NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement")
is made as of October 29, 1997, by and between AMERICAN AXLE & MANUFACTURING OF
MICHIGAN, INC., a Michigan corporation (the "Company"), and XXXX X. XXXXXXX, an
executive employee of the Company (the "Employee").
PRELIMINARY STATEMENT
WHEREAS, The Company currently has authorized one hundred
thousand (100,000) shares of common stock, $0.01 par value ("Shares"), of which
approximately eight thousand two hundred and twenty seven (8,227) shares are
issued and outstanding.
WHEREAS, The Company has agreed, in connection with the
Recapitalization and Stock Purchase Agreement dated as of September 19, 1997,
among the Company, AAM, Jupiter Capital Corporation, Xx. Xxxxxxx X. Xxxxx, Xx.
Xxxxxx X. Xxxxxx and AAM Acquisition, Inc. (the "Recapitalization"), to grant
options to Employee to purchase Shares.
WHEREAS, The Board of Directors of the Company has duly
authorized the execution and delivery by the Company of this Agreement and
granting of options to the Employee to purchase Shares as herein provided.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. DEFINITIONS.
(a) "Affiliate" shall mean, with respect to any Person, (i)
any other Person that directly or indirectly Controls, is Controlled by or is
under common Control with, such Person, or (ii) any director, officer, partner,
member or employee of such Person or any Person specified in clause (i) above;
provided, that officers, directors or employees of the Company (or one of its
Subsidiaries) shall be deemed not to be Affiliates of Blackstone for purposes
hereof solely by reason of being officers, directors or employees of the
Company (or one of its Subsidiaries).
(b) "Blackstone" shall mean collectively, Blackstone Capital
Partners II Merchant Banking Fund L.P., Blackstone Offshore Capital Partners II
L.P., Blackstone Family Investment Partnership II L.P. and their Affiliates
(other than the Company and its Subsidiaries).
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean (i) neglect of or willful and
continuing refusal to perform one's duties (other than due to Disability), (ii)
a breach of any non-competition/no
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raid covenants the Employee is subject to, (iii) engaging in conduct which is
demonstrably injurious to the Company, the Company's Subsidiaries or
Affiliates, or Blackstone (including, without limitation, a breach of any
confidentiality covenant the Employee is subject to), or (iv) a conviction or
plea of guilty or nolo contendere to a felony or a misdemeanor involving moral
turpitude, dishonesty, fraud or theft, in each case as determined in the sole
discretion of the Board.
(e) "Committee" shall mean the Compensation Committee of the
Board.
(f) "Control" (including, with correlative meaning, all
conjugations thereof) shall mean with respect to any Person, the ability of
another Person to control or direct the actions or policies of such first
Person, whether by ownership of voting securities, by contract or otherwise.
(g) "Disability" shall mean the inability of the Employee to
perform in all material respects his duties and responsibilities to the
Company, or any Subsidiary of the Company, by reason of a physical or mental
disability or infirmity which inability is reasonably expected to be permanent
and has continued (i) for a period of six consecutive months or (ii) such
shorter period as the Board may reasonably determine in good faith. The
Disability determination shall be in the sole discretion of the Board and the
Employee (or his Representative) shall furnish the Board with medical evidence
documenting the Employee's disability or infirmity which is satisfactory to the
Board.
(h) "Good Reason" shall mean a material reduction in base
salary, as determined in the sole discretion of the Board.
(i) "Option Shares" shall mean any Shares issuable or issued
by the Company upon exercise of an Option, as adjusted as a result of any stock
dividend, stock split, merger, consolidation, reorganization or other
recapitalization.
(j) "Person" shall mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture,
an unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
(k) "Representative" shall mean (i) in the case of death, the
executor, liquidator or administrator of the deceased Employee's estate or the
Person or Persons to whom the deceased Employee's rights under the Option shall
pass by will or the laws of descent and distribution and (ii) in the case of
Disability, his legal guardian or legal representative.
(l) "Subsidiary" shall mean any corporation of which the
Company owns, directly or through one or more subsidiaries, securities having a
majority of the ordinary voting power in electing the board of directors of
such corporation.
(m) "Transfer" shall mean, with respect to any Option, the
gift, sale, assignment, transfer, pledge, hypothecation or other disposition
(whether for or without
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consideration and whether voluntary, involuntary or by operation of law), or
any act thereof, of such Option or any interest therein.
2. GRANT OF OPTIONS.
(a) Subject to and effective upon the closing under the
Recapitalization, the Company hereby grants to the Employee the right and
option (the "Options") to purchase from the Company on the terms and conditions
set forth herein all or any portion of an aggregate whole number of Shares
equal to 83.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the parties hereby acknowledge and agree that in the event that
the closing under the Recapitalization is not consummated, this Agreement shall
have no force or effect and shall be null and void.
3. OPTION PRICE. The purchase price for each Share subject to
the Options is $16,811.78 (the "Option Price").
4. EXERCISE OF OPTIONS.
(a) The Options shall be 100% exercisable on the date hereof.
(b) During the lifetime of the Employee, exercisable Options
may be exercised only by such Employee (except that, in the event of his death
or Disability, Options may be exercised by his Representative). Options may be
exercised in whole or in part with respect to any portion that is exercisable.
To exercise an Option the Employee (or such other person who shall be permitted
to exercise the Option) must complete, sign and deliver to the Company (to the
attention of the Company's Secretary) a notice of exercise substantially in the
form attached hereto as Annex I (or in such other similar form as the Committee
may from time to time adopt and provide to the Employee) (the "Exercise
Notice"), together with payment in full of the Option Price multiplied by the
number of Shares with respect to which the Option is exercised. Payment of the
Option Price shall be made in cash (including certified check, bank draft or
money order). Immediately prior to the exercise of any of the Options, the
Employee shall enter into a stockholders' agreement in a form substantially
similar to the stockholders' agreement dated as of October 29, 1997 by and
among the Company, Blackstone, Jupiter Capital Corporation, Xx. Xxxxxxx X.
Xxxxx and Xx. Xxxxxx X. Xxxxxx (the "Stockholders' Agreement"). In entering
into such a stockholders' agreement, the Optionee will agree that he shall be
bound by terms, conditions and obligations and shall be entitled to rights and
privileges, substantially similar to those applicable to the "Rollover Holders"
or "Stockholders" (as defined in the Stockholders' Agreement) in the
Stockholders' Agreement (including limitation on transfer rights, tag-along
rights, drag-along rights and piggy-back registration rights). The execution of
such stockholders' agreement shall be a condition to the exercise of such
Options. The Employee's right to exercise the Option shall be subject to the
satisfaction of all conditions set forth in the Exercise Notice.
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(c) The Company shall reserve or hold available at all times
a sufficient number of Shares to cover the aggregate number of shares issuable
pursuant to this Agreement.
5. TAXES. The Company shall withhold from any amounts due and
payable by the Company to the Employee (or secure payment from the Employee in
lieu of withholding) the amount of any withholding or other tax due from the
Company with respect to any Shares issuable under this Agreement, and the
Company may defer such issuance unless indemnified to its satisfaction.
6. EXPIRATION
(a) Options shall expire at 5:00 p.m. Eastern Standard Time
on June 15, 1999 (the "Expiration Date").
(b) Notwithstanding (a) above, the Employee's Options shall
expire immediately, without any payment, upon the Employee's termination of
employment if the Employee's employment is terminated for Cause or if the
Employee voluntarily terminates employment without Good Reason.
7. ADJUSTMENT OF OPTION PRICE AND NUMBER OF SHARES
PURCHASABLE. In the event of a merger, recapitalization, stock dividend,
reorganization, stock split, share consolidation or combination, or other
similar event, the Committee shall make such adjustments in the number and type
of Shares covered by the outstanding Options and the Option Price as the Board,
in good faith, determines to be appropriate and equitable.
8. SECURITIES LAW COMPLIANCE. The Options may not be
exercised and the Company shall not be required to issue any Shares hereunder
if such exercise or issuance would, in the reasonable judgment of the Board of
Directors of the Company, constitute a violation of any state or federal law,
or of the rules or regulations of any governmental regulatory body, or any
securities exchange. The Company, in its sole discretion, may require the
Employee to furnish the Company with appropriate representations and a written
investment agreement prior to the exercise of the Options and the delivery of
any Shares pursuant to the Options, and may endorse on any share certificates
any legends required to reflect the restrictions and limitations contemplated
by this Agreement.
9. TRANSFER OF OPTIONS. Unless otherwise provided by the
Committee, neither Options nor Option Shares may be Transferred (other than by
will or the laws of descent or distribution).
10. NOTICES. Notices, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
sent by telex, cable or certified mail, postage prepaid, addressed to the
intended recipient at the address set forth at the end of this Agreement, or at
such other address as such intended recipient hereafter may have designated
most recently to the other party hereto with specific reference to this
Section.
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11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement with respect to the subject matter hereof and supersedes all prior
written and oral agreements with respect thereto, and may be modified only by
an instrument in writing signed by each of the parties hereto.
12. NO EMPLOYMENT CONTRACT. Nothing in this Agreement shall
interfere with or limit in any way the right of the Company to terminate the
Employee's employment at any time (with or without Cause), nor confer upon the
Employee any right to continued employment by the Company for any period of
time or to continue such employee's present (or any other) rate of
compensation.
13. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be deemed an original, but all of which
together may be construed as one and the same instrument.
14. BINDING EFFECT. The provisions contained in this
Agreement shall be binding upon and enure to the benefit of the parties hereto
and their respective successors and assigns.
15. APPLICABLE LAW. This Agreement, all matters of corporate
law as applying to the Company and the Shares, and the construction and
interpretation of the provisions hereof shall be governed by the laws of the
State of Delaware, without regard to the choice of law provisions thereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed by its duly authorized officer, and the Employee has executed
this Agreement, all on the day and year first above written.
ADDRESSES:
0000 Xxxxxxxx Xxxxxx AMERICAN AXLE &
Xxxxxxx, XX 00000 MANUFACTURING OF MICHIGAN,
INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Title: Vice President, General Counsel
and Secretary
0000 Xxxxxxxx Xxxxxx /s/ Xxxx X. Xxxxxxx
Xxxxxxx, XX 00000 -------------------
Xxxx X. Xxxxxxx
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Annex I
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EXERCISE NOTICE
---------------
(Applicable Prior to an Initial Public Offering)
This Exercise Notice (this "Notice") is given by the
undersigned to American Axle & Manufacturing of Michigan Inc., a Michigan
corporation (the "Company"), in connection with the his exercise of an Option
granted pursuant to an option agreement dated October 29, 1997 (the
"Agreement") to purchase Option Shares (as defined in the Agreement).
Capitalized terms used but not defined herein shall have the respective
meanings ascribed to them in the Agreement.
1. PURCHASE AND SALE OF OPTION SHARES.
(a) Upon delivery to the Company of (i) this Notice, (ii) the
aggregate Option Price for the Option Shares purchased hereunder by
certified check, bank draft or money order made payable to "American
Axle & Manufacturing of Michigan Inc." and (iii) the Option to which
the Option Shares relates, the Company shall sell and issue to the
undersigned, the Option Shares that he elects to purchase hereunder.
(b) Notwithstanding the previous paragraph, his election to
purchase Option Shares hereunder shall not be valid unless and until
he executes a Stockholders' Agreement.
2. EFFECT OF EXERCISE. The undersigned acknowledges and
agrees that:
(a) neither the issuance of the Option Shares to
the undersigned nor any provision contained herein shall
entitle the undersigned to remain in the employment of the
Company and its Subsidiaries or affect the right of the
Company to terminate his employment at any time for any
reason;
(b) the Company shall have no duty or obligation
to disclose to the undersigned and the undersigned shall have
no right to be advised of, any material information regarding
the Company and its Subsidiaries in connection with the
repurchase of Option Shares upon the termination of his
employment with the Company and its Subsidiaries or as
otherwise provided hereunder; and
(c) the Company shall be entitled to withhold from
any amounts due and payable by the Company to the undersigned
(or secure payment from him in lieu of withholding) the
amount of any withholding or other tax due from the Company
with respect to such Option Shares and the Company may defer
issuance until indemnified to its satisfaction.
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(d) The Option Shares issued in connection herewith
hereunder, are issued as a part of the compensation and
incentive arrangements between the Company and the
undersigned.
3. RESTRICTION ON OPTION SHARES. The undersigned acknowledges
that the Option Shares being purchased hereunder are being issued pursuant to
the Agreement, the terms and conditions of which are incorporated herein as if
set forth fully herein, and that such Option Shares are subject to certain
restrictions on transfer, rights of repurchase and other provisions set forth
in the Agreement and the Stockholders' Agreement.
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* * *
IN WITNESS WHEREOF, the undersigned has executed this Notice
as of the date written below.
Number of Shares Common Stock Acquired: ________
Aggregate Option Price: ________
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Signature Date Date
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Print Name Social Security No.
Residence Address: Mailing Address, if different from
Residence Address:
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Street Street
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City State Zip Code City State Zip Code
