Aam Master Trust Series 1997-a Supplement

EXECUTION COPY


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AAM MASTER TRUST
SERIES 1997-A SUPPLEMENT


TO


POOLING AGREEMENT


Dated as of October 29, 1997


Among


AAM RECEIVABLES CORP.


AMERICAN AXLE & MANUFACTURING, INC.
as Servicer


and


THE CHASE MANHATTAN BANK
as Trustee


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TABLE OF CONTENTS


ARTICLE I


Definitions
Page SECTION 1.01. Definitions...............................................................................1


ARTICLE II


Designation of VFC Certificates; Purchase and
Sale of the VFC Certificates


SECTION 2.01. Designation..............................................................................20 SECTION 2.02. The VFC Certificates and Series 1997-A
Subordinated Interest......................................................20 SECTION 2.03. Purchases of Interests in the VFC
Certificates and the Series 1997-A
Subordinated Interest......................................................21 SECTION 2.04. Delivery.................................................................................21 SECTION 2.05. Procedure for Initial Issuance and for
Increasing the Series 1997-A Invested
Amount.....................................................................22 SECTION 2.06. Procedure for Decreasing the Series
1997-A Invested Amount; Optional
Termination................................................................23 SECTION 2.07. Reductions of the Commitments............................................................25 SECTION 2.08. Interest; Commitment Fee.................................................................25 SECTION 2.09. Indemnification by the Company and
the Servicer...............................................................26


ARTICLE III


Article III of the Agreement


SECTION 3A.02. Establishment of Trust Accounts.........................................................28 SECTION 3A.03. Daily Allocations.......................................................................29 SECTION 3A.04. Determination of Interest...............................................................32 SECTION 3A.05. Determination of Series 1997-A Monthly
Principal.................................................................34 SECTION 3A.06. Applications............................................................................35


Series 1997-A Supplement Contents, p. ii


ARTICLE IV


Distributions and Reports
Page SECTION 4A.01. Distributions...........................................................................37 SECTION 4A.02. Daily Reports...........................................................................38 SECTION 4A.03. Statements and Notices..................................................................38


ARTICLE V


Additional Early Amortization Events


SECTION 5.01. Additional Early Amortization Events.....................................................39


ARTICLE VI


Servicing Fee


SECTION 6.01. Servicing Compensation...................................................................43


ARTICLE VII


Change in Circumstances


SECTION 7.01. Illegality...............................................................................43 SECTION 7.02. Requirements of Law......................................................................44 SECTION 7.03. Taxes....................................................................................46 SECTION 7.04. Indemnity................................................................................50 SECTION 7.05. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate............................................51 SECTION 7.06. Limitation...............................................................................52


ARTICLE VIII


Covenants, Representations and Warranties


SECTION 8.01. Representations and Warranties
of the Company and the Servicer............................................53 SECTION 8.02. Covenants of the Company and
the Servicer...............................................................53 SECTION 8.03. Covenants of the Servicer................................................................54 SECTION 8.04. Covenant of the Company..................................................................55


Series 1997-A Supplement Contents, p. iii


Page


SECTION 8.05. Obligations Unaffected...................................................................55 SECTION 8.06. Representations and Warranties of the
Initial Purchasers and any Acquiring
Purchasers..................................................................55


ARTICLE IX


Conditions Precedent


SECTION 9.01. Conditions Precedent to Effectiveness
of Supplement..............................................................56


ARTICLE X


The Agent


SECTION 10.01. Appointment.............................................................................60 SECTION 10.02. Delegation of Duties....................................................................60 SECTION 10.03. Exculpatory Provisions..................................................................60 SECTION 10.04. Reliance by Agent.......................................................................61 SECTION 10.05. Notice of Servicer Default or Early
Amortization Event or Potential Early
Amortization Event........................................................61 SECTION 10.06. Non-Reliance on Agent and Other
Purchasers................................................................62 SECTION 10.07. Indemnification.........................................................................63 SECTION 10.08. Agent in Its Individual Capacity........................................................63 SECTION 10.09. Successor Agent.........................................................................63


ARTICLE XI


Miscellaneous


SECTION 11.01. Ratification of Agreement...............................................................64 SECTION 11.02. Governing Law...........................................................................64 SECTION 11.03. Further Assurances......................................................................64 SECTION 11.04. Payments................................................................................64 SECTION 11.05. Costs and Expenses......................................................................65 SECTION 11.06. No Waiver; Cumulative Remedies..........................................................65 SECTION 11.07. Amendments..............................................................................65 SECTION 11.08. Severability............................................................................66 SECTION 11.09. Notices.................................................................................67 SECTION 11.10. Successors and Assigns..................................................................67


Series 1997-A Supplement Contents, p. iv


Page


SECTION 11.11. Counterparts............................................................................72 SECTION 11.12. Adjustments; Setoff.....................................................................72 SECTION 11.13. Limitation of Payments by Company.......................................................73 SECTION 11.14. No Bankruptcy Petition..................................................................73


ARTICLE XII


Final Distributions


SECTION 12.01. Certain Distributions...................................................................74


Series 1997-A Supplement


SERIES 1997-A SUPPLEMENT dated as of
October 29, 1997 (this "Supplement"), among AAM
RECEIVABLES CORP., a Delaware corporation (the
"Company"), AMERICAN AXLE & MANUFACTURING, INC., a
Delaware corporation, as servicer (the "Servicer"),
THE CHASE MANHATTAN BANK, as the initial purchaser
(the "Initial Purchaser"), the other financial
institutions from time to time parties hereto as
purchasers pursuant to Section 11.10, THE CHASE
MANHATTAN BANK, a New York corporation, as agent
(the "Agent") for the Purchasers (as hereinafter
defined) in its individual capacity and not as
Trustee and THE CHASE MANHATTAN BANK, in its
capacity as trustee (the "Trustee") under the
Agreement.


W I T N E S S E T H :


WHEREAS, the Company, the Servicer and the Trustee have entered into the Pooling Agreement, dated as of October 29, 1997 (the "Agreement");


WHEREAS, the Agreement provides, among other things, that the Company, the Servicer and the Trustee may at any time and from time to time enter into supplements to the Agreement for the purpose of authorizing the issuance on behalf of the Trust by the Company for execution and redelivery to the Trustee for authentication of one or more Series of Investor Certificates; and


WHEREAS, the Company, the Servicer, the Trustee and the Initial Purchaser wish to supplement the Agreement as hereinafter set forth.


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 as follows:


ARTICLE I


Definitions


SECTION 1.01. Definitions. (a) The following words and phrases shall have the following meanings with


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Series 1997-A Supplement


respect to Series 1997-A and the definitions of such terms are applicable to the singular as well as the plural form of such terms and to the masculine as well as the feminine and neuter genders of such terms:


"ABR" 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 plus 1/2 of 1%. If for any reason, the Agent 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 Agent to obtain quotations in accordance with the terms thereof, the ABR shall be determined without regard to clause (b) of the immediately preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the ABR 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 Agent 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 Agent from three Federal funds brokers of recognized standing selected by it.


"Accrual Period" shall mean, with respect to Series 1997-A, the period from and including a Distribution Date to but excluding the next succeeding Distribution Date; provided that in the case of a Eurodollar Tranche with a NIBO Period, it shall mean the period from and including the Increase Date to but excluding the next succeeding Distribution Date; provided further that in the case of the initial Accrual Period, it shall mean the period from and including the Issuance Date to but excluding the next succeeding Distribution Date.


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Series 1997-A Supplement


"Accrued Expense Adjustment" shall mean, for any Business Day in any Accrual Period, the amount, if any, which may be less than zero, equal to the difference between (a) the entire amount of (i) the Commitment Fee, if any, due and payable on the next succeeding Distribution Date, (ii) the Series 1997-A Monthly Interest to be distributed on the next succeeding Distribution Date, (iii) the Series 1997-A Monthly Servicing Fee, (iv) the aggregate amount of all previously accrued, unpaid and unallocated Series


1997-A Monthly Interest for prior Distribution Dates, (v) the aggregate amount of all accrued, unpaid and unallocated Additional Interest and (vi) all accrued Program Costs, in each case for such Accrual Period determined as of such day, and (b) the aggregate of the amounts transferred to the Series 1997-A Non-Principal Collection Sub-subaccount on or before such day in respect of such Accrual Period pursuant to subsection 3A.03(a)(i), before giving effect to any transfer made in respect of the Accrued Expense Adjustment on such day pursuant to the proviso contained in such subsection.


"Accrued Expense Amount" shall mean, for each Business Day during an Accrual Period, the sum of (a) for Floating Tranches and Eurodollar Tranches with Eurodollar Periods, in the case of each of the first ten Business Days in the Accrual Period, one-tenth of the Series 1997-A Monthly Interest determined as of such Business Day, (b) for Eurodollar Tranches with NIBO Periods, in the case of each Business Day in the Accrual Period, the Daily Interest Expense determined as of such Business Day, (c) in the case of each of the first ten Business Days in the Accrual Period, one-tenth of the Commitment Fee payable to the VFC Certificate holders on the next succeeding Distribution Date, (d) in the case of each of the first ten Business Days in the Accrual Period, one-tenth of the Series 1997-A Monthly Servicing Fee (in the case of each of the foregoing clauses (a) through (d), up to the amount thereof due and payable on such next succeeding Distribution Date, but subject to Accrued Expense Adjustments as provided in subsection 3A.03(a)(i)), (e) the aggregate amount of all previously accrued, unpaid and unallocated Series 1997-A Monthly Interest for prior Distribution Dates, (f) the aggregate amount of all accrued, unpaid and unallocated Additional Interest and (g) all Program Costs that have accrued since the preceding Business Day.


"Acquiring Purchaser" shall have the meaning assigned in subsection 11.10(b).


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Series 1997-A Supplement


"Additional Interest" shall have the meaning assigned in subsection 3A.04(b).


"Agent" shall have the meaning specified in the recitals hereto.


"Aggregate Commitment Amount" shall mean, with respect to any Business Day, the aggregate amount of the Commitments of all Purchasers on such date, as reduced from time to time pursuant to Section 2.07.


"Aggregate Receivables Amount" shall mean with respect to any date of determination, (i) the aggregate Principal Amount of all Eligible Receivables in the Trust at the end of the Business day immediately preceding such date minus (ii) the Aggregate Overconcentration Amount for such date; provided that notwithstanding anything to the contrary contained herein, during any GMT/PPAP Rejection Period, no Tooling Receivables relating to the


GMT 800 Program shall be included in the calculation of the Aggregate Receivables Amount.


"Applicable Margin" shall mean at any date of determination until the Margin Increase Date, for each Eurodollar Tranche, 0.75% per annum and, for the Floating Tranche, 0.0% per annum, provided that from and after the Margin Increase Date, the Applicable Margin at any time shall be equal to the LIBOR Margin at such time (as set forth on Schedule B to the Credit Agreement) for each Eurodollar Tranche and the ABR Margin at such time (as set forth on Schedule B to the Credit Agreement) for the Floating Tranche.


"Article VII Costs" shall mean any amounts due pursuant to Article VII.


"Available Commitment" shall mean, with respect to any Business Day, the (i) Aggregate Commitment Amount on such Business Day minus (ii) the Series 1997-A Invested Amount.


"Available Pricing Amount" shall mean, on any Business Day, the sum of (i) the Unallocated Balance plus (ii) the Increase, if any, on such date.


"Benefitted Purchaser" shall have the meaning assigned in Section 11.12.


"Carrying Cost Reserve Ratio" shall mean, as of any Settlement Report Date and continuing until (but not


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Series 1997-A Supplement


including) the next Settlement Report Date, an amount (expressed as a percentage) equal to (a) the product of (i) 2.0 times Days Sales Outstanding as of such day and (ii) 1.30 times the ABR in effect as of such day divided by (b) 365.


"Certificate Rate" shall mean on any date of determination, the average (weighted based on the respective outstanding amounts of the Floating Tranche and each Eurodollar Tranche) of the ABR in effect on such day and One-Month LIBOR or the NIBO Rate in effect on such day plus, in each case, the Applicable Margin.


"Change in Control" shall mean the occurrence of any event the result of which causes the Company not to be a direct or indirect, wholly owned Subsidiary of American Axle & Manufacturing, Inc.


"Claim" shall have the meaning specified in subsection 2.09(a).


"Code" shall mean the Internal Revenue Code of 1986, as


amended from time to time.


"Commitment" shall mean, as to any Purchaser, its obligation to maintain and, subject to certain conditions, increase, its Series 1997-A Purchaser Invested Amount, in an aggregate amount not to exceed at any one time outstanding the amount set forth opposite such Purchaser's name on Schedule 1 under the caption "Commitment", as such amount may be reduced from time to time as provided herein; collectively, as to all Purchasers, the "Commitments".


"Commitment Fee" shall have the meaning assigned in subsection 2.08(b).


"Commitment Percentage" shall mean, as to any Purchaser and as of any date, the percentage equivalent of a fraction, the numerator of which is such Purchaser's Commitment as set forth on Schedule 1 and the denominator of which is the Aggregate Commitment Amount as of such date.


"Commitment Period" shall mean the period commencing on the Issuance Date and terminating on the date that the Series 1997-A Amortization Period commences.


"Commitment Reduction" shall have the meaning assigned in subsection 2.07(a).


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Series 1997-A Supplement


"Commitment Termination Date" shall mean the earlier of (a) the Scheduled Revolving Termination Date and (b) the date on which the Commitments are terminated in whole pursuant to Section 2.07.


"Commitment Transfer Supplement" shall have the meaning assigned in subsection 11.10(c).


"Company Indemnified Person" shall have the meaning assigned in subsection 2.09(a).


"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 Delaware, as Fronting Bank (including any amendments or modifications thereto or refinancing thereof).


"Daily Interest Adjustment" shall mean, for any Business Day in any Accrual Period, the amount, if any, which may be less than zero, equal to the difference between (i) the sum of (A) the Series 1997-A Monthly Interest determined as of such day, (B) the aggregate amount of all previously accrued, unpaid and unallocated Series 1997-A Monthly Interest for prior


Distribution Dates and (C) the aggregate amount of all accrued, unpaid and unallocated Additional Interest and (ii) the amount on deposit in the Series 1997-A Accrued Interest Sub-subaccount on such day after making any deposit thereto pursuant to subsection 3A.03(c), before giving effect to any transfer made in respect of the Daily Interest Adjustment on such day pursuant to the proviso to such subsection.


"Daily Interest Deposit" shall mean, for any Business Day, an amount equal to (i) the amount of accrued and unpaid Daily Interest Expense in respect of such day plus (ii) the aggregate amount of all previously accrued, unpaid and unallocated Series 1997-A Monthly Interest for prior Distribution Dates plus (iii) the aggregate amount of all accrued, unpaid and unallocated Additional Interest.


"Daily Interest Expense" for any day in any Accrual Period, shall mean the sum of (A) the product of (i) the portion of the Series 1997-A Invested Amount (calculated without regard to clauses (d) and (e) of the definition of Series 1997-A Purchaser Invested Amount) allocable to the Floating Tranche on such day divided by 365 and (ii) the ABR plus the Applicable Margin in effect on such day, and (B) the product of (i) the portion of the


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Series 1997-A Supplement


Series 1997-A Invested Amount (calculated without regard to clauses (d) and (e) of the definition of Series 1997-A Purchaser Invested Amount) allocable to Eurodollar Tranches on such day divided by 360 and (ii) either (A) One-Month LIBOR if the Eurodollar Tranche has a Eurodollar Period or (B) the NIBO Rate if the Eurodollar Tranche has a NIBO Period plus the Applicable Margin on such day in effect with respect thereto; provided, however, that for the purposes of calculating Series 1997-A Monthly Interest, the "Daily Interest Expense" for any day following the date of determination shall be based on the allocable portions of the Series 1997-A Invested Amount, the ABR, One-Month LIBOR, the NIBO Rate and the Applicable Margins as of or in effect on such date of determination; provided further that for any such day during the continuation of an Early Amortization Period, the "Daily Interest Expense" for such day shall be equal to the greater of (i) the sum of the amounts calculated pursuant to clauses (A) and (B) above and (ii) the product of (x) the Series 1997-A Invested Amount on such day divided by 365 and (y) the ABR in effect on such day plus 2.00% per annum.


"Daily Report" shall mean a report prepared by the Servicer on each Business Day for the period specified therein, in substantially the form of Exhibit D.


"Days Sales Outstanding" shall mean, as of any Settlement Report Date and continuing until the next Settlement Report Date, the number of days equal to the product of (a) 91 and (b) the amount obtained by dividing (i) the Aggregate Receivables Amount as at the last day of the Settlement


Period immediately preceding such earlier Settlement Report Date, by (ii) the aggregate Principal Amount of Receivables originated by the Seller (whether or not billed) for the three Settlement Periods immediately preceding such earlier Settlement Report Date, computed solely with respect to Receivables of Designated Obligors.


"Decrease" shall have the meaning assigned in Section 2.06.


"Designated Obligor" shall mean GM, Ford and any other Obligor designated by the Servicer and approved by the Agent, provided that if such other Obligor is of a credit quality comparable to GM, then such approval shall not be unreasonably withheld, from time to time based on criteria provided by the Agent to the Servicer.


"Dilution Horizon Factor" shall mean 1.0.


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Series 1997-A Supplement


"Dilution Period" shall mean, as of any Settlement Report Date and continuing until (but not including) the next Settlement Report Date, the quotient of (i) the product of (A) the aggregate Principal Amount of Receivables that were initially billed by the Seller during the Settlement Period preceding such earlier Settlement Report Date and (B) the Dilution Horiz ...