AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. AMENDED & RESTATED CONTINUITY AGREEMENT
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
AMENDED
& RESTATED
This
Agreement (the “Agreement”) is dated as of {DATE} by and between American
Axle & Manufacturing Holdings, Inc., a Delaware corporation (the “Company”), and {NAME} (the
“Executive”).
WHEREAS,
the Company’s Board of Directors (the “Board”) considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS,
the Board desires to assure, and has determined that it is appropriate and in
the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of key executives of the
Company to their duties of employment without personal distraction or conflict
of interest in circumstances which could arise from the occurrence of a change
in control of the Company; and
WHEREAS,
the Board has authorized the Company to enter into continuity agreements with
those key executives of the Company, such agreements to set forth the severance
compensation which the Company agrees under certain circumstances to pay such
executives; and
WHEREAS,
the Executive is a key executive of the Company and has been designated by the
Compensation Committee of the Board (the “Committee”) as an
executive to be offered such a continuity agreement with the
Company.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree as follows:
1. Term. This
Agreement shall become effective on the date hereof and remain in effect until
the second anniversary thereof; provided, however, that, on
such anniversary and on each successive anniversary thereof, this Agreement
shall automatically renew, unless the Company provides to the Executive, in
writing, at least one year prior to the renewal date, notice that this Agreement
shall not be renewed. Notwithstanding the foregoing, in the event
that a Change in Control (as hereinafter defined) occurs at any time prior to
the termination or expiration of this Agreement in accordance with the preceding
sentence, this Agreement shall not terminate until the second anniversary of the
Change in Control.
2. Change in
Control. No compensation or other benefit shall be payable
pursuant to Section 4 of this Agreement unless and until either (i) a Change in
Control shall have occurred while the Executive is an employee of the Company
and the Executive’s employment by the Company thereafter shall have terminated
in accordance with Section 3(a)(i) hereof or (ii) the Executive’s employment by
the Company shall have terminated in accordance with Section 3(a)(ii) hereof
prior to the occurrence of the Change in Control. For purposes of
this Agreement, a “Change in Control”
shall be deemed to have occurred when:
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(a) Any “person” as defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
as used in Section 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) of the Exchange Act (but excluding the Company and any subsidiary
and any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee)), directly or
indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), of securities of the Company representing 30% or more of the
combined voting power of the Company’s then outstanding securities;
or
(b) The consummation of any merger or other
business combination involving the Company, a sale of 51% or more of the
Company’s assets, liquidation or dissolution of the Company or a combination of
the foregoing transactions (the “Transactions”) other
than a Transaction immediately following which the shareholders of the Company
immediately prior to the Transaction own, in the same proportion, at least 51%
of the voting power, directly or indirectly, of (i) the surviving corporation in
any such merger or other business combination; (ii) the purchaser of or
successor to the Company’s assets; (iii) both the surviving corporation and the
purchaser in the event of any combination of Transactions; or (iv) the parent
company owning 100% of such surviving corporation, purchaser or both the
surviving corporation and the purchaser, as the case may be; or
(c) Within any 12 month period, the persons
who were directors immediately before the beginning of such period (the “Incumbent Directors”)
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of a successor to the
Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors (so long as such director was not nominated by a person who
commenced or threatened to commence an election contest or proxy solicitation by
or on behalf of a person (other than the Board) or who has entered into an
agreement to effect a Change in Control or expressed an intention to cause such
a Change in Control).
Notwithstanding
the foregoing, an event described in subsections (a) through (c) above shall not
constitute a Change in Control for purposes of this Agreement unless such event
also constitutes a “change in control event” within the meaning of the default
provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and
the final regulations promulgated thereunder.
3. Termination of Employment;
Definitions.
(a) Termination without Cause by
the Company or for Good Reason by the Executive.
(i) The
Executive shall be entitled to the compensation provided for in Section 4 hereof
if, on or within two years after a Change in Control, the Executive’s employment
by the Company shall be terminated (A) by the Company for any reason other than
(I) the Executive’s Disability or Retirement, (II) the Executive’s death or
(III) for Cause, or (B) by the Executive with Good Reason (all terms are
hereinafter defined).
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(ii) In
addition, the Executive shall be entitled to the compensation provided for in
Section 4 hereof if the following events occur: (A) an agreement is signed
which, if consummated, would result in a Change in Control, (B) the Executive is
terminated without Cause by the Company (other than for any reason listed in
clauses (I) and (II) above) or terminates employment with Good Reason prior to
the Change in Control, (C) such termination is at the direction of the acquirer
or merger partner or is otherwise in connection with the anticipated Change in
Control, and (D) such Change in Control actually occurs.
(b) Disability. For
purposes of this Agreement, “Disability” shall
mean the Executive’s absence from the full-time performance of the Executive’s
duties (as such duties existed immediately prior to such absence) for 180
consecutive business days, when the Executive is disabled as a result of
incapacity due to physical or mental illness, as determined by a physician
selected by the Executive and approved by the Company for such purpose (such
approval not to be unreasonably withheld).
(c) Retirement. For
purposes of this Agreement, “Retirement” shall
mean the Executive’s voluntary termination of employment that constitutes a
retirement under the Company’s Retirement Program for Salaried Employees,
Restatement dated December 31, 2006, but only if such retirement occurs prior to
a termination (i) by the Company without Cause (and not in anticipation of a
termination for Cause) or (ii) by the Executive for Good Reason.
(d) Cause. For
purposes of this Agreement, “Cause” shall mean the
occurrence of any of the following, during the term of this
Agreement:
(i) The
willful and continued failure of the Executive to perform substantially all of
Executive’s duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness) for a period of 10 days following
delivery of a written demand for substantial performance to such Executive by
the Board, which specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the Executive’s duties;
or
(ii) The
Executive’s conviction of, or plea of guilty or nolo contendere to a crime
under the laws of the United States or any state thereof constituting (x) a
felony or (y) a misdemeanor involving moral turpitude.
Termination
of the Executive for Cause shall be made by delivery to the Executive of a copy
of a resolution duly adopted by the affirmative vote of not less than a majority
of the non-employee members of the Board or of the ultimate parent of the entity
which caused the Change in Control (if the Company has become a subsidiary) at a
meeting of such members called and held for such purpose, after 30 days prior
written notice to the Executive specifying the basis for such termination and
the particulars thereof and a reasonable opportunity for the Executive to cure
or otherwise resolve the behavior in question prior to such meeting, finding
that in the reasonable judgment of such members, the conduct or event set forth
in any of clauses (i) and (ii) above has occurred and that such occurrence
warrants the Executive’s termination.
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(e) Good
Reason. For purposes of this Agreement, “Good Reason” shall
mean the occurrence, during the term of this Agreement, of any of the following
without the Executive’s express written consent:
(i) Any
material and adverse diminution in the Executive’s duties, titles or
responsibilities with the Company from those in effect immediately prior to the
Change in Control;
(ii) Any
reduction in the Executive’s annual base salary or annual cash bonus percentage
target from the annual base salary or annual cash bonus percentage target in
effect immediately prior to the Change in Control;
(iii) Any
requirement that the Executive be based at a location more than 50 miles from
the location at which the Executive was based immediately prior to the Change in
Control; and
(iv) Any
failure by the Company to obtain from any successor to the Company an agreement
reasonably satisfactory to the Executive to assume and perform this Agreement,
as contemplated by Section 11(a) hereof.
Notwithstanding
the foregoing, in the event that the Executive wishes to resign for Good Reason,
the Executive must provide the Company with a Notice of Termination (as defined
below) referencing this Section 3(e) within six months after the occurrence of
the event giving rise to the Executive’s claim of Good Reason.
(f) Notice of
Termination. Any purported termination of the Executive’s
employment with the Company (other than on account of the Executive’s death)
shall be communicated by a Notice of Termination to the Executive, if such
termination is by the Company, or to the Company, if such termination is by the
Executive. For purposes of this Agreement, “Notice of
Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provisions so indicated.
For purposes of
this Agreement, no purported termination of the Executive’s employment with the
Company shall be effective without such a Notice of Termination having been
given.
4. Compensation Upon
Termination On or After a Change in Control.
If the
Executive’s employment by the Company shall be terminated in accordance with
Section 3(a)(i) or (ii) (the “Termination”), the
Executive shall be entitled to the following payments and benefits:
(a) Severance. The
Company shall pay, or cause to be paid, to the Executive a cash severance amount
equal to the
product of 2.5 times the sum of:
(i) the
Executive’s annual base salary on the date of the Change in Control (or, if
higher, the annual base salary in effect immediately prior to the giving of the
Notice of Termination), and
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(ii) the
higher of (A) the average annual bonus awarded to the Executive for the three
Company fiscal years (or, if the Executive was not eligible for a bonus for such
three fiscal years, such lesser number of fiscal years during which the
Executive was employed by the Company) preceding (I) the fiscal year in which
the Change in Control occurs, or (II) the fiscal year in which the Termination
occurs, whichever produces the higher result or (B) the Executive’s target
annual bonus (expressed as a percentage of salary) for the fiscal year in which
the Change in Control occurs or in which the Termination occurs, whichever is
higher (the “Bonus
Component”).
This cash
severance amount shall be payable in a lump sum, calculated without any present
value discount, on the first day of the third calendar month next following the
Executive’s Date of Termination. For purposes of this Agreement,
“Date of
Termination” shall mean the date on which the Executive’s employment with
the Company is terminated in accordance with Section 3(a)(i) or, with respect to
a Termination described in Section 3(a)(ii), the date on which the Change in
Control occurs, as the case may be.
Notwithstanding
anything herein to the contrary, the Company’s obligation under this Section
4(a) is expressly conditioned upon the Executive’s execution of a General
Release substantially in the form attached hereto as Appendix B at least 8 days
prior to the designated payment date, and the Executive’s refraining from
exercising his/her right to revoke the Release prior to such payment
date.
(b) Additional Payments and
Benefits. The Executive shall also be entitled
to:
(i) A lump
sum cash payment equal to the sum of (A) the Executive’s accrued but unpaid
annual base salary through the date of Termination, (B) the unpaid portion, if
any, of annual bonuses earned by the Executive pursuant to the Company’s
incentive compensation plan for any year ending prior to the Executive’s date of
Termination, (C) a pro rata portion of the Executive’s Bonus Component in
respect of the year in which the date of Termination occurs (calculated from
January 1 of such year through the date of Termination) (such payment, the
“Pro Rata
Bonus”), and (D) an amount, if any, equal to compensation previously
deferred (excluding any qualified plan deferrals) and any accrued vacation pay,
in each case, in full satisfaction of the Executive’s rights
thereto;
(ii) Continued
medical, dental, vision, disability, accidental death and dismemberment and life
insurance coverage (“Welfare Benefit
Coverage”) for the Executive and the Executive’s eligible dependents or,
to the extent Welfare Benefit Coverage is not commercially available, such other
arrangements reasonably acceptable to the Executive, on the same basis as in
effect prior to the Executive’s Termination, for a period ending on the earlier
of (A) the date that is 2.5 years following the Date of Termination under
Section 4(a) hereof (the “Continuation Period”)
or (B) the commencement of comparable coverage by the Executive with a
subsequent employer; provided, however, that to the
extent necessary to avoid the imposition of additional taxes, penalties and
interest under Section 409A of Internal Revenue Code of 1986, as amended (the
“Code”), any
reimbursements of medical, dental or vision expenses shall be made on or before
the last day of the calendar year next following the calendar year in which such
expense was incurred;
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(iii) Immediate
100% vesting of all outstanding stock options, stock appreciation rights,
phantom stock units, and restricted stock granted or issued by the Company to
the Executive to the extent not previously vested on or following the Change of
Control;
(iv) 2.5 years
of additional service credit and credit for 2.5 years of additional age under
the Company’s employee pension and welfare benefit plans (except for any plan
qualified under the Code) for purposes of benefit accrual, matching
contributions, vesting, and eligibility for retirement; provided that any
retirement benefits shall commence [in accordance with the terms of such
employee pension and welfare benefit plans]. In addition, if salary
and/or bonus amounts are part of the calculation of such benefits, the amounts
in Section 4(a) and 4(b)(i)(B), as applicable, shall be included in such
calculation as if the Executive had remained employed by the Company for the
entire Continuation Period. (The methodology to be applied in
calculating the benefit provided in this Section 4(b)(iv) shall follow the
Example set forth in Appendix A of this Agreement.);
(v) Continued
use of the Company car then used by the Executive, free of charge, for a
six-month period, at which time the Executive shall return the car to the
Company; and
(vi) Without
duplication of the amounts otherwise provided for in this Agreement, all other
accrued or vested benefits in accordance with the terms of the applicable plan
(the “Accrued
Benefits”).
All lump
sum payments under this Section 4(b) shall be paid shall be payable in a lump
sum on the first day of the third calendar month following the Executive’s Date
of Termination.
Notwithstanding
anything herein to the contrary, the Company’s obligation under this Section
4(b) is expressly conditioned upon the Executive’s execution of a General
Release substantially in the form attached hereto as Appendix B at least 8 days
prior to the designated payment date, and the Executive’s refraining from
exercising his/her right to revoke the Release prior to such payment
date.
(c) Outplacement. If
so requested by the Executive, outplacement services shall be provided by a
professional outplacement provider selected by Executive; provided, however, that such
outplacement services shall be provided to the Executive at a cost to the
Company of not more than 10% of the Executive’s annual base salary as in effect
immediately prior to the date of Termination, or, if greater, $40,000; provided further that
outplacement services shall not be provided to Executive beyond the last day of
the second calendar year following the calendar year which contains the
Executive’s Date of Termination.
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5. Compensation Upon
Termination for Death, Disability or Retirement.
If the
Executive’s employment is terminated on or after a Change in Control by reason
of Death, Disability or Retirement prior to any other termination (other than in
anticipation of a termination for Cause by the Company), the Executive will
receive:
(a) The sum of (i) the Executive’s accrued
but unpaid annual base salary through the date of termination of employment by
the Company, (ii) the unpaid portion, if any, of annual bonuses earned by the
Executive pursuant to the Company’s incentive compensation plan for any year
ending prior to the Executive’s date of termination of employment by the
Company, (iii) the Pro Rata Bonus, and (iv) an amount, if any, equal to
compensation previously deferred (excluding any qualified plan deferrals) and
any accrued vacation pay, in each case, in full satisfaction of the Executive’s
rights thereto; and
(b) The Accrued Benefits.
All
payments under this Section 5 shall be paid in a lump sum on the first day of
the third calendar month next following the date on which the Executive’s
employment is terminated on or after a Change in Control by reason of Death,
Disability or Retirement.
6. Excess Parachute Excise
Tax.
(a) (i) If
it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
“Payment”),
would be subject to the excise tax imposed under Section 4999 (or any successor
provision thereto) of the Code by reason of being “contingent on a change in
ownership or control” of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by state
or local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment or payments (a
“Gross-Up
Payment”) in an amount such that, after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments; provided, however, that if the
sum of the Payments (net of any reduction including, without limitation, any
reduction attributable to obligations imposed on the Executive hereunder, taken
into account in computing the Excise Tax) exceeds by 10% or less the maximum
amount that may be paid to the Executive without the imposition of the Excise
Tax, then, to the least extent necessary to eliminate the imposition of the
Excise Tax (after taking into account the aforementioned reductions) (a) any
cash payments hereunder shall first be reduced, and (b) all other non-cash
amounts hereunder shall next be reduced, until the sum of the payments equals
the maximum amount that may be paid to the Executive without the imposition of
the excise tax.
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(ii) Subject
to the provisions of Section 6(a)(i) hereof, all determinations required to be
made under this Section 6, including whether an Excise Tax is payable by the
Executive and the amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by a nationally
recognized firm of certified public accountants (the “Accounting Firm”)
used by the Company prior to the Change in Control (or, if such Accounting Firm
declines to serve, the Accounting Firm shall be a nationally recognized firm of
certified public accountants selected by the Executive). The
Accounting Firm shall be directed by the Company or the Executive to submit its
preliminary determination and detailed supporting calculations to both the
Company and the Executive within 15 calendar days after the Executive’s Date of
Termination, if applicable, and any other such time or times as may reasonably
be requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company shall
pay the required Gross-Up Payment to, or for the benefit of, the Executive
within five business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his/her federal, state and local
income or other tax return. Any determination by the Accounting Firm
as to the amount of the Gross-Up Payment shall be binding upon the Company and
the Executive absent a contrary determination by the Internal Revenue Service or
a court of competent jurisdiction; provided, however, that no such
determination shall eliminate or reduce the Company’s obligation to provide
any Gross-Up Payment as a result of such contrary determination. As a
result of the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto), and the possibility of
similar uncertainty regarding state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (an
“Underpayment”),
consistent with the calculations required to be made hereunder. In
the event that the Company exhausts or fails to pursue its remedies pursuant to
Section 6(b) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Executive shall direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The
federal, state and local income or other tax returns filed by the Executive (or
any filing made by a consolidated tax group that includes the Company) shall be
prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by the
Executive. The Executive shall make proper payment of the amount of
any Excise Tax and, at the request of the Company, provide to the Company true
and correct copies (with any amendments) of his/her federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such
payment.
(b) (i) In
the event that the Internal Revenue Service claims that any payment or benefit
received under this Agreement constitutes an “excess parachute payment,” within
the meaning of Section 280G(b)(1) of the Code (or any successor provision
thereto), for which the Company has not made a Gross-Up Payment, the Executive
shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration
of the 30-day period following the date on which the Executive gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim; (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to the Executive; (iii)
cooperate with the Company in good faith in order to effectively contest such
claim; and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the
Company shall bear and pay directly all costs and expenses (including, but not
limited to, additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for and against any
Excise Tax or other tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses.
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(ii) The
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and ▇▇▇ for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and ▇▇▇ for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations to enable the Company
to contest such claim, the Executive may limit this extension solely to such
contested amount. The Company’s control of the contest shall be
limited to issues with respect to which a corporate deduction would be
disallowed pursuant to Section 280G of the Code, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition,
no position may be taken nor any final resolution be agreed to by the Company
without the Executive’s consent if such position or resolution could reasonably
be expected to adversely affect the Executive (including any other tax position
of the Executive unrelated to matters covered hereby).
(iii) If, after
the receipt by the Executive of an amount advanced by the Company in connection
with the contest of the Excise Tax claim, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company the amount of such refund received by the Executive (together
with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount
advanced by the Company in connection with an Excise Tax claim, a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest the denial of such refund prior to the expiration of 30 days
after such determination, such advance shall be forgiven and shall not be
required to be repaid, and the Company shall be required to gross up such
forgiven amount in respect of any taxes attributable thereto.
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(c) Notwithstanding
anything in this Section 6, any Gross-Up Payment or reimbursement by the Company
of expenses incurred by the Executive in connection with a litigation proceeding
relating to the Excise Tax, as provided for in this Section 6, shall be paid no
later than the last day of the calendar year following the calendar year in
which the Executive remitted the Excise Tax or, if no Excise Tax is paid, the
end of the calendar year following the calendar year in which there is a final
and nonappealable settlement or other resolution of the litigation.
(d) The Company and the Executive shall
each provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determination contemplated by Section 6(a) hereof.
(e) The fees and expenses of the Accounting
Firm for its services in connection with the determinations and calculations
contemplated by Section 6(b) hereof shall be borne by the Company. If
such fees and expenses are initially advanced by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
7. Legal
Expenses. Each party shall pay its own costs and expenses in
connection with any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, the Company
shall pay such costs and expenses, including attorneys fees and disbursements,
of the Executive if the Executive prevails on any such substantive issue in such
proceeding; provided further that the
Executive’s costs and expenses incurred on or before the last day of the second
calendar year following the calendar year in which the Executive’s employment
with the Company is terminated shall be reimbursed only if submitted on or
before the last day of the third calendar year following the calendar year in
which the Executive’s employment with the Company is terminated; and provided further that the
Executive’s costs and expenses incurred after the last day of the second
calendar year following the calendar year in which the Executive’s employment
with the Company is terminated shall be reimbursed only if submitted on or
before the last day of the calendar year following the calendar year in which
the costs and expenses were incurred.
7A. Six-Month Delay for
Specified Employees. Notwithstanding anything herein to the
contrary, if the Executive is a “specified employee” for purposes of Section
409A of the Code, as determined under the Company’s established methodology for
determining specified employees, on the date on which the Executive separates
from service, any payment hereunder (including any provision of continued
benefits) that provides for the deferral of compensation within the meaning of
Section 409A of the Code shall not be paid or commence to be paid on any date
prior to the first business day after the date that is six months following the
Executive’s separation from service; provided, however, that a
payment delayed pursuant to the preceding clause shall commence earlier in the
event of the Executive’s death prior to the end of the six-month
period.
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8. (a) Confidential
Information. The Executive acknowledges that all information
obtained by the Executive during the term of employment concerning the business
and affairs of the Company and its subsidiaries and affiliates are valuable,
special and unique assets of the Company and are the sole and exclusive property
of the Company (“Confidential
Information”). The Executive agrees that the Executive will
not at any time or in any manner, directly or indirectly, use, exploit, disclose
or communicate in any manner such Confidential Information to any third party
without the prior written consent of the Company. All Confidential
Information will be protected in accordance with the Company’s
policies. The foregoing obligations will not apply to the extent such
Confidential Information (i) becomes generally known to the public other than as
a result of acts or omissions of the Executive or (ii) as may be required by
law. At the time of the termination or expiration of this Agreement,
the Executive shall immediately deliver to the Company all such Confidential
Information under control or possession of the Executive and all copies and
notes thereon, regardless of the form of storage or retrieval. The
only exceptions to the foregoing shall be the Executive’s personal files
containing no Confidential Information.
(b) Non-Compete
Covenant. In consideration for the compensation paid under
this Agreement, the Executive agrees and covenants that, during the Continuation
Period, the Executive will not directly or indirectly engage in any business
that is competitive with the Company and its products immediately prior to the
Change in Control and any businesses that the Company plans to enter within the
next year pursuant to its business plans, as determined immediately prior to the
Change in Control, including, without limitation, the manufacture, assembly,
distribution and/or sale of forgings, axles, prop shafts and all related parts
and components which are made, sold or used by the Company. Engaging
in competitive activity shall include, without limitation, (i) engaging in a
business as owner, partner or agent, (ii) consulting, becoming self-employed or
becoming an employee or being associated in any capacity with any third party
that is engaged in such business, (iii) owning or controlling any interest in
such business, directly or indirectly, (iv) soliciting, calling on or
communicating with any customer of the Company for the purpose of competing with
the Company, (v) inducing or attempting to induce, or assisting others to induce
or attempt to induce, any employee, agent, representative or other person
employed by, associated with, doing business with or having a relationship with
the company to terminate his, her or its employment relationship or association
with the Company, or in any way interfere with the relationship between the
Company or any such person or enterprise, or (vi) otherwise competing with the
Company. This obligation shall apply to any geographic area where the
Company has a manufacturing facility or conducts automotive-related sales and
service operations.
(c) Remedies. The
Executive agrees that the Company would suffer irreparable harm from a breach by
the Employee of any of the covenants or terms of this Section
8. Therefore, in the event of any actual or threatened breach by the
Executive of any of the provisions of this Section 8, the Company may seek
specific performance and/or injunctive or other relief in order to enforce this
Agreement. The Executive further agrees that, in the event any of the
provisions of this Section 8 are determined by a court of competent jurisdiction
to be contrary to any applicable statute, law or rule, or for any reason to be
unenforceable as written, such court may modify any of such provisions so as to
permit enforcement thereof as thus modified.
11
9. Nature of Obligations;
Non-Exclusivity of Rights; Joint and Several Liability.
(a) The payments and benefits provided
under Section 4 hereof are contingent on (i) the Executive’s compliance with
Section 8 and (ii) the Executive’s execution and delivery to the Company of the
General Release attached hereto as Appendix B. The obligations of the
Company to make the payment to the Executive, and to make the arrangements
provided for herein shall be absolute and unconditional and shall not be reduced
by any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or any third party at any time.
(b) Nothing in this Agreement shall prevent
or limit the Executive’s continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company and for which
the Executive may qualify (other than any change in control or other severance
plan or policy), nor shall anything herein limit or reduce such rights as the
Executive may have under any agreements with the Company. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company shall be payable in accordance
with such plan or program, except as explicitly modified by this
Agreement.
(c) Any successors or assigns of the
Company shall be joint and severally liable with the Company under this
Agreement.
10. Entire Agreement; Not an
Employment Agreement.
(a) This Agreement constitutes the entire
agreement of the parties hereto and supersedes all prior and contemporaneous
agreements and understandings (including term sheets), both written and oral,
between the parties hereto, or either of them, with respect to the subject
matter hereof. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
(b) This Agreement is not, and nothing
herein shall be deemed to create, a contract of employment between the Executive
and the Company. The Company may terminate the employment of the
Executive by the Company at any time, subject to the terms of this Agreement
and/or any employment agreement or arrangement between the Company and the
Executive that may then be in effect.
11. Successors; Binding
Agreement; Assignment.
(a) The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business of the Company, by agreement to
expressly, absolutely and unconditionally assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean (i) the Company as hereinbefore defined,
and (ii) any successor to all the stock of the Company or to all or
substantially all of the Company’s business or assets which executes and
delivers an agreement provided for in this Section 11(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, including any parent or subsidiary of such a successor.
(b) This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount
would be payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive’s estate or
designated beneficiary. Neither this Agreement nor any right arising
hereunder may be assigned or pledged by the Executive.
12
12. Notice. For
purposes of this Agreement, notices and all other communications provided for in
this Agreement or contemplated hereby shall be in writing and shall be deemed to
have been duly given when personally delivered, delivered by a nationally
recognized overnight delivery service or when mailed by United States certified
or registered mail, return receipt requested, postage prepaid, and addressed, in
the case of the Company, to the Company at:
American
Axle & Manufacturing Holdings, Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice
President, Chief Administrative Officer & Secretary
and in
the case of the Executive, to the Executive at the address set forth on the
execution page at the end hereof.
Either
party may designate a different address by giving notice of change of address in
the manner provided above, except that notices of change of address shall be
effective only upon receipt.
13. Miscellaneous.
(a) Amendments. No
provision of this Agreement may be amended, altered, modified, waived or
discharged unless such amendment, alteration, modification, waiver or discharge
is agreed to in writing signed by the Executive and such officer of the Company
as shall be specifically designated by the Committee or by the
Board.
(b) Waivers. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
13
14. Severability. If
any one or more of the provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby. To the
extent permitted by applicable law, each party hereto waives any provision of
law that renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
15. Governing Law;
Venue. The validity, interpretation, construction and
performance of this Agreement shall be governed on a non-exclusive basis by the
laws of the State of Michigan without giving effect to its conflict of laws
rules. For purposes of jurisdiction and venue, the Company hereby
consents to jurisdiction and venue in any suit, action or proceeding with
respect to this Agreement in any court of competent jurisdiction in the state in
which Executive resides at the commencement of such suit, action or proceeding
and waives any objection, challenge or dispute as to such jurisdiction or venue
being proper.
16. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be an
original and all of which shall be deemed to constitute one and the same
instrument.
17. Section
409A. The provisions of this Agreement are intended to satisfy
the applicable requirements of Section 409A of the Code and shall be performed
and interpreted consistent with such intent. If any provision of this
Agreement does not satisfy such requirements or could otherwise cause the
Executive to recognize income under Section 409A of the Code, the Company and
the Executive agree to negotiate in good faith an appropriate modification to
maintain, to the maximum extent practicable, the original intent of the
applicable provision without violating the requirements of Section 409A of the
Code or otherwise causing the recognition of income thereunder.
18. Amendment and
Restatement. This Agreement has been amended and restated for
purposes of complying with Section 409A of the Code, effective as of the
original date hereof.
[Signatures on next
page.]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
| EXECUTIVE: | AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. | |||
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Name
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Title
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15
Appendix
A
Non-CEO SERP
Illustration
As of
January 1, 2007 the American Axle & Manufacturing, Inc. Supplemental
Executive Retirement Program (the SERP) was amended. The amended SERP
provides that all Grandfathered Participant’s benefits are calculated using the
formula described in Example 1 and all Non-Grandfathered Participant’s benefits
are calculated using the formula as described in Example 2.
“Grandfathered
Participant” means an individual who (i) is actively employed by the Corporation
on December 31, 2006, (ii) is an active Participant in this Plan and in the
Salaried Retirement Plan or Cash Balance Plan on December 31, 2006, and (iii) if
he or she continues in the employ of the Corporation on a full-time basis, will
be eligible for Early or Normal Retirement under the Salaried Retirement Plan on
or before December 1, 2011.
“Non-Grandfathered
Participant” means any Participant in the SERP who is not a Grandfathered
Participant.
Example
1
Grandfathered
Participant
Grandfathered
Participant shall be eligible for the greater of (1) the Basic Benefit or (2) if
he or she has attained age 62, the Alternative Benefit as described in Section
4.2 of the SERP.
If the
Grandfathered Participant does not retire on or before December 1, 2011 the
current SERP benefit will be frozen and the SERP benefit going forward will be
calculated as a Non-Grandfathered Participant as described in Section 4.1 of the
SERP.
Example
2
Non-Grandfathered
Participant
The
Non-Grandfathered Participant shall receive a benefit equal to 12.5% of his or
her Final Average Compensation (base compensation plus bonus) times the
Participant’s years of Credited Service, less the sum of:
|
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(a)
|
The
lump sum Actuarial Equivalent Value of benefits payable pursuant
to:
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(1)
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the
Salaried Retirement Plan;
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(2)
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the
Cash Balance Plan;
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(3)
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his
or her Frozen Benefit under the SERP Plan;
and
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(b)
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the
Participant’s AAM Retirement Contribution Account established pursuant to
Section 3.2(b) of the Salaried Savings
Plan.
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Change of
Control
If a
Change of Control occurs the calculations above are calculated adding 2.5 years
to credited service and age, and adjusting the average compensations as if the
participant worked the 2.5 additional years.
16
Appendix
B
RELEASE
In
exchange for a portion of the benefits described in the attached Continuity
Agreement dated August 1, 2006 (the “Agreement”), to which I agree I am not
otherwise entitled, I hereby release American Axle & Manufacturing Holdings,
Inc. (the “Company”), its respective affiliates, subsidiaries, predecessors,
successors, assigns, officers, directors, employees, agents, stockholders,
attorneys, and insurers, past, present and future (the “Released Parties”) from
any and all claims of any kind which I now have or may have against the Released
Parties, whether known or unknown to me, by reason of facts which have occurred
on or prior to the date that I have signed this Release. Such
released claims include, without limitation, any and all claims under federal,
state or local laws pertaining to employment, including the Age Discrimination
in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. Section 2000e et seq., the Fair
Labor Standards Act, as amended, 29 U.S.C. Section 201 et seq., the
Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 et seq., the
Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 et seq., the
Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 et seq., the Family
and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et seq., and any and
all state or local laws regarding employment discrimination and/or federal,
state or local laws of any type or description regarding employment, including
but not limited to any claims arising from or derivative of my employment with
the Company, as well as any and all claims under state contract or tort law or
otherwise.
I hereby
represent that I have not filed any action, complaint, charge, grievance or
arbitration against the Company or the Released Parties.
I
understand and agree that I must forever continue to keep confidential all
proprietary or confidential information which I learned while employed by the
Company, whether oral or written and as defined in the Agreement (“Confidential
Information”) and shall not make use of any such Confidential Information on my
own behalf or on behalf of any other person or entity; provided however, that I
may divulge such Confidential Information if I am required to do so by a court
of law, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative or legislative body with
apparent jurisdiction to order me to divulge, disclose or make accessible such
Confidential Information.
I
expressly understand and agree that the Company’s obligations under this Release
are in lieu of any and all other amounts to which I might be, am now or may
become entitled to receive from any of the Released Parties upon any claim
whatsoever.
I
understand that I must not disclose the terms of this Release and the Agreement
to anyone other than my immediate family, financial advisors (if any) and legal
counsel, that I must immediately inform my immediate family, financial advisors
(if any) and legal counsel that they are prohibited from disclosing the terms of
this Release and the Agreement.
It is
understood that I will not be in breach of the nondisclosure provisions of this
Release if I am required to disclose information pursuant to a valid subpoena or
court order, provided that I notify the Company (to the attention of the General
Counsel of the Legal Department) within one business day that I have received
the subpoena or court order which may require me to disclose information
protected by this Release. Notwithstanding the foregoing, I may also
disclose the terms of this Release to government taxing
authorities.
17
I agree that any violation or breach by
me of my nondisclosure obligations, without limiting the Company’s remedies,
shall give rise on the part of the Company to a claim for relief to recover from
me, before a court of competent jurisdiction, any and all amounts previously
paid to or on behalf of me by the Company pursuant to the Agreement, but shall
not release me from the performance of my obligations under this
Release.
I will
not apply for or otherwise seek employment with the Released
Parties.
I have
read this Release carefully, acknowledge that I have been given at least 21 days
to consider all of its terms, and have been advised to consult with an attorney
and any other advisors of my choice prior to executing this Release, and I fully
understand that by signing below I am voluntarily giving up any right which I
may have to ▇▇▇ or bring any other claims against the Released Parties,
including any rights and claims under the Age Discrimination in Employment
Act. I also understand that I have a period of 7 days after signing
this Release within which to revoke my agreement, and that neither the Company
nor any other person is obligated to provide any benefits to me pursuant to the
Agreement until 8 days have passed since my signing of this Release without my
signature having been revoked. I understand that any revocation of
this Release must be received by the Vice President, Chief Administrative
Officer and Secretary within the seven-day revocation
period. Finally, I have not been forced or pressured in any manner
whatsoever to sign this Release, and I agree to all of its terms
voluntarily. I represent and acknowledge that no representation,
statement, promise, inducement, threat or suggestion has been made by any of the
Released Parties or by any other individual to influence me to sign this Release
except such statements as are expressly set forth herein or in the
Agreement.
I fully
understand that this Release is a legally binding document and that by signing
this Release I am prevented from filing, commencing or maintaining any action
against the Company or the Released Parties.
This
Release is final and binding and may not be changed or modified.
________________________ _________________________
DATE NAME
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