MONITORING AGREEMENT
This Monitoring Agreement (this "Agreement"), dated as of
October 29, 1997, between American Axle & Manufacturing of Michigan, Inc., a
Michigan corporation (together with its subsidiaries, the "Company"), and
Blackstone Management Partners L.P., a Delaware limited partnership
("Blackstone").
WHEREAS, Blackstone, by and through itself, its affiliates
and their respective officers, employees and representatives, has expertise in
the areas of management, finance, strategy, investment, acquisitions and other
matters relating to the business of the Company; and
WHEREAS, the Company desires to avail itself, for the term
of this Agreement, of the expertise of Blackstone in the aforesaid areas and
Blackstone wishes to provide the services to the Company as herein set forth.
NOW, THEREFORE, in consideration of the foregoing recitals
and the covenants and conditions contained herein, the parties hereto agree as
follows:
1. Appointment. The Company hereby appoints Blackstone to
render the advisory and consulting services described in Section 2 hereof for
the term of this Agreement.
2. Services. Blackstone hereby agrees that during the term
of this Agreement it shall render to the Company and its subsidiaries, by and
through itself, its affiliates, and their respective officers, members,
employees and representatives as Blackstone in its sole discretion shall
designate from time to time, advisory and consulting services in relation to
the affairs of the Company and its subsidiaries in connection with ongoing
strategic and operational oversight of the Company, including, without
limitation, (i) advice in designing financing structures and advice regarding
relationships with the Company's lenders and bankers; (ii) advice regarding
the structure and timing of public offerings of debt and equity securities of
the Company; (iii) advice regarding property dispositions or acquisitions; and
(iv) such other advice directly related or ancillary to the above financial
advisory services as may be reasonably requested by the Company. It is
expressly agreed that the services to be performed hereunder shall not include
investment banking or other financial advisory services rendered by Blackstone
or its affiliates to the Company in connection with any specific acquisition,
divestiture, refinancing or recapitalization by the Company or any of its
subsidiaries. Blackstone may be entitled to receive additional compensation
for providing services of the type specified in the preceding sentence by
mutual agreement of the Company or such subsidiary and Blackstone.
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3. Fees. In consideration of the services contemplated by
Section 2, for the term of this Agreement, the Company and its successors
agree to pay to Blackstone an annual monitoring fee (the "Monitoring Fee")
which will be paid semi-annually and in advance. The first payment of $838,356
shall be paid on the Closing Date (as defined in the Recapitalization and
Stock Purchase Agreement, dated as of September 19, 1997, between the Company,
American Axle & Manufacturing, Inc., AAM Acquisition, Inc., Jupiter Capital
Corporation, Xxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx). On each March 31 and
September 30, the Company shall pay Blackstone $1 million. In addition, on
each March 31 commencing on March 31, 1999, the Company shall pay Blackstone
an amount equal to 1% of EBITDA (as defined below) for the most recently
completed fiscal year less $2,000,000 (if such amount is positive). For
purposes of this Section 3, "EBITDA" shall have the meaning set forth in the
Credit Agreement, dated as of October 27, 1997 among the Company, American
Axle & Manufacturing, Inc., the lenders named therein, The Chase Manhattan
Bank, as administrative agent and collateral agent and Chase Manhattan Bank
Delaware, as fronting bank (the "Credit Agreement").
4. Reimbursements. In addition to the Monitoring Fee payable
pursuant to this Agreement, the Company shall pay directly or reimburse
Blackstone for its Out-of-Pocket Expenses (as defined below). Promptly following
the Company's request therefor, Blackstone will provide written back-up relating
to any Out-of-Pocket Expenses to be paid or reimbursed by the Company pursuant
to this Agreement. For the purposes of this Agreement, the term "Out-of-Pocket
Expenses" shall mean the reasonable out-of-pocket costs and expenses incurred by
Blackstone or its affiliates in connection with the services rendered hereunder,
including, without limitation, (i) fees and disbursements of any independent
professionals and organizations, including independent accountants, outside
legal counsel or consultants, (ii) costs of any outside services or independent
contractors such as financial printers, couriers, business publications, on-line
financial services or similar services, (iii) research and research related
expenses and (iv) transportation, per diem costs, word processing expenses or
any similar expense not associated with its ordinary operations. All
reimbursements for Out-of-Pocket Expenses shall be made promptly upon or as soon
as practicable after presentation by Blackstone to the Company of a written
statement thereof.
5. Indemnification. The Company will indemnify and hold
harmless Blackstone, its affiliates and their respective partners (both general
and limited), members (both managing and otherwise), officers, directors,
employees, agents and representatives (each such person being an "Indemnified
Party") from and against any and all losses, claims, damages and liabilities,
whether joint or several (the "Liabilities"), related to, arising out of or in
connection with the advisory and consulting services contemplated by this
Agreement or the
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engagement of Blackstone pursuant to, and the performance by Blackstone of the
services contemplated by, this Agreement, whether or not pending or
threatened, whether or not an Indemnified Party is a party, whether or not
resulting in any liability and whether or not such action, claim, suit,
investigation or proceeding is initiated or brought by the Company. The
Company will reimburse any Indemnified Party for all reasonable costs and
expenses (including reasonable attorneys' fees and expenses) as they are
incurred in connection with investigating, preparing, pursuing, defending or
assisting in the defense of any action, claim, suit, investigation or
proceeding for which the Indemnified Party would be entitled to
indemnification under the terms of the previous sentence, or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
thereto, provided that, subject to the following sentence, the Company shall
be entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment. Any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense, and in any action, claim, suit, investigation or
proceeding in which both the Company and/or one or more of its subsidiaries,
on the one hand, and an Indemnified Party, on the other hand, is, or is
reasonably likely to become, a party, such Indemnified Party shall have the
right to employ separate counsel at the expense of the Company and to control
its own defense of such action, claim, suit, investigation or proceeding if,
in the reasonable opinion of counsel to such Indemnified Party, a conflict or
potential conflict exists between the Company, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable. The Company agrees that it will not, without the
prior written consent of the applicable Indemnified Party, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
suit, investigation, action or proceeding relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been threatened to
be made a party thereto) unless such settlement, compromise or consent
includes an unconditional release of the applicable Indemnified Party and each
other Indemnified Party from all liability arising or that may arise out of
such claim, suit, investigation, action or proceeding. Provided the Company is
not in breach of its indemnification obligations hereunder, no Indemnified
Party shall settle or compromise any claim subject to indemnification
hereunder without the consent of the Company. The Company will not be liable
under the foregoing indemnification provision with respect to any Indemnified
Party, to the extent that any loss, claim, damage, liability, cost or expense
is determined by a court, in a final judgment from which no further appeal may
be taken, to have resulted primarily from the gross negligence or willful
misconduct of Blackstone. If an Indemnified Party is reimbursed hereunder for
any expenses, such reimbursement of expenses shall be refunded to the extent
it is finally judicially determined
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that the Liabilities in question resulted primarily from the gross negligence
or willful misconduct of Blackstone.
The Company agrees that if any indemnification sought by any
Indemnified Party pursuant to this Section 5 is unavailable for any reason or
is insufficient to hold the Indemnified Party harmless against any Liabilities
referred to herein, then the Company shall contribute to the Liabilities for
which such indemnification is held unavailable or insufficient in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by the Company, on the one hand, and Blackstone,
on the other hand, in connection with the transactions which gave rise to such
Liabilities or, if such allocation is not permitted by applicable law, not
only such relative benefits but also the relative faults of the Company, on
the one hand, and Blackstone, on the other hand, as well as any other
equitable considerations, subject to the limitation that in any event the
aggregate contribution by the Indemnified Parties to all Liabilities with
respect to which contribution is available hereunder shall not exceed the fees
actually received by Blackstone in connection with the transaction which gave
rise to such Liabilities (excluding any amounts paid as reimbursement of
expenses).
6. Accuracy of Information. The Company shall furnish or
cause to be furnished to Blackstone such information as Blackstone believes
appropriate to its assignment (all such information so furnished being the
"Information"). The Company recognizes and confirms that Blackstone (i) will
use and rely primarily on the Information and on information available from
generally recognized public sources in performing the services contemplated by
this Agreement without having independently verified the same, (ii) does not
assume responsibility for the accuracy or completeness of the Information and
such other information and (iii) is entitled to rely upon the Information
without independent verification.
7. Term. This Agreement shall be effective as of the date
hereof and shall continue until Blackstone and its affiliates beneficially own
less than one-half the percentage of the aggregate voting power represented by
the issued and outstanding capital stock beneficially owned by Blackstone and
its affiliates on the Closing Date (such termination date, the "Termination
Date"), provided that Section 4 shall remain in effect with respect to
Out-of-Pocket Expenses incurred prior to the Termination Date. The provisions
of Sections 5, 7 and 9 and otherwise as the context so requires shall survive
the termination of this Agreement.
8. Permissible Activities. Subject to applicable law,
nothing herein shall in any way preclude Blackstone, its affiliates or their
respective partners (both general and limited), members (both managing and
otherwise), officers, directors, employees, agents or representatives from
engaging in
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any business activities or from performing services for its or their own
account or for the account of others, including for companies that may be in
competition with the business conducted by the Company.
9. Miscellaneous.
(a) No amendment or waiver of any provision of
this Agreement, or consent to any departure by either party hereto from any
such provision, shall be effective unless the same shall be in writing and
signed by all of the parties hereto. Any amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
(b) Any notices or other communications required
or permitted hereunder shall be sufficiently given if delivered personally or
sent by telecopier, Federal Express, or other overnight courier, addressed as
follow or to such other address of which the parties may have given notice:
If to Blackstone: Blackstone Management Partners L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to the Company: American Axle & Manufacturing
of Michigan, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Unless otherwise specified herein, such notices or other communications shall
be deemed received (i) on the date delivered, if delivered personally or sent
by telecopier, and (ii) one business day after being sent by Federal Express
or other overnight courier.
(c) This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof, and
shall supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
(d) This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the
State of New York. This Agreement shall inure to the benefit of,
and be binding upon, Blackstone, the Company and their respective
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successors and assigns. The provisions of Section 5 shall inure to the benefit
of each Indemnified Party.
(e) This Agreement may be executed by one or more
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the
same instrument.
(f) The waiver by any party of any breach of this
Agreement shall not operate as or be construed to be a waiver by such party of
any subsequent breach.
(g) Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered by their duly authorized officers or agents as of
the date first above written.
AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
BLACKSTONE MANAGEMENT PARTNERS L.P.
By: Blackstone Management Partners
L.L.C., its General Partner
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Member
