1999 AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC.
STOCK INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Plan is to aid the Company and its
Subsidiaries in recruiting and retaining key individuals of outstanding ability
and to motivate such individuals to exert their best efforts on behalf of the
Company and its Subsidiaries by providing incentives through the granting of
Awards. The Company expects that it will benefit from the added interest which
such key individuals will have in the welfare of the Company as a result of
their proprietary interest in the Company's success.
2. Definitions
The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as
amended, or any successor thereto.
(b) Award: An Option, Stock Appreciation Right or Other
Stock-Based Award granted pursuant to the Plan.
(c) Beneficial Owner: A "beneficial owner", as such term
is defined in Rule 13d-3 under the Act (or any
successor rule thereto).
(d) Board: The Board of Directors of the Company.
(e) Change in Control: The purchase or other acquisition
by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the
Exchange Act, or any comparable successor
provisions, other than Blackstone, employees or
directors of the Company or their respective
Affiliates, of ownership of fifty percent (50%) or
more of the combined voting power of the Company's
then outstanding voting securities entitled to vote
generally.
(f) Code: The Internal Revenue Code of 1986, as amended,
or any successor thereto.
(g) Committee: The Compensation Committee of the Board.
(h) Company: American Axle & Manufacturing of Michigan,
Inc., a Delaware corporation.
(i) Disability: Inability of a Participant to perform in
all material respects his duties and
responsibilities to the Company, or any Subsidiary
of the
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Company, by reason of a physical or mental
disability or infirmity which inability is
reasonably expected to be permanent and has
continued (i) for a period of six consecutive months
or (ii) such shorter period as the Board may
reasonably determine in good faith. The Disability
determination shall be in the sole discretion of the
Board and a Participant (or his representative)
shall furnish the Board with medical evidence
documenting the Participant's disability or
infirmity which is satisfactory to the Board.
(j) Effective Date: January 8, 1999
(k) Fair Market Value: On a given date, the arithmetic
mean of the high and low prices of the Shares as
reported on such date on the Composite Tape of the
principal national securities exchange on which such
Shares are listed or admitted to trading, or, if no
Composite Tape exists for such national securities
exchange on such date, then on the principal
national securities exchange on which such Shares
are listed or admitted to trading, or, if the Shares
are not listed or admitted on a national securities
exchange, the arithmetic mean of the per Share
closing bid price and per Share closing asked price
on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or
such market in which such prices are regularly
quoted), or, if there is no market on which the
Shares are regularly quoted, the Fair Market Value
shall be the value established by the Committee in
good faith. If no sale of Shares shall have been
reported on such Composite Tape or such national
securities exchange on such date or quoted on the
National Association of Securities Dealer Automated
Quotation System on such date, then the immediately
preceding date on which sales of the Shares have
been so reported or quoted shall be used.
(l) ISO: An Option that is also an incentive stock
option granted pursuant to Section 6(d) of the Plan.
(m) LSAR: A limited stock appreciation right granted
pursuant to Section 7(d) of the Plan.
(n) Other Stock-Based Awards: Awards granted pursuant to
Section 8 of the Plan.
(o) Option: A stock option granted pursuant to Section 6
of the Plan.
(p) Option Price: The purchase price per Share of an
Option, as determined pursuant to Section 6(a) of
the Plan.
(q) Participant: An individual who is selected by the
Committee to participate in the Plan.
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(r) Performance-Based Awards: Certain Other Stock-Based
Awards granted pursuant to Section 8(b) of the Plan.
(s) Person: A "person", as such term is used for
purposes of Section 13(d) or 14(d) of the Act (or
any successor section thereto).
(t) Plan: The 1999 American Axle & Manufacturing of
Michigan, Inc. Stock Incentive Plan.
(u) Shares: Shares of common stock of the Company.
(v) Stock Appreciation Right: A stock appreciation right
granted pursuant to Section 7 of the Plan.
(w) Subsidiary: A subsidiary corporation, as defined in
Section 424(f) of the Code (or any successor section
thereto).
3. Shares Subject to the Plan
The total number of Shares which may be issued under the Plan
is 887.199(1). The maximum number of Shares for which Options or Stock
Appreciation Rights may be granted during a calendar year to any Participant
shall be 380.2282(2). The Shares may consist, in whole or in part, of unissued
Shares or treasury Shares. The issuance of Shares or the payment of cash upon
the exercise of an Award shall reduce the total number of Shares available
under the Plan, as applicable. Shares which are subject to Awards which
terminate or lapse may be granted again under the Plan.
4. Administration
The Plan shall be administered by the Committee, which may
delegate its duties and powers in whole or in part to any subcommittee thereof
consisting solely of at least two individuals who are each "non-employee
directors" within the meaning of Rule 16b-3 under the Act (or any successor
rule thereto) and "outside directors" within the meaning of Section 162(m) of
the Code (or any successor section thereto). The Committee is authorized to
interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in
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1. Pursuant to Section 9(a) of the Plan, the number of Shares to equal
3,500,000 after the conversion of Shares pursuant to the proposed merger of the
Company into American Axle & Manufacturing Holdings, Inc.
2. Pursuant to Section 9(a) of the Plan, the number of Shares to equal
1,500,000 after the conversion of Shares pursuant to the proposed merger of the
Company into American Axle & Manufacturing Holdings, Inc.
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the Plan in the manner and to the extent the Committee deems necessary or
desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to, Participants and their beneficiaries
or successors). The Committee shall require payment of any amount it may
determine to be necessary to withhold for federal, state, local or other taxes
as a result of the exercise of an Award. Unless the Committee specifies
otherwise, the Participant may elect to pay a portion or all of such
withholding taxes by (a) delivery in Shares or (b) having Shares withheld by
the Company from any Shares that would have otherwise been received by the
Participant.
5. Limitations
No Award may be granted under the Plan after the tenth
anniversary of the Effective Date, but Awards theretofore granted may extend
beyond that date.
6. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the
Committee, non-qualified or incentive stock options for federal income tax
purposes, as evidenced by the related Award agreements, and shall be subject to
the foregoing and the following terms and conditions and to such other terms
and conditions, not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be
determined by the Committee, but shall not be less than 100% of the Fair Market
Value of the Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be
determined by the Committee, but in no event shall an Option be exercisable
more than ten years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the
Plan or in an Award agreement, an Option may be exercised for all, or from time
to time any part, of the Shares for which it is then exercisable. For purposes
of Section 6 of the Plan, the exercise date of an Option shall be the later of
the date a notice of exercise is received by the Company and, if applicable,
the date payment is received by the Company pursuant to clauses (i), (ii) or
(iii) in the following sentence. The purchase price for the Shares as to which
an Option is exercised shall be paid to the Company in full at the time of
exercise at the election of the Participant (i) in cash, (ii) in Shares having
a Fair Market Value equal to the aggregate Option Price for the Shares being
purchased and satisfying such other requirements as may be imposed by the
Committee; provided, that such Shares have been held by the Participant for no
less than six months, (iii) partly in cash and partly in such Shares or (iv)
through the delivery of irrevocable instruments to a broker to deliver promptly
to the Company an amount equal to the aggregate option price for the shares
being purchased. No Participant shall have any rights to dividends or other
rights of a stockholder with respect to Shares subject to an Option until the
Participant has given written
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notice of exercise of the Option, paid in full for such Shares and, if
applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.
(d) ISOs. The Committee may grant Options under the Plan that
are intended to be ISOs. Such ISOs shall comply with the requirements of
Section 422 of the Code (or any successor section thereto). No ISO may be
granted to any Participant who at the time of such grant, owns more than ten
percent of the total combined voting power of all classes of stock of the
Company or of any Subsidiary, unless (i) the Option Price for such ISO is at
least 110% of the Fair Market Value of a Share on the date the ISO is granted
and (ii) the date on which such ISO terminates is a date not later than the day
preceding the fifth anniversary of the date on which the ISO is granted. Any
Participant who disposes of Shares acquired upon the exercise of an ISO either
(i) within two years after the date of grant of such ISO or (ii) within one
year after the transfer of such Shares to the Participant, shall notify the
Company of such disposition and of the amount realized upon such disposition.
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant (i) a Stock
Appreciation Right independent of an Option or (ii) a Stock Appreciation Right
in connection with an Option, or a portion thereof. A Stock Appreciation Right
granted pursuant to clause (ii) of the preceding sentence (A) may be granted at
the time the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same Shares covered by
an Option (or such lesser number of Shares as the Committee may determine) and
(C) shall be subject to the same terms and conditions as such Option except for
such additional limitations as are contemplated by this Section 8 (or such
additional limitations as may be included in an Award agreement).
(b) Terms. The exercise price per Share of a Stock
Appreciation Right shall be an amount determined by the Committee but in no
event shall such amount be less than the greater of (i) the Fair Market Value
of a Share on the date the Stock Appreciation Right is granted or, in the case
of a Stock Appreciation Right granted in conjunction with an Option, or a
portion thereof, the Option Price of the related Option and (ii) an amount
permitted by applicable laws, rules, by-laws or policies of regulatory
authorities or stock exchanges. Each Stock Appreciation Right granted
independent of an Option shall entitle a Participant upon exercise to an amount
equal to (i) the excess of (A) the Fair Market Value on the exercise date of
one Share over (B) the exercise price per Share, times (ii) the number of
Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right
granted in conjunction with an Option, or a portion thereof, shall entitle a
Participant to surrender to the Company the unexercised Option, or any portion
thereof, and to receive from the Company in exchange therefor an amount equal
to (i) the excess of (A) the Fair Market Value on the exercise date of one
Share over (B) the Option Price per Share, times (ii) the number of Shares
covered by the Option, or portion thereof, which is surrendered. The date a
notice of exercise is received by the Company shall be the exercise date.
Payment shall be made in Shares or in cash, or partly in Shares and partly in
cash (any such Shares valued at such Fair Market Value), all as shall be
determined by the Committee. Stock Appreciation Rights may be exercised from
time to time upon actual receipt by the Company of
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written notice of exercise stating the number of Shares with respect to which
the Stock Appreciation Right is being exercised. No fractional Shares will be
issued in payment for Stock Appreciation Rights, but instead cash will be paid
for a fraction or, if the Committee should so determine, the number of Shares
will be rounded downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion,
such conditions upon the exercisability or transferability of Stock
Appreciation Rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may
grant LSARs that are exercisable upon the occurrence of specified contingent
events. Such LSARs may provide for a different method of determining
appreciation, may specify that payment will be made only in cash and may
provide that any related Awards are not exercisable while such LSARs are
exercisable. Unless the context otherwise requires, whenever the term "Stock
Appreciation Right" is used in the Plan, such term shall include LSARs.
8. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may
grant Awards of Shares, Awards of restricted Shares and Awards that are valued
in whole or in part by reference to, or are otherwise based on the Fair Market
Value of, Shares ("Other Stock-Based Awards"). Such Other Stock-Based Awards
shall be in such form, and dependent on such conditions, as the Committee shall
determine, including, without limitation, the right to receive one or more
Shares (or the equivalent cash value of such Shares) upon the completion of a
specified period of service, the occurrence of an event and/or the attainment
of performance objectives. Other Stock-Based Awards may be granted alone or in
addition to any other Awards granted under the Plan. Subject to the provisions
of the Plan, the Committee shall determine to whom and when Other Stock-Based
Awards will be made, the number of Shares to be awarded under (or otherwise
related to) such Other Stock-Based Awards; whether such Other Stock-Based
Awards shall be settled in cash, Shares or a combination of cash and Shares;
and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof and provisions ensuring that all
Shares so awarded and issued shall be fully paid and non-assessable).
(b) Performance-Based Awards. Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under this Section 8
may be granted in a manner which is deductible by the Company under Section
162(m) of the Code (or any successor section thereto) ("Performance-Based
Awards"). A Participant's Performance-Based Award shall be determined based on
the attainment of written performance goals approved by the Committee for a
performance period established by the Committee (i) while the outcome for that
performance period is substantially uncertain and (ii) no more than 90 days
after the commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of the
relevant performance period. The performance goals, which must be objective,
shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating income; (iv)
earnings per Share; (v) book value per Share; (vi) return on shareholders'
equity; (vii) expense management; (viii)
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return on investment; (ix) improvements in capital structure; (x) profitability
of an identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital and (xviii) return
on assets. The foregoing criteria may relate to the Company, one or more of its
Subsidiaries or one or more of its divisions or units, or any combination of
the foregoing, and may be applied on an absolute basis and/or be relative to
one or more peer group companies or indices, or any combination thereof, all as
the Committee shall determine. In addition, to the degree consistent with
Section 162(m) of the Code (or any successor section thereto), the performance
goals may be calculated without regard to extraordinary items. The maximum
amount of a Performance-Based Award during a calendar year to any Participant
shall be $5,000,000. The Committee shall determine whether, with respect to a
performance period, the applicable performance goals have been met with respect
to a given Participant and, if they have, to so certify and ascertain the
amount of the applicable Performance-Based Award. No Performance-Based Awards
will be paid for such performance period until such certification is made by
the Committee. The amount of the Performance-Based Award actually paid to a
given Participant may be less than the amount determined by the applicable
performance goal formula, at the discretion of the Committee. The amount of the
Performance-Based Award determined by the Committee for a performance period
shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such performance period; provided,
however, that a Participant may, if and to the extent permitted by the
Committee and consistent with the provisions of Section 162(m) of the Code,
elect to defer payment of a Performance-Based Award.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the
contrary, the following provisions shall apply to all Awards granted under the
Plan:
(a) Generally. In the event of any change in the outstanding
Shares after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares or other corporate exchange, any distribution to
shareholders of Shares other than regular cash dividends or any other similar
event, the Committee in its sole discretion and without liability to any person
may make such substitution or adjustment, if any, as it deems to be equitable,
as to (i) the number or kind of Shares or other securities issued or reserved
for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the
maximum number of Shares for which Options or Stock Appreciation Rights may be
granted during a calendar year to any Participant, (iii) the Option Price
and/or (iv) any other affected terms of such Awards; provided, however, that
the number of Shares issued or reserved for issuance pursuant to the Plan and
the maximum number of Shares for which Options or Stock Appreciation Rights may
be granted during a calendar year to any Participant shall automatically be
adjusted by multiplying such number of Shares by 3,945 to reflect the
conversion of Shares pursuant to the proposed merger of the Company into
American Axle & Manufacturing Holdings, Inc.
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(b) Change in Control. Except as otherwise provided in an
Award agreement, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if any,
as it deems necessary or desirable with respect to any Award (including,
without limitation, (i) the acceleration of an Award, (ii) the payment of a
cash amount in exchange for the cancellation of an Award and/or (iii) the
requiring of the issuance of substitute Awards that will substantially preserve
the value, rights and benefits of any affected Awards previously granted
hereunder) as of the date of the consummation of the Change in Control.
10. No Right to Employment
The granting of an Award under the Plan shall impose no
obligation on the Company or any Subsidiary to continue the employment of a
Participant and shall not lessen or affect the Company's or Subsidiary's right
to terminate the employment of such Participant.
11. Successors and Assigns
The Plan shall be binding on all successors and assigns of
the Company and a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
12. Nontransferability of Awards
Unless otherwise determined by the Committee, an Award shall
not be transferable or assignable by the Participant otherwise than by will or
by the laws of descent and distribution. An Award exercisable after the death
of a Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
13. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which, (a) without the
approval of the shareholders of the Company, would (except as is provided in
Section 9 of the Plan), increase the total number of Shares reserved for the
purposes of the Plan or change the maximum number of Shares for which Awards
may be granted to any Participant or (b) without the consent of a Participant,
would impair any of the rights or obligations under any Award theretofore
granted to such Participant under the Plan; provided, however, that the
Committee may amend the Plan in such manner as it deems necessary to permit the
granting of Awards meeting the requirements of the Code or other applicable
laws. Notwithstanding anything to the contrary herein, the Board may not amend,
alter or discontinue the provisions relating to Section 9(b) of the Plan after
the occurrence of a Change in Control.
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14. International Participants
With respect to Participants who reside or work outside the
United States of America and who are not (and who are not expected to be)
"covered employees" within the meaning of Section 162(m) of the Code, the
Committee may, in its sole discretion, amend the terms of the Plan or Awards
with respect to such Participants in order to conform such terms with the
requirements of local law.
15. Choice of Law
The Plan shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflicts of laws
principles thereof.
16. Effectiveness of the Plan
The Plan shall be effective as of the Effective Date.