Senior Unsecured Revolving Credit Facility

EXHIBIT 10.40


EXECUTION COPY


================================================================================


CREDIT AGREEMENT


dated as of


January 9, 2004


among


AMERICAN AXLE & MANUFACTURING, INC.,


AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.,


The Lenders Party Hereto


and


JPMORGAN CHASE BANK,
as Administrative Agent


---------------------------


J.P. MORGAN SECURITIES INC.


and


BANC OF AMERICA SECURITIES LLC,


as Joint Lead Arrangers and Joint Bookrunners


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TABLE OF CONTENTS


Page
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ARTICLE I


Definitions


SECTION 1.01. Defined Terms................................................. 1 SECTION 1.02. Types of Loans and Borrowings................................. 22 SECTION 1.03. Terms Generally............................................... 22 SECTION 1.04. Accounting Terms; GAAP........................................ 22


ARTICLE II


The Credits


SECTION 2.01. Commitments................................................... 23 SECTION 2.02. Loans and Borrowings.......................................... 23 SECTION 2.03. Requests for Revolving Borrowings............................. 24 SECTION 2.04. Swingline Loans............................................... 25 SECTION 2.05. Letters of Credit............................................. 26 SECTION 2.06. Funding of Borrowings......................................... 31 SECTION 2.07. Interest Elections............................................ 32 SECTION 2.08. Termination and Reduction of Commitments...................... 33 SECTION 2.09. Repayment of Loans; Evidence of Debt.......................... 34 SECTION 2.10. Prepayment of Loans........................................... 35 SECTION 2.11. Fees.......................................................... 35 SECTION 2.12. Interest...................................................... 36 SECTION 2.13. Alternate Rate of Interest.................................... 37 SECTION 2.14. Increased Costs............................................... 38 SECTION 2.15. Break Funding Payments........................................ 40 SECTION 2.16. Taxes......................................................... 40 SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs... 43 SECTION 2.18. Additional Reserve Costs...................................... 44 SECTION 2.19. Mitigation Obligations; Replacement of Lenders................ 45 SECTION 2.20. Redenomination of Sterling.................................... 46 SECTION 2.21. Assigned Dollar Value......................................... 46


ARTICLE III


Representations and Warranties


SECTION 3.01. Organization; Powers.......................................... 47 SECTION 3.02. Authorization; Enforceability................................. 47


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SECTION 3.03. Governmental Approvals; No Conflicts.......................... 48 SECTION 3.04. Financial Condition; No Material Adverse Change............... 48 SECTION 3.05. Litigation and Environmental Matters.......................... 48 SECTION 3.06. Compliance with Laws and Agreements........................... 49 SECTION 3.07. Investment Company Status..................................... 49 SECTION 3.08. Taxes......................................................... 49 SECTION 3.09. ERISA......................................................... 49 SECTION 3.10. Disclosure.................................................... 49 SECTION 3.11. Subsidiaries.................................................. 50


ARTICLE IV


Conditions


SECTION 4.01. Effective Date................................................ 50 SECTION 4.02. Each Credit Event............................................. 51


ARTICLE V


Affirmative Covenants


SECTION 5.01. Financial Statements and Other Information.................... 52 SECTION 5.02. Notices of Material Events.................................... 53 SECTION 5.03. Existence; Conduct of Business................................ 54 SECTION 5.04. Payment of Obligations........................................ 54 SECTION 5.05. Maintenance of Properties; Insurance.......................... 54 SECTION 5.06. Books and Records; Inspection Rights.......................... 54 SECTION 5.07. Compliance with Laws.......................................... 55 SECTION 5.08. Use of Proceeds and Letters of Credit......................... 55 SECTION 5.09. Additional Guarantors......................................... 55


ARTICLE VI


Negative Covenants


SECTION 6.01. Indebtedness.................................................. 55 SECTION 6.02. Liens......................................................... 56 SECTION 6.03. Fundamental Changes........................................... 57 SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions..... 58 SECTION 6.05. Transactions with Affiliates.................................. 58 SECTION 6.06. Restrictive Agreements........................................ 59 SECTION 6.07. Leverage Ratio................................................ 59 SECTION 6.08. Net Worth..................................................... 59


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ARTICLE VII


Events of Default


ARTICLE VIII


The Administrative Agent


ARTICLE IX


Miscellaneous


SECTION 9.01. Notices....................................................... 64 SECTION 9.02. Waivers; Amendments........................................... 65 SECTION 9.03. Expenses; Indemnity; Damage Waiver............................ 66 SECTION 9.04. Successors and Assigns........................................ 68 SECTION 9.05. Survival...................................................... 71 SECTION 9.06. Counterparts; Integration; Effectiveness...................... 71 SECTION 9.07. Severability.................................................. 71 SECTION 9.08. Right of Setoff............................................... 71 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.... 72 SECTION 9.10. WAIVER OF JURY TRIAL.......................................... 73 SECTION 9.11. Judgment Currency............................................. 73 SECTION 9.12. Headings...................................................... 73 SECTION 9.13. Confidentiality............................................... 74 SECTION 9.14. Interest Rate Limitation...................................... 74


SCHEDULES:


Schedule 2.01 -- Commitments


Schedule 3.05 -- Disclosed Matters


Schedule 3.11 -- Subsidiaries


Schedule 6.01 -- Existing Indebtedness


Schedule 6.02 -- Existing Liens


Schedule 6.05 -- Existing Transactions with Affiliates


Schedule 6.06 -- Existing Restrictions


EXHIBITS:


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Exhibit A -- Form of Guarantee Agreement


Exhibit B -- Form of Assignment and Assumption


Exhibit C-1 -- Form of Opinion of General Counsel to the Borrower


Exhibit C-2 -- Form of Opinion of Shearman & Sterling LLP


Exhibit D -- Mandatory Costs Rate


CREDIT AGREEMENT dated as of January 9, 2004
among AMERICAN AXLE & MANUFACTURING, INC., AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC., the LENDERS
party hereto, and JPMORGAN CHASE BANK, as
Administrative Agent.


The parties hereto agree as follows:


ARTICLE I


Definitions


SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:


"ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.


"Account" means, collectively, (a) an "account" as such term is defined in the Uniform Commercial Code as in effect from time to time in the State of New York or under other relevant law, (b) a "payment intangible" as such term is defined in the Uniform Commercial Code as in effect from time to time in the State of New York or under other relevant law, and (c) the Parent's or any Subsidiary's rights to payment for goods sold or leased or services performed or rights to payment in respect of any monetary obligation owed to the Parent or any Subsidiary, including all such rights evidenced by an account, note, contract, security agreement, chattel paper, or other evidence of indebtedness or security.


"Acquired/Disposed EBITDA" means, with respect to any Acquired Entity or Business or any Sold Entity or Business (any of the foregoing, a "Pro Forma Entity") for any period, the Consolidated Net Income of such Pro Forma Entity for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income for such Pro Forma Entity, the sum of (i) income tax expense for such period, (ii) gross interest expense for such period (including interest-equivalent costs associated with any Permitted Receivables Financing, whether accounted for as interest expense or loss on the sale of Receivables), (iii) depreciation and amortization expense for such period, (iv) any special charges and any extraordinary or nonrecurring losses for such period and (v) other non-cash items reducing Consolidated Net Income for such period, and minus (b) without duplication and to the extent included in determining Consolidated Net Income, (i) interest income for such period, (ii) extraordinary or nonrecurring gains for such period and (iii) other noncash items increasing Consolidated Net Income for such period, all determined on a consolidated basis for such Pro Forma Entity in accordance with GAAP.


"Acquired Entity or Business" has the meaning assigned to such term in the definition of "Consolidated EBITDA".


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"Adjusted EURIBO Rate" means, with respect to any Eurodollar Borrowing denominated in Euro for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the EURIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.


"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing (other than a Eurodollar Borrowing denominated in Euro) for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.


"Administrative Agent" means JPMorgan Chase Bank, in its capacity as administrative agent for the Lenders hereunder.


"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent.


"Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.


"Alternate Base Rate" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. If for any reason the Administrative Agent shall have determined that it is unable after due inquiry to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist.


"Alternative Currency" means Sterling or Euro.


"Alternative Currency Borrowing" means a Borrowing comprised of Alternative Currency Loans.


"Alternative Currency Equivalent" means, with respect to an amount in Dollars on any date in relation to a specified Alternative Currency, the amount of such specified Alternative Currency that may be purchased with such amount of Dollars at the Spot Exchange Rate with respect to such Alternative Currency on such date.


"Alternative Currency Letter of Credit" means a Letter of Credit denominated in an Alternative Currency.


"Alternative Currency Loan" means any Revolving Loan denominated in an Alternative Currency.


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"Applicable Percentage" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.


"Applicable Rate" means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based upon the ratings by Moody's and S&P, respectively, applicable on such date to the Index Debt:


Index Debt Eurodollar Commitment
Ratings ABR Spread Spread Fee Rate
------- ---------- ------ -------- Category 1 > or = BBB+/Baa1 0.00% 0.625% 0.150%


Category 2 > or = BBB/Baa2 0.00% 1.00% 0.200%


Category 3 > or = BBB-/Baa3 0.25% 1.25% 0.250%


Category 4 > or = than BB+/Ba1 0.50% 1.50% 0.375%


Category 5 < BB+/Ba1 1.00% 2.00% 0.400%


For purposes of the foregoing, (i) if Moody's shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then the Applicable Rate shall be based on Moody's senior implied rating in respect of the Borrower (or if Moody's has not established such senior implied rating, Moody's shall be deemed to have established a rating in Category 5); (ii) if S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then the Applicable Rate shall be based on S&P's corporate credit rating in respect of the Borrower (or if S&P has not established such rating, S&P shall be deemed to have established a rating in Category 5); (iii) if the ratings established or deemed to have been established by Moody's for the Index Debt (or Moody's senior implied rating in respect of the Borrower, if applicable) and S&P for the Index Debt (or S&P's corporate credit rating in respect of the Borrower, if applicable) shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case the Applicable Rate shall be determined by reference to the Category next below that of the higher of the two ratings; and (iv) if the ratings established or deemed to have been established by Moody's for the Index Debt (or Moody's senior implied rating in respect of the Borrower, if applicable) and S&P for the Index Debt (or S&P's corporate credit rating in respect of the Borrower, if applicable) shall be changed (other than as a result of a change in the rating system of Moody's or


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S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.


"Approved Fund" has the meaning assigned to such term in Section 9.04.


"Arrangers" means JPMorgan Securities Inc. and Banc of America Securities LLC, each in its capacity as joint lead arranger in respect of the credit facility established hereunder.


"Assigned Dollar Value" shall have the meaning set forth in Section 2.21.


"Assignment and Assumption" means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit B or any other form approved by the Administrative Agent.


"Availability Period" means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.


"Board" means the Board of Governors of the Federal Reserve System of the United States of America.


"Borrower" means American Axle & Manufacturing, Inc., a Delaware corporation.


"Borrowing" means (a) Revolving Loans of the same currency and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.


"Borrowing Request" means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03.


"Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan or an Alternative Currency Loan the term "Business Day" shall also exclude any day on which dealings in foreign currencies and exchange between banks may not be carried on in London, England or New York, New York or, in the case of an Alternative Currency


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Loan denominated in Euro, any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is not open.


"Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.


"Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of the Borrower or the Parent nor (ii) appointed by directors so nominated; (c) the acquisition of direct or indirect Control of the Parent by any Person or group; (d) the failure of the Parent to own, directly or indirectly, at least 75% of the outstanding Equity Interests of the Borrower; or (e) at any time that any Existing Subordinated Debt is outstanding, the occurrence of a Change of Control, as defined in the Indenture referred to in the definition of "Existing Subordinated Debt".


"Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender's or such Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.


"Code" means the Internal Revenue Code of 1986, as amended from time to time.


"Commitment" means, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The initial aggregate amount of the Lenders' Commitments is $600,000,000.


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"Consolidated EBITDA" means, of any Person for any period, Consolidated Net Income of such Person for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) income tax expense for such period, (ii) gross interest expense for such period (including interest-equivalent costs associated with any Permitted Receivables Financing, whether accounted for as interest expense or loss on the sale of Receivables), (iii) depreciation and amortization expense for such period, (iv) any special charges and any extraordinary or nonrecurring losses for such period and (v) other non-cash items reducing such Consolidated Net Income for such period, and minus (b) without duplication and to the extent included in determining such Consolidated Net Income, (i) interest income for such period, (ii) extraordinary or nonrecurring gains for such period and (iii) other noncash items increasing such Consolidated Net Income for such period, all determined on a consolidated basis in accordance with GAAP; provided, that for purposes of determining the Leverage Ratio only, (A) there shall be included in determining the Consolidated EBITDA of the Parent for any period the Acquired/Disposed EBITDA of any Person, property, business or asset acquired outside the ordinary course of business during or after the end of such period by the Parent or a Subsidiary, to the extent not subsequently sold, transferred or otherwise disposed of by the Parent or a Subsidiary (each such Person, property, business or asset acquired and not subsequently so disposed of, an "Acquired Entity or Business"), based on the actual Acquired/Disposed EBITDA of such Acquired Entity or Business for such period (including the portion thereof occurring prior to such acquisition) and (B) there shall be excluded in determining Consolidated EBITDA of the Parent for any period the Acquired/Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of outside the ordinary course of business by the Parent or any Subsidiary during or after the end of such period (each such Person, property, business or asset so sold or disposed of, a "Sold Entity or Business") based on the actual Acquired/Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer or disposition).


"Consolidated Net Worth" means, as of any date, (a) the amount of total assets of the Parent and the Subsidiaries minus (b) the amount of total liabilities of the Parent and the Subsidiaries, in each case, that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP.


"Consolidated Net Income" means, of any Person for any period, the net income or loss of such Person for such period determined on a consolidated basis in accordance with GAAP.


"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.


"Currency Equivalent" means the Dollar Equivalent or the Alternative Currency Equivalent, as the case may be.
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