1997 American Axle & Manufacturing Of

1997 AMERICAN AXLE & MANUFACTURING OF MICHIGAN, INC.
REPLACEMENT PLAN


1. Purpose of the Plan


The purpose of the 1997 American Axle & Manufacturing of Michigan, Inc. Replacement Plan (the "Plan") is to provide for the award of replacement stock options ("Replacement Stock Options") to certain current or former employees or directors (the "Eligible Holders") of American Axle & Manufacturing, Inc. whose awards under the American Axle & Manufacturing, Inc. Phantom Stock Plan dated March 1, 1994 (the "PSP Plan") were voluntarily cancelled in connection with the recapitalization (the "Recapitalization") specified in the Recapitalization and Stock Purchase Agreement among American Axle & Manufacturing of Michigan, Inc. (the "Company"), American Axle & Manufacturing, Inc., Jupiter Capital Corporation, Mr. Richard E. Dauch, Mr. Morton E. Harris, and AAM Acquisition, Inc., dated as of September 19, 1997.


It is the intention of the Company that the terms of the Replacement Stock Options will preserve the economic value of the cancelled awards under the PSP Plan ("PSP Stock Options"). The Company expects that it will benefit from the added interest which such Eligible Holders will have in the welfare of the Company as a result of their proprietary interest in the Company's success.


2. Stock Subject to the Plan


The total number of shares of common stock of the Company ("Common Stock") which may be issued under the Plan is equal to the aggregate number of shares subject to Replacement Stock Options. The shares may consist, in whole or in part, of unissued shares or treasury shares. Issuance of shares of Common Stock upon exercise of a Replacement Stock Option shall reduce the total number of shares of Common Stock available under the Plan.


3. One Time Grant


The only grant of Replacement Stock Options shall be to Eligible Holders, to the extent they elect to rollover to this Plan, in whole or in part, the options they held under the PSP Plan immediately prior to the consummation of the Recapitalization (the "Effective Date"). The number of Replacement Stock Options to be granted to each Eligible Holder is set forth on Schedule I hereto. The Eligible Holders are Marion A. Cumo, George J. Dellas, B.G. Mathis and James W. McLernon.


4. Administration


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The Board of Directors of the Company (the "Board") shall administer the Plan and make all determinations in connection therewith which may be necessary or advisable, and all such actions of the Board shall be binding upon all Eligible Holders; provided, however, no such action by the Board may impair the rights of


any Eligible Holder under any award theretofore granted, without the Eligible Holder's consent.


5. Terms and Conditions of Replacement Stock Options


The Replacement Stock Options granted under the Plan shall be non-qualified stock options for federal income tax purposes, as evidenced by option grants, and shall be subject to the foregoing and the following terms and conditions:


(a) Grant. On the Effective Date, each Eligible Holder will roll over into this Plan the number of unexercised PSP Stock Options specified in the schedule attached hereto. Each rolled PSP Stock Option shall be cancelled, and such Eligible Holder shall receive a Replacement Stock Option pursuant to this Plan. The exercise price of each Replacement Stock Option (the "Exercise Price") shall remain the same as under the PSP Stock Option being replac ...