SENIOR SECURED
PROMISSORY NOTE
$15,000,000 August 14, 1998
New York, New York
FOR VALUE RECEIVED, Richard E. Dauch (the "Payor") promises to pay to the order of American Axle & Manufacturing of Michigan, Inc., a Michigan corporation (the "Company"), in lawful money of the United States of America and in immediately available funds, the principal amount of Fifteen Million Dollars ($15,000,000) ("Maximum Amount") or such lesser amount as may be outstanding from time to time from the Payor to the Company hereunder (the "Loan") on August 14, 2003 (or on such earlier date on which the then unpaid principal amount of the Loan becomes due and payable pursuant to the terms of this Senior Secured Promissory Note (the "Note")). Payments in respect of this Note shall be made by the Payor to the Company at the Company's office at 1840 Holbrook Avenue, Detroit, MI 48212 or at such other place as the Company may designate in writing from time to time.
The Loan to be repaid by the Payor pursuant hereto shall be made on the date hereof by the Company to the Payor to pay taxes due by the Payor in respect of options issued to the Payor in respect of the capital stock of the Company and, thereafter, on each Interest Payment Date, the Payor may borrow from the Company the interest due on such Interest Payment Date from the Payor to the Company so long as at no time shall the aggregate principal amount due hereunder exceed the Maximum Amount.
The Loan shall bear interest (calculated on the basis of a 360 day year for actual days elapsed) during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate applicable to such Interest Period plus 2.00%; provided that the Payor may request the Company to fix the interest rate paid hereunder by fixing the cost to the Company of the funds borrowed hereunder pursuant to an interest rate hedging agreement on terms and conditions reasonable to the Company and to the Pledgor. Interest shall be payable in arrears on each Interest Payment Date.
For purposes hereof, the following definitions shall apply:
"Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided that the term "Business Day" shall also exclude any day on which banks are not open for dealings in U.S. dollar deposits in the London interbank market.
"Eurodollar Rate": with respect to each Interest Period, the rate of interest determined on the basis of the rate for deposits in U.S. dollars for a period of six months commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate Service as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate Service (or otherwise on such service), the "Eurodollar Base Rate" shall be determined by reference to such other
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