
orderly collection and liquidation of the Receivables and other Trust Assets in
the manner contemplated for such liquidations in Section 7.02 of the Pooling
Agreement. The Trustee shall not be liable for any action taken or not taken in
effecting such liquidations of Receivables so long as such liquidations are
conducted in a commercially reasonable manner and on commercially reasonable
terms. The Trustee may delegate any of its servicing obligations to an affiliate
or agent in accordance with subsection 2.02(d). Notwithstanding the above, the
Trustee shall, if the Trustee is legally unable so to act, petition a court of
competent jurisdiction to appoint any Person qualifying as an Eligible Successor
Servicer as the Successor Servicer hereunder. The Servicer shall immediately
give notice to each Rating Agency of the appointment of a Successor Servicer.
(c) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under the Pooling and Servicing Agreements (with such changes as are agreed to
between such Successor Servicer and either the Company (with the consent of the
Rating Agencies) or the Company and the Trustee) and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and all references in any Pooling and
Servicing Agreement to the Servicer shall be deemed to refer to such Successor
Servicer. The Successor Servicer shall not be liable for, and the replaced
Servicer shall indemnify the Successor
Servicing Agreement 28
Servicer against, costs incurred by the Successor Servicer as a result of any
acts or omissions of such replaced Servicer or any events or occurrences
occurring prior to the Successor Servicer's acceptance of its appointment. Any
Successor Servicer shall manage the servicing and administration of the
Receivables in accordance with the Policies of the replaced Servicer and the
terms of the Pooling and Servicing Agreements.
SECTION 6.03. Waiver of Past Defaults. Holders of Investor
Certificates evidencing more than 50% of the Aggregate Invested Amount may waive
any continuing default by the Servicer or the Company in the performance of its
respective obligations hereunder and its consequences, except a default in the
failure to make any required deposits or payments in respect of any Series of
Investor Certificates, which shall require a waiver by the holders of all of the
affected Investor Certificates. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of the Pooling and Servicing Agreements.
No such waiver shall extend to any subsequent or other default or impair any
right consequent thereon except to the extent expressly so waived. Either the
Company or the Servicer shall provide notice to each Rating Agency of any such
waiver.
ARTICLE VII
Miscellaneous Provisions
SECTION 7.01. Amendment. This Agreement may only be amended,
supplemented or otherwise modified from time to time if such amendment,
supplement or modification is effected in accordance with the provisions of
Section 10.01 of the Pooling Agreement.
SECTION 7.02. Termination. (a) The respective obligations and
responsibilities of the parties hereto shall terminate on the Trust Termination
Date (unless such obligations or responsibilities are expressly stated to
survive the termination of this Agreement).
(b) All authority and power granted to the Servicer under any
Pooling and Servicing Agreement shall automatically cease and terminate on the
Trust Termination Date, and shall pass to and be vested in the Company and,
without limitation, the Company is hereby authorized and
Servicing Agreement 29
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of rights from and after the Trust Termination Date. The Servicer shall
cooperate with the Company in effecting the termination of its responsibilities
and rights to conduct servicing of the Receivables. The Servicer shall transfer
all of its records relating to the Receivables to the Company in such form as
the Company may reasonably request and shall transfer all other records,
correspondence and documents to the Company in the manner and at such times as
the Company shall reasonably request. To the extent that compliance with this
subsection 7.02(b) shall require the Servicer to disclose to the Company
information of any kind that the Servicer deems to be confidential, the Company
shall be required to enter into such customary licensing and confidentiality
agreements as the Servicer shall reasonably deem necessary to protect its
interests.
SECTION 7.03. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.04. 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 otherwise 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 set forth in Section 10.05 of the Pooling
Agreement or Section 9.09 of the Receivables Sale Agreement, or to such other
address as may be hereafter notified by the respective parties hereto.
SECTION 7.05. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 7.06. Third-Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and the Holders
and their respective successors and permitted assigns. Except as provided in
Servicing Agreement 30
this Article VII, no other person shall have any right or obligation hereunder.
SECTION 7.07. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement and the other Transaction Documents set
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement and the other Transaction Documents. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 7.08. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
SECTION 7.09. No Set-Off. Except as expressly provided in this
Agreement, the Servicer agrees that it shall have no right of set-off or
banker's lien against, and no right to otherwise deduct from, any funds held in
the Collection Account for any amount owed to it by the Company, the Trust, the
Trustee or any Certificateholder.
SECTION 7.10. No Bankruptcy Petition. The Servicer hereby
covenants and agrees that, prior to the date which is one year and one day after
the Trust Termination Date, it shall 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.
Servicing Agreement 31
IN WITNESS WHEREOF, the Company, the Servicer and
the Trustee have caused this Agreement to be duly executed
by their respective officers as of the day and year first
above written.
AAM RECEIVABLES CORP.,
by /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
AMERICAN AXLE & MANUFACTURING, INC.,
as Servicer,
by /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, not
in its individual capacity but
solely as Trustee,
by /s/ Xxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
EXHIBIT A TO
SERVICING AGREEMENT
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered within 90 days after the end
of each calendar year of the Servicer
pursuant to Section 4.03 of the
Servicing Agreement referred to below)
[NAME OF SERVICER]
_________________________________________
AAM MASTER TRUST
_________________________________________
The undersigned, a duly authorized representative of [NAME OF
SERVICER] (the "Servicer"), as Servicer pursuant to (a) the Pooling Agreement,
dated as of October 29, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Pooling Agreement"), by and among AAM Receivables Corp.
(the "Company"), American Axle & Manufacturing Inc., as Servicer and The Chase
Manhattan Bank, as Trustee (the "Trustee") and (b) the Servicing Agreement,
dated as of October 29, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Servicing Agreement"; the Pooling Agreement and the
Servicing Agreement, collectively, the "Pooling and Servicing Agreements"), by
and among the Company, the Servicer and the Trustee, do hereby certify that:
1. [NAME OF SERVICER] is, as of the date hereof, the Servicer
under the Pooling and Servicing Agreements.
2. The undersigned is duly authorized pursuant to the Pooling
and Servicing Agreements to execute and deliver this Certificate to the Trustee.
3. A review of the activities of the Company and the Servicer
during the calendar year ended ______________, ____ and of its performance under
each Transaction Document was conducted under my supervision.
4. Based on such review, to my knowledge, each of the Company
and the Servicer has performed in all material respects all its obligations
under each Transaction Document and no material default in the performance of
such obligations has occurred or is continuing except as set forth in paragraph
5 below.
Servicing Agreement 2
5. The following is a description of all material defaults in
the performance of the Servicer or the Company under the provisions of the
Transaction Documents known to us to have been made during the calendar year
ended _________, ___, which sets forth in detail (i) the nature of each such
default, (ii) the action taken by the Servicer and/or the Company, if any, to
remedy each such default and (iii) the current status of each default:
[If applicable, insert "None."]
6. The following is a description of each material inaccuracy
known to us to exist in any Daily Report and/or Monthly Settlement Statement
during the calendar year ended ________, ____:
Capitalized terms used in this certificate have the meanings
ascribed to them in the Pooling and Servicing Agreements.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ___ day of ________, 199_.
By:
______________________________
Name:
Title:
EXHIBIT B TO
SERVICING AGREEMENT
FORM OF AGREED-UPON PROCEDURES
To the Board of Directors of AAM Receivables Corp., the
Trustee, the Agent, the Rating Agencies and the Certificateholders:
At your request, we have performed the procedures enumerated
below with respect to the receivables of AAM Receivables Corp., (the "Company")
that are serviced by American Axle & Manufacturing, Inc. (the "Servicer") for
the period from ________, 199_ to ____________, 199_ as set forth in the
accompanying Monthly Settlement Statements (the "Statements") and in the five
accompanying Daily Reports (which were selected on a random basis from the
above- referenced period) (the "Daily Reports"). Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Pooling Agreement dated as of October 29, 1997, among the Company, the Servicer
and The Chase Manhattan Bank, as Trustee, as amended, supplemented or otherwise
modified to the date hereof. These procedures, which were specified by you, were
performed solely to assist you, and this report is solely for your information
and should not be used by those who did not participate in determining the
procedures. The procedures and findings are as follows:
A. We obtained all Statements for the period from _____, 199_ through
__________, 199_ (the "Fiscal Period") and performed the following:
-- We recalculated the mathematical accuracy of
the statements.
-- With respect to Receivables, we agreed the
amounts appearing as principal amounts,
amounts outstanding with respect to each
Receivable and the amount of interest paid by
Obligors with respect to each Receivable as a
result of late payment to either schedules
prepared by the Servicer or to reports
generated by the Servicer's systems.
B. For a selection of three Statements (one of which was the Statement
for the last Settlement Period of the Fiscal Period), we performed
the following procedures:
2
With respect to the amount appearing as Collections on such
Statements:
-- Obtained a daily listing of Collections for
that Settlement Period and agreed the total
on the Statements to a cumulative total of
the daily listing of Collections for that
period.
-- Agreed a random sample of 10% (but at least
10) of the daily collections appearing on the
daily listing of cash Collections to the bank
statements of AAM Master Trust (the "Trust").
-- Agreed the total amount of cash Collections
allocated to the Series Collection Subaccount
of each Outstanding Series during that
Settlement Period to the Trust's bank
statements.
-- Agreed the total amount of cash Collections
allocated to the Series Principal Collection
Sub-subaccount and Series Non-Principal
Collection Sub-subaccount of each Outstanding
Series during that Settlement Period to the
Trust's bank statement.
-- Agreed the aggregate amount of Recoveries
received during that Settlement Period to the
Servicer's system-generated reports.
-- For each Obligor the amount of whose
Receivables is greater than 2.5% of the
aggregate amount of all Receivables, agreed
the aggregate amount of Receivables with
respect to such Obligor to the Seller's
system-generated reports.
With respect to the amount appearing as Defaulted Receivables:
-- Agreed the total Defaulted Receivables to the
Servicer's system-generated reports.
-- From a random sample of 10% (but at least 10)
of Defaulted Receivables during the month,
3
agreed the default amount to the Obligor's
file in the Servicer's system.
With respect to the amount appearing as Adjustment Amounts:
-- Agreed the Adjustment Amount to a schedule
prepared by the Servicer.
With respect to the amount appearing as Eligible Receivables:
-- Recalculated the mathematical accuracy of the
Company's schedule of Eligible Receivables.
-- Agreed the amounts appearing in this schedule
to a Statement generated by the Servicer's
system.
With respect to the amounts appearing as Invested Percentages
applicable during that Settlement Period:
-- Agreed amounts to schedules provided by the
Servicer.
C. With respect to each of the Daily Reports, agreed amounts to the
system-generated reports provided by each Originator for such day.
D. Agreed the calculation used in computing the aggregate Servicing Fee
to the Agreement and agreed amounts appearing in the schedule of
Servicing Fee prepared by the Servicer to the Statements.
Because the above procedures do not constitute an audit made
in accordance with generally accepted auditing standards, we do not express an
opinion on any of the elements referred to above. Had we performed additional
procedures or had we made an audit of the financial statements of the Company in
accordance with generally accepted auditing standards, (other) matters might
have come to our attention that would have been reported to you. This report
relates only to the elements specified above and does not extend to any
financial statements of the Company taken as a whole.
4
This report is solely for your information and is not to be
used, referred to or distributed for any other purpose.
