Ex. 10.62 Settlement and Commercial Agreement dated as of September 16, 2009, between American Axle & Manufacturing, Inc. and General Motors Company

 

 

This Settlement and Commercial Agreement (this “Agreement”) is entered into as of September 16, 2009 (the “Effective Date”), by and among General Motors Company (“GM”), a Delaware corporation, American Axle & Manufacturing Holdings, Inc., a Delaware corporation (“AAM Holdings”), and American Axle & Manufacturing, Inc., a Delaware corporation, on behalf of itself and its subsidiaries and affiliates (“AAM”).  GM, AAM Holdings or AAM may be individually referred to herein as a “Party” or collectively, as the “Parties”.

 

 

WHEREAS, on June 1, 2009 Motors Liquidation Company (f/k/a General Motors Corporation) (“Liquidation Company”) and certain of its subsidiaries commenced Case No. 09-50026 currently pending before the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”);

 

WHEREAS, on July 5, 2009 the Bankruptcy Court entered an order (the “Sale Order”) approving the sale of substantially all of Liquidation Company’s assets to GM pursuant to 11 U.S.C. § 363 (the “363 Transaction”); and

 

WHEREAS, in connection with the 363 Transaction and the assumption of certain executory contracts between AAM and Liquidation Company by Liquidation Company and subsequent assignment of such contracts to GM, the Parties desire to resolve and settle certain outstanding commercial issues and modify the supply relationship among the Parties in accordance with the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which the Parties acknowledge, GM, AAM Holdings and AAM agree as follows:

 

1. ACCOMMODATIONS

 

 

1.1 Second Lien Term Loan Financing.

 

GM shall make available to AAM a delayed draw term loan facility in a maximum principal amount of up to $100,000,000.00 (the “Second Lien Term Loan”), pursuant to the terms and conditions of a loan agreement to be entered into among GM, AAM Holdings and AAM in the form of the attached Exhibit 1.1 (the “Second Lien Term Loan Agreement”), and certain ancillary agreements and documents as described in the Second Lien Term Loan Agreement (collectively, with the Second Lien Term Loan Agreement, the “Second Lien Term Loan Documents”).

 

AAM agrees that (i) on the Effective Date, it will execute the Second Lien Term Loan Documents, (ii) AAM may not terminate the Second Lien Term Loan facility until June 30, 2011, and (iii) if AAM requires additional liquidity that cannot be satisfied utilizing (a) expedited payments provided under Section 1.5(g), (b) the proceeds from sales of common equity, (c) the proceeds from the issuance of equity linked securities if not prohibited under Section 6.01 of the Second Lien Term Loan Agreement, (d) cash flow generated by AAM from its ordinary course business operations, (e) the availability existing from time to time under the revolving credit agreement governing the Revolving Debt (the “Revolving Credit Agreement”), (f) the incurrence of indebtedness permitted under Section(s) 6.01(a)(vii) and/or 6.01(a)(v) of the Second Lien Term Loan Agreement, or (g) any Permitted Refinancing Indebtedness (as defined in the Second Lien Term Loan Agreement) in an amount incurred to refinance any of the Senior Debt, AAM will fully borrow all amounts under the Second Lien Term Loan Documents before borrowing any additional amounts (assuming availability exists under the Second Lien Term Loan Documents); provided, however that AAM may only seek liquidity from a source permitted under (c), (e) or (f) above, if, at the time, the sum of (i) AAM’s indebtedness outstanding under the Revolving Debt and Term Debt, plus (ii) any amounts provided as a result of AAM’s utilization of (c), (e) or (f) above, does not exceed, in the aggregate, the Senior Debt Cap (as defined below), plus the aggregate principal amount of the indebtedness outstanding as of the Effective Date as set forth on Schedule 6.01 to the Second Lien Term Loan Agreement.  If AAM borrows under the Second Lien Term Loan facility, AAM may not prepay the amounts outstanding thereunder until June 30, 2011 unless the source of such prepayment is proceeds in respect of sub-section (d) above.

 

AAM further agrees that for the period commencing on the Effective Date and continuing through AAM’s termination of the Second Lien Term Loan facility in accordance with the terms of this Agreement:

 

(a) it will not increase the aggregate principal amount of the Revolving Debt and Term Debt (as each are defined below) (collectively, the “Senior Debt”) in excess of the Senior Debt Cap (defined below); provided, that the foregoing will not prohibit the capitalization of interest or other fees.  The following terms shall have the indicated meanings:  (i) “Senior Debt Cap” means $726.9 million, (ii) “Revolving Debt” means the amounts outstanding under the Amended and Restated Credit Agreement, dated as of January 9, 2004, as amended and restated as of November 7, 2008, and as further amended and restated as of September 16, 2009, among AAM, AAM Holdings, the Lenders party thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and Banc of America Securities LLC, and (iii) “Term Debt” means the amounts outstanding under the Credit Agreement, dated as of June 14, 2009, as amended and restated as of September 16, 2009, among AAM, AAM Holdings, the Lenders party thereto, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc. and Banc of America Securities LLC; and

 

(b) if any Senior Debt is refinanced prior to its scheduled maturity, such refinanced debt and any other Senior Debt will not exceed, in the aggregate, the Senior Debt Cap.

 

1.2 Commercial Accommodation Payment; Release.

 

(a) On the Effective Date, GM shall make a one-time payment to AAM of $110,000,000.00 (the “Commercial Accommodation Payment”) via wire transfer of immediately available funds to an account designated in writing by AAM in consideration of (i) AAM’s agreement to GM’s decision not to source to AAM the […***…] program and (ii) any and all

 

*** CONFIDENTIAL TREATMENT REQUESTED

 

payments associated with (a) the assumption of the Assumed Agreements and the Modified Assumed Agreements (as each are defined below), in each case, as are required to “cure” any defaults under 11 U.S.C. § 365, (b) the termination of the Terminated Agreements (as defined below), and (c) the acknowledgement of performance of the Performed Agreements (as defined below) and the release in subsection (b) below.

 

(b) On the Effective Date, AAM hereby fully and forever releases and discharges GM, Liquidation Company, GM’s and Liquidation Company’s respective subsidiaries and affiliates, and each of their respective officers, directors, employees, agents, successors and assigns (the “Released Parties”), from all manner of action and causes of action, suits, damages and rights whatsoever, in law or in equity, existing or accrued as of the date hereof, whether known or unknown, by reason of, or arising out of or in any way related or connected to the agreements or programs referenced in Sections 1.2(a)(i) and (ii) above.  AAM hereby covenants that AAM will refrain from commencing any suit, prosecuting any pending action or suit, or participating or assisting in any manner in the commencement or prosecution of any action or suit, in law or in equity, against any of the Released Parties on account of any action or cause of action released hereby.

 

1.3 OPEB Obligations.

 

AAM and GM will negotiate in good faith for the settlement of GM’s reimbursement and other obligations to AAM for any post-retirement health care, life insurance and other post-retirement welfare benefits of any kind for UAW represented and non-UAW represented current and former AAM employees and their spouses, dependents and beneficiaries (collectively, the “OPEB”) arising out of or relating to that certain Asset Purchase Agreement, dated as February 8, 1994 by and between Liquidation Company and AAM, and that certain Agreement, dated May 3, 2008, as amended May 16, 2008 by and between Liquidation Company and AAM or any other existing agreement between Liquidation Company and AAM (the “OPEB Obligations”).

 

1.4 Warrants.

 

(a) As of the Effective Date, AAM Holdings shall issue to GM warrants (the “Warrants”) to purchase 4,093,729 shares of common stock, representing 7.4% of the outstanding common stock of AAM Holdings (the “Initial Warrants”), as described in the warrant agreement dated as of the Effective Date (the “Warrant Agreement”) which shall include registration rights and standstill provisions, in the form of the attached Exhibit 1.4(a).

 

(b) In the event that AAM elects to make a draw pursuant to the terms and conditions of Second Lien Term Loan Agreement, AAM Holdings shall, as a condition precedent to each draw, issue Warrants to GM to purchase a pro rata portion of an additional 6,915,083 shares of common stock of AAM Holdings based upon the amount of each Second Lien Term Loan drawn (the “Potential Subsequent Warrants”), in the form of the attached Exhibit 1.4(a).  For clarification, if AAM makes a draw of $25,000,000 on the Second Lien Term Loan, AAM will issue Warrants to GM representing 1,728,771 shares of common stock of AAM Holdings (25% of 6,915,083 shares).

 

1.5 Commercial Agreements.

 

(a) Agreements.

 

(1) Assumed Agreements.  GM shall promptly cause the agreements between Liquidation Company and AAM set forth on Schedule 1 (collectively, the “Assumed Agreements”) to be assumed by Liquidation Company according to their respective terms without modification and assigned to GM as of the Effective Date.  Upon receipt of the Commercial Accommodation Payment, the foregoing assumption and assignment of the Assumed Agreements shall be deemed in full and final satisfaction of all of the requirements of 11 U.S.C. § 365, including, without limitation, the requirement to effect any further “cure” within the meaning of 11 U.S.C. § 365.  On the Effective Date, GM shall cause the GM contracts website to update the status of the Assumed Agreements to “Assumed” and no further act or requirement shall be necessary to evidence the assignment and assumption of the Assumed Agreements to GM.

 

(2) Terminated Agreements.  The Parties agree that the agreements between Liquidation Company and AAM set forth on Schedule 2 (collectively, the “Terminated Agreements”) shall be deemed terminated and of no further force and effect and all parties’ obligations thereunder, if any, will be deemed fully and finally satisfied as of the Effective Date.

 

(3) Modified Assumed Agreements.  GM shall promptly cause the agreements between Liquidation Company and AAM set forth on Schedule 3 (collectively, the “Modified Assumed Agreements”) to be assumed by Liquidation Company according to their respective terms, except that, upon assumption, the Modified Assumed Agreements shall be deemed modified by the parties’ agreements set forth in this Section 1.5, and assigned to GM.  Upon AAM’s receipt of the Commercial Accommodation Payment, the foregoing modification and assignment of the Modified Assumed Agreements shall be deemed in full and final satisfaction of all of the requirements of 11 U.S.C. § 365, including, without limitation, the requirement to effect any further “cure” under 11 U.S.C. § 365.

 

(4) Reservation of Rights.  The Parties agree that AAM’s entry into this Agreement shall not be deemed to constitute a waiver of any of AAM’s rights against Liquidation Company other than with respect to the Assumed Agreements, the Terminated Agreements and the Modified Assumed Agreements; provided, that nothing in this Agreement shall be deemed to modify, alter or amend Liquidation Company’s rights, claims and defenses in respect thereof.

 

(5) Treatment of Existing, Future and New Business.

 

[…***…]

 

*** CONFIDENTIAL TREATMENT REQUESTED

 

 

(E) Past Performance.  The Parties agree that the agreements set forth on Schedule 6 (collectively, the “Performed Agreements”) have been fully performed by each of the respective parties to the Performed Agreements as of the Effective Date and, in the case of each of, AAM, AAM Holdings or GM, no Party has any rights, claims or obligations arising out of or relating to the Performed Agreements.

 

[…***…]

 

(c) Cost Transparency.  AAM shall complete to GM’s reasonable satisfaction all 1804 and 1810 forms that relate to all business subject to a GM New Lifetime Program Contract, and GM shall have the right to audit to confirm the components of the 1804/1810 forms in accordance with GM’s standard “Right to Audit” clause contained on GM’s standard form purchase order contracts.  A representative copy of a fully completed 1804/1810 form is attached as Exhibit 1.5(c) hereto and any 1804/1810 form submitted by AAM containing less detail than as set forth on the attached example will not be deemed to comport with the requirements of this Section 1.5(c).

 

[…***…]

 

(e) Cost Reduction.  AAM shall participate in GM’s standard technical cost reduction program (including, without limitation, the program’s existing allocations) for future cost reductions proposed by either AAM or GM, as the case may be, after the Effective Date.

 

[…***…]

 

(g) Payment Terms.  For component and service parts received by GM on or after August 1, 2009, and continuing through December 31, 2013, AAM shall have the option, upon written notice to GM, to receive payment terms of “net 10 days” or approximately equivalent expedited basis for shipments of component and service parts following receipt in exchange for a 1.0% early payment discount; […***…].

 

[…***…]

 

 

*** CONFIDENTIAL TREATMENT REQUESTED

 

 

1.6 Access and Security Agreement.

 

AAM and GM shall enter into an Access and Security Agreement in the form of the attached Exhibit 1.6 (the “Access and Security Agreement”) on or prior to the date on which AAM invokes the expedited payment terms provided in Section 1.5(g) of this Agreement and, in any event, on or before the Effective Date.  Notwithstanding anything to the contrary contained herein, on March 31, 2011, the Term of the Access and Security Agreement shall be automatically extended through March 31, 2012 if AAM Holdings fails to achieve a Secured Debt Leverage Ratio (as defined in the Revolving Credit Agreement) of the lesser of (i) 3.5 to 1.0 and (ii) such lower ratio on which AAM Holdings and the Revolving Lenders agree in the amendment to the Revolving Credit Agreement entered into as of the Effective Date, measured as of March 31, 2011 (without regard to any subsequent waiver, amendment, forbearance or modification to such covenant granted by the Revolving Lenders).

 

1.7 Executive Compensation.

 

Beginning with the 2009 calendar year and continuing until 90 days following the later to occur of (a) the repayment and termination of the Second Lien Term Loan in accordance with the terms of the Second Lien Term Loan Agreement and (b) the termination of the expedited payment terms provided in Section 1.5(g) of this Agreement, AAM and its affiliates shall limit the total compensation of each current or former employee of, current or former non-employee director of, and current or former non-employee service provider to, AAM or any affiliate, pursuant to any base salary, bonus, incentive, stock option, stock appreciation right, restricted stock, excess benefit, SERP-type or other type of deferred compensation (whether or not subject to Internal Revenue Code section 409A), severance, employment, consulting, life insurance, or other type of formal or informal, written or unwritten, agreement, policy, program, employee benefit plan, or like arrangement, to $3,000,000 for each full calendar year, determined on a paid basis with respect to base salary or with respect to annual bonus or other annual compensation, or using the grant date fair value or the target payment value, as applicable, of long-term incentive or other equity-based or similar awards granted during the calendar year, or using the present value determined in accordance with GAAP of any other amount with respect to which a legally binding right is created in the calendar year.  Notwithstanding the foregoing, the payment, in accordance with the current terms of the applicable plan, contract or arrangement, of any amount of deferred compensation or other compensation that was earned and vested prior to 2009 and the payment or accrual during and after 2009, in accordance with a legally binding right created prior to 2009 pursuant to the current terms of any plan, contract or arrangement in effect on the date hereof, shall be excluded from the calculation of amounts counting against the foregoing $3,000,000 limitation and shall not otherwise be subject to the payment restrictions contained herein.

 

1.8 Golden Parachutes.

 

AAM and each affiliate shall terminate all existing “golden parachute”, change of control, retention, and similar types of agreements or arrangements with any employee of, non-employee director of, or non-employee service provider to, AAM or any affiliate of AAM (“Golden Parachute Arrangements”).  Continuing until 90 days following the later to occur of (a) the repayment and termination of the Second Lien Term Loan in accordance with the terms of the Second Lien Term Loan Agreement and (b) the termination of expedited payment terms provided in Section 1.5(g) of this Agreement, AAM and each affiliate shall not enter into any Golden Parachute Arrangements with any current or former employee of, current or former non-employee director of, and current or former non-employee service provider to, AAM or any affiliate of AAM.

 

2. DELIVERIES

 

 

The Parties shall, in addition to other items specified elsewhere in this Agreement, take the following actions on the Effective Date, the satisfaction of each of which is a condition precedent to the effectiveness of this Agreement:

 

(a) GM, AAM and AAM Holdings shall execute and deliver the Second Lien Term Loan Documents to which each is a party and AAM shall cause its subsidiaries and affiliates to execute and deliver to GM any Second Lien Term Loan Documents to which such subsidiary or affiliate is a party;

 

(b) GM shall make the Commercial Accommodation Payment;

 

(c) AAM Holdings shall execute and deliver to GM the Initial Warrants;

 

(d) GM and AAM shall execute and deliver the Warrant Agreement;

 

(e) GM and AAM shall execute and deliver the Access and Security Agreement and all acknowledgments required thereunder; and

 

(f) AAM and AAM Holdings shall deliver fully executed copies of the amendments to the Revolving Debt and Term Debt credit facility documents.

 

3. EVENTS OF DEFAULT

 

 

The occurrence of one or more of the following shall be “Events of Default”, or individually, an “Event of Default” hereunder, unless a waiver or deferral is agreed to in writing, in each instance, by the Party having the right to exercise remedies pursuant to Section 4 of this Agreement as a result of such Event of Default:

 

(a) AAM or AAM Holdings, as the case may be, becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, which petition or proceeding is not dismissed with prejudice within sixty (60) days after filing;

 

(b) AAM or AAM Holdings breaches or fails to perform any express agreement, covenant, term or condition of this Agreement or any Related Agreement (as defined in Section 6(a) below) (except for the Second Lien Term Loan Agreement and the Access and Security Agreement) and fails to cure that breach within 5 days after receiving written notice of the breach;

 

(c) an “Event of Default” occurs under the Second Lien Term Loan Agreement (without regard to any “standstill period” provided for under any Intercreditor Agreement (or related agreement) among any one or more of AAM Holdings, AAM, any secured lender(s) to AAM Holdings and/or AAM, as the case may be, and GM) or the Access and Security Agreement;

 

(d) One or more of AAM’s or AAM Holding’s loan facilities in respect of which the indebtedness outstanding thereunder exceeds $5,000,000 USD (other than the Second Lien Loan Agreement) expire or are terminated without AAM or AAM Holding providing to GM written evidence of a binding substitute financing commitment relating to such expired or terminated loan facility, which written evidence of binding substitute financing commitment has not expired or been terminated, and the consequence of such expiration or termination of the loan facility(ies) and failure to provide a written substitute financing commitment is the substantial likelihood that GM’s production at any one or more of GM’s assembly plants worldwide may be imminently interrupted; or

 

(e) GM breaches or fails to perform any express agreement, covenant, term or condition of this Agreement or any Related Agreement (except for the Second Lien Term Loan Agreement and the Access and Security Agreement), and fails to cure that breach within 5 days after receiving written notice of the breach.

 

4. REMEDIES

 

 

(a) Upon an Event of Default pursuant to Sections 3(a), 3(b), 3(c) or 3(d), GM shall be entitled to exercise all rights and remedies available to it under this Agreement, applicable law, or at equity.  All of GM’s rights and remedies under this Agreement are cumulative and not exclusive of any rights and remedies under any other agreement, including, without limitation, the Related Agreements, the New GM Lifetime Program Contracts, and the GM Long-Term Contracts, or under applicable law or at equity all of which rights and remedies, in each case, are expressly reserved.

 

(b) Upon an Event of Default pursuant to Section 3(e) of this Agreement, AAM shall be entitled to exercise all rights and remedies available to it under applicable law or at equity; provided that, with respect to an Event of Default resulting from a breach of the expedited payment terms in accordance with Section 1.5(g) above, if such breach has not been cured within the cure period set forth in Section 3(e), GM and AAM shall promptly arrange a meeting between a representative of AAM and GM’s Chief Financial Officer of Global Purchasing and Supply Chain, and the Parties shall attempt to resolve such dispute in good faith prior to AAM exercising any other remedy available to it under this Agreement, the New GM Lifetime Program Contracts, or under applicable law or at equity.

 

5. TOOLING ACKNOWLEDGEMENT

 

 

5.1 AAM acknowledges and agrees that exclusive of AAM Owned Tooling (as defined below) and Unpaid Tooling (as defined below), all tooling, dies, test and assembly fixtures, jigs, gauges, patterns, casting patterns, cavities, molds, and documentation, including engineering specifications, PPAP books, and test reports together with any accessions, attachments, parts, accessories, substitutions, replacements, and appurtenances thereto (collectively, “Tooling”) used by AAM in connection with its manufacture of Component Parts (collectively, the “GM Owned Tooling”) are owned by GM and are being held by AAM or, to the extent AAM has transferred the GM Owned Tooling to third parties, by such third parties, as bailees at will.  Upon payment in full of the applicable purchase order price for any item of Unpaid Tooling, such item shall thereafter be included in the definition of the GM Owned Tooling under this Agreement; provided, however, that nothing in this Section 5 is intended to modify any of GM’s obligations to AAM on account of Unpaid Tooling.  For the purposes of this Section 5, the term (i) “Unpaid Tooling” means Tooling for which GM has not paid the applicable purchase order price for such Tooling to AAM, any of its predecessor(s)-in-interest, or to any third party on account or for the benefit of AAM, and (ii) “AAM Owned Tooling” means any Tooling that is neither Unpaid Tooling nor GM Owned Tooling.

 

5.2 AAM will provide to GM, within sixty (60) days after the Effective Date, a list of AAM Owned Tooling and Unpaid Tooling relating to that GM’s Component Parts (“Tooling Lists”).  AAM will have a period of 45 days thereafter within which to supplement the Tooling Lists regarding AAM Owned Tooling or Unpaid Tooling inadvertently omitted from the Tooling Lists, after which the Tooling Lists will become final.  GM will provide assistance to AAM in preparing the Tooling Lists as reasonably requested by AAM.  GM reserves the right to dispute any Tooling List provided by AAM.  If a GM disagrees with a Tooling List, AAM and GM will meet and attempt, in good faith, to resolve the dispute.  If the dispute cannot be resolved by AAM and GM within thirty (30) days after GM’s receipt of the Tooling List, the matter will be jointly submitted to a neutral third party on whom AAM and GM agree for expedited resolution.  The costs of the neutral third party shall be shared equally by AAM and GM.  Any Tooling used to manufacture Component Parts not included in the Tooling List will be subject to the dispute resolution mechanics set forth in Section 5.4.  If AAM fails to timely provide a Tooling List or seek GM’s consent to extend the date by which AAM must provide the Tooling Lists, which consent will not be unreasonably withheld, all Tooling will be deemed GM Owned Tooling.

 

5.3 Neither AAM nor any other person or entity other than GM has any right, title, or interest in the GM Owned Tooling other than AAM’s obligation, subject to GM’s unfettered discretion, to use the GM Owned Tooling in the manufacture of GM’s component and service parts in accordance with the GM purchase orders.  GM and its designee(s) shall have the right to take immediate possession of the GM Owned Tooling at any time at GM’s expense, without payment of any kind from GM to AAM, provided, that, GM shall promptly repair, at GM’s expense, physical damage to AAM’s equipment or AAM’s facilities directly and proximately caused by any removal of the GM Owned Tooling from AAM’s equipment or AAM’s facilities.  Should GM elect to exercise such right, AAM shall cooperate fully with GM in its taking possession of its GM Owned Tooling, including, without limitation, by allowing access to AAM’s facilities.  GM shall, within 10 business days of removal of any Tooling, provide to AAM and Lenders a detailed list of all items removed from any AAM facility.  The rights and obligations contained in this Section 5 shall continue notwithstanding the expiration or termination of this Agreement.

 

5.4 In the event of a dispute between AAM and GM over whether any Tooling is GM Owned Tooling, AAM Owned Tooling or Unpaid Tooling, the Tooling subject to the dispute will be presumed to be GM Owned Tooling pending resolution of the dispute, and GM will have the right to immediate possession of the applicable Tooling pending resolution of the dispute (and AAM may not withhold delivery of possession of the Tooling to GM pending such resolution), but the Tooling will remain subject to any lien of AAM, or any claim or right to payment of AAM for the disputed amounts (despite AAM’s relinquishment of possession).  The rights and obligations contained in this Section 5 are in addition to (and not in lieu of) the rights of GM arising out of its purchase orders, including GM’s T’s&C’s, and other agreements with AAM, and will continue in effect notwithstanding the expiration or termination of this Agreement.  In the event of a conflict between the GM’s T’s&C’s and conditions and this Section 5, the terms and conditions of this Section 5 will control.

 

6. REPRESENTATIONS AND WARRANTIES

 

 

As of the date of this Agreement, each Party represents and warrants to the other Party the following:

 

(a) Organization; Authority Relative to this Agreement.  Such Party is duly formed, validly existing, and in good standing under the laws of its state of organization, and has the requisite power and authority to execute, deliver, and perform its obligations under this Agreement, the Warrant Agreement, and the Access and Security Agreement (collectively, the “Related Agreements”) and to consummate the transactions contemplated by this Agreement and the Related Agreements.  Such Party’s execution, delivery, and performance of this Agreement and the Related Agreements have been duly authorized by all necessary corporate or similar governing authority.  No other action on the part of such Party or any other individual, person or entity is necessary to authorize this Agreement or the Related Agreements or the consummation of the transactions contemplated by this Agreement or the Related Agreements.  Such Party has duly and validly executed and delivered this Agreement and the Related Agreements, and this Agreement and the Related Agreements, upon execution, will constitute a valid and binding obligation of such party enforceable against such Party in accordance with its terms, except as they may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally, and except as they may be limited by general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity.

 

(b) Consents and Approvals; No Violation.  Neither such Party’s execution nor delivery of this Agreement or the Related Agreements, nor such Party’s consummation of the transactions contemplated by this Agreement and the Related Agreements, except for such consents and approvals required in connection with AAM’s Amended and Restated Revolving Credit Facility, dated January 9, 2004, as amended and restated on November 7, 2008 and Credit Agreement dated as of June 14, 2007, nor such Party’s compliance with the terms and provisions of this Agreement and the Related Agreements (a) requires any authorization, consent or approval of any governmental or regulatory authority or of any other person or entity; (b) will accelerate any obligation under, violate or breach any provision of, constitute a default under, result in the creation of any lien or security interest under, result in the termination of, require the consent, authorization or approval of any third party under, or in connection with, any of the terms, covenants, provisions or conditions of any note, bond, mortgage, indenture, deed of trust, license, franchise, lease, contract, agreement or other instrument, commitment or obligation to which such party is a party; or (c) will violate any order, writ, injunction, decree, judgment or arbitration award, or any statute, rule, regulation or ruling of any court or governmental authority, United States or foreign, applicable to such party.

 

7. MISCELLANEOUS

 

 

7.1 Assignment.

 

This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and assigns.  No Party may assign its rights, privileges or obligations under this Agreement without the prior written consent of the other Party, and any attempted assignment without the written consent of the other Party will be void, except that GM may assign or otherwise transfer this Agreement and its rights or obligations under this Agreement to any affiliated or successor company or to any purchaser of a substantial part of GM’s business to which this Agreement relates.  In addition, GM may delegate, in whole or in part, this Agreement and its rights and obligations under this Agreement to any such affiliate, successor or purchaser.  GM will provide AAM written notice of any such assignment, transfer or other delegation.

 

7.2 Notice.

 

Any notice or communication under this Agreement will be in writing and either delivered personally, sent by certified or registered mail, postage prepaid, delivered by a recognized overnight courier service, or transmitted via facsimile with confirmation receipt of such notice, addressed as follows:

 

If to GM:

General Motors Company

 

30009 Van Dyke Road

 

P.O. Box 9025

 

Mail Code 480-206-116

 

Warren, Michigan  48090-9025

 

Attention:  Christopher F. Dubay

 

Group Counsel, Global Purchasing &

 

Supply Chain

 

Facsimile:   ###-###-####

 

With a copy to:

Honigman Miller Schwartz and Cohn LLP

 

2290 First National Building

 

660 Woodward Avenue

 

Detroit, Michigan  48226

 

Attention:  Robert B. Weiss

 

Facsimile:   ###-###-####

 

If to AAM:

American Axle & Manufacturing, Inc.

 

One Dauch Drive

 

Detroit, Michigan  48211

 

Attention:  Patrick S. Lancaster

 

Facsimile:   ###-###-####

 

And to:

General Counsel

 

American Axle & Manufacturing, Inc.

 

One Dauch Drive

 

Detroit, Michigan  48211

 

Facsimile:   ###-###-####

 

Attn:  Richard Raymond

 

With a copy to:

Shearman & Sterling LLP

 

599 Lexington Avenue

 

New York, NY 10022

 

Attention:  Peter D. Lyons

 

Facsimile:   ###-###-####

 

or to such other address as may be furnished in writing by either party in the preceding manner.

 

7.3 Entire Agreement.

 

This Agreement together with all exhibits and schedules hereto constitutes the entire agreement between the parties with respect to the subject matter of this Agreement.  No waiver, amendment or other modification of this Agreement will be valid unless evidenced by a writing signed by the Party or Parties whose rights or obligations are affected by such waiver, amendment or modification.  All rights and remedies granted in this Agreement to either Party shall be cumulative and nonexclusive of all other rights and remedies that such Party may have.

 

7.4 Press Releases and Public Announcements; Confidentiality.  The Parties shall mutually agree in advance the substance of any press release to be issued by either Party with respect to this Agreement and the Related Agreements.  Prior to the issuance of any such press release, no Party shall issue any other press release or make any other public announcement relating to the subject matter of this Agreement or the Related Agreements without the prior written consent of the Parties.  There shall be no restrictions on the Parties in commenting regarding this Agreement other than the initial press release referenced above and the confidentiality provisions set forth in this Section 7.4.  Without limiting the other provisions of this Section 7.4, the Parties acknowledge that the specific terms of this Agreement are of a confidential nature and no Party shall make, and each will direct its respective representatives not to make, directly or indirectly, any disclosure, whether written or oral, of the specific terms of this Agreement without the prior written approval of each other Party.  Notwithstanding the foregoing, following the issuance by AAM of the press release referred to above, any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities; provided that any such Party shall use commercially reasonable efforts to provide the other Parties a minimum of 24 hours prior notice of any such public disclosure.

 

7.5 Interpretation.

 

(a) This Agreement is being entered into among competent and experienced business persons, represented by counsel, and have been reviewed by the parties and their counsel.  Therefore, any ambiguous language in this Agreement will not necessarily be construed against any particular Party as the drafter of such language.

 

(b) The captions and headings contained in this Agreement are solely for convenience of reference and will not affect the interpretation of any provision of this Agreement.

 

(c) All references in this Agreement to section numbers, schedules or exhibits are references to the sections in, or schedules or exhibits to, as applicable, this Agreement.

 

7.6 Severability.

 

If any provision of this Agreement is determined to be contrary to law or unenforceable by any court of law, the provision will be reformed to provide the maximum expression of the intent of the parties permissible under law.

 

7.7 Counterparts and Effectiveness.

 

This Agreement may be executed in counterparts (each of which shall be deemed an original, but all of which take together shall constitute one and the same agreement) and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties.  The exchange of copies of this Agreement and of signature pages by facsimile or electronic transmissions shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the Parties transmitted by facsimile or electronic transmission shall be deemed to be their original signatures for all purposes.

 

7.8 Applicable Law; Forum.

 

This Agreement is made in the State of Michigan and will be governed by, and construed and enforced in accordance with, the laws of the State of Michigan, without regard to principles of conflicts of laws.  The Parties agree that the federal and state courts sitting in Wayne County, Michigan, have personal jurisdiction over the Parties and that proper jurisdiction and venue for any dispute arising from or under this Agreement will be in the federal or state courts sitting in Wayne County, Michigan.

 

7.9 Third Party Beneficiary.

 

Except for Liquidation Company, which is an express third party beneficiary of the terms and conditions of this Agreement, including, without limitation, the provisions of Section 1.2, this Agreement is for the sole benefit of the Parties hereto, and nothing herein expressed or implied shall give or be construed to give any person other then the Parties hereto any legal or equitable rights hereunder.

 

7.10 JURY TRIAL WAIVER.

 

 

7.11 Treatment of Certain Agreements in Potential Subsequent Chapter 11

 

.

 

AAM and AAM Holdings irrevocably covenant and agree that in the event that either were to commence proceedings (a “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) following the Effective Date, AAM and/or AAM Holdings, as the case may be, will move in the Chapter 11 Case, under section 365(a) of the Bankruptcy Code, to assume this Agreement and the Access and Security Agreement.

 

{Signatures on following page.}

 

IN WITNESS WHEREOF, the parties have executed this Settlement and Commercial Agreement as of the date first written above.

 

 

Schedule 1	Assumed Agreements
Schedule 2	[…***…]
Schedule 3	[…***…]
Schedule 4	[…***…]
Schedule 5	[…***…]
Schedule 6	Performed Agreements
Schedule 7	[…***…]
Schedule 8(1)	[…***…]
Schedule 8(2)	[…***…]
Schedule 9	[…***…]
Schedule 10	[…***…]
Schedule 11	[…***…]

 

Exhibit 1.1	Second Lien Term Loan Agreement
Exhibit 1.4(a)	Warrant Agreement
Exhibit 1.5(a)(5)(1)	GM Standard Lifetime Contract
Exhibit 1.5(a)(5)(2)	GM Terms and Conditions
Exhibit 1.5(a)(5)(3)	GM Long-Term Contract
Exhibit 1.5(c)	Form 1804 / 1810
Exhibit 1.6	Access and Security Agreement

*** CONFIDENTIAL TREATMENT REQUESTED