Settlement Agreement

SETTLEMENT AGREEMENT


This Settlement Agreement ("Agreement"), dated as of July 28, 2000, is by and between American Axle & Manufacturing, Inc. ("AAM") and General Motors Corporation ("GM").


RECITALS


A. AAM and GM have entered into the following agreements: the Component
Supply Agreement, dated as of February 28, 1994, as amended and as
modified by the letter agreement dated February 20, 1996 (the "CSA");
the Restated and Amended Memorandum of Understanding, dated September
2, 1997 (the "MOU"); the *** Agreement, dated February 24, 2000 ("***
Agreement").


B. AAM has stated that certain amounts are due from GM to AAM and, in
addition, AAM has alleged that GM has breached certain provisions of
the CSA ("AAM Claims"); and GM has stated that certain amounts are due
from AAM ("GM Claim"). A brief description of the AAM Claims and GM
Claims is set forth on Exhibit 1 attached hereto.


C. AAM and GM desire to amicably resolve and completely settle the AAM
Claims and GM Claim, without either of the parties admitting any
liability to the other.


AGREEMENT


NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


1. Recitals. The foregoing recitals to this agreement are incorporated
into, and they should constitute an integral part of, this Agreement.


2. Agreement.


A. On or before August 15, 2000, GM shall pay AAM $*** for the
inbound transportation costs of productive material to AAM
under Section 3.6 of the CSA for the period prior to March 31,
2000.


B. As soon as reasonably practicable, but in no event later than
September 30, 2000, GM and AAM shall increase the price of
components sold by AAM under the CSA for material and freight
rebate amounts as the parties have agreed. Such price increase
will be effective for applicable components on or after April
1, 2000. 2


C. Upon completion of the price increases described in Section
2.B. above to the mutual satisfaction of AAM and GM, Section
3.6 (b) of the CSA will be deleted in its entirety from the
CSA.


D. As soon as reasonably practicable, but in no event later than
August 31, 2000, GM shall pay AAM's invoices against GM
purchase orders as identified in Exhibit 2.


E. On or before August 1, 2000, GM shall pay AAM $*** for the
Saginaw tooling.


F. All payments for products or services provided by AAM (or any
of its subsidiaries or affiliates) to GM or General Motors de
Mexico ("GMM") under the 8.6 inch 5 link rear axle program and
the 11.5 inch rear axle program shall be in U.S. dollars
("USD"). Furthermore, within 10 days from GM's receipt of
invoices, GM shall pay to AAM USD for all past due amounts for
such products and services under the programs identified
above. Current and future payments for such products and
services under the programs identified above shall be made by
GM to AAM in USD in a timely manner as such amounts become due
per GM and AAM payment terms. Payment for components to be
manufactured by AAM (or any of its subsidiaries or affiliates)
in Mexico and sold to GMM for future programs shall be in the
currency the parties shall agree upon.


G. Notwithstanding Paragraph 2 of the *** Agreement, GM and AAM
agree to modify the original schedule of *** from AAM to GM
and agree to the payment schedule set forth on the attached
Exhibit 3. All other provisions of the *** Agreement remain in
effect unchanged.


H. GM and AAM shall establish a mutually agreeable procedure for
the administration of directed buy components by August 15,
2000.


I. With respect to the sourcing of New Components under Section
1.2 of the CSA, actual competitive quotes shall be made
available by GM to a mutually agreeable independent third
party to verify and confirm to AAM that GM's 30 day letter to
AAM, specifying the nature and extent to which AAM's original
proposal is not competitive with respect to quality, service
and price, is full, complete and accurate, including, without
limitation, the items set forth in the attached Exhibit 4 and
reflects a bonafide competitive quote that is not from GM or a
GM affiliate and is based upon U.S. and Canadian production.
Such independent third party shall also verify and confirm to
AAM that any sourcing by GM under Section 1.2 to suppliers
other than AAM is in accordance with Section 1.2 of the CSA.


J. AAM and GM mutually agree that the following information is
sufficient to satisfy GM's needs with respect to Piece Price
Cost Breakdown and Tooling Cost Breakdown (on GM's standard
forms) as set forth on the attached Exhibit 5 and Exhibit 6,
respectively:


Information to be provided if available:


2 3
All General Header Information


Raw Material & Purchased Components


(1) Item descriptions
(2) Purchase or manufacture
(3) Quantity
(4) Cost/unit
Total


Labor & Burden


(6) Operation description by major component
(9) Labor cost
(12) Machine type
(15) Total
(16) Total manufacturing cost
(17) SG&A expense
(18) Profit
(19) Selling price


Tooling Breakdown


(1) Operation Description by Major Component
(2) Tooling type (Perishable/Durable/Gages/Other)
(3) Tools per operation - number of sets
(4) Tool Description (Name)
(5) Tooling Location
(6) Tool Cost
(7) Lead Time (wks)
(11) Annual Tool Capacity
(13) Volume quoted
(14) Plant Operation (Dept/Hrs/Shift/ Hrs/Day/Days/Wk)
(15) Local Currency


The parties acknowledge that all information provided is
deemed to be estimates at the time of quotation and subject to
change prior to or after production.


K. In resolution of issues relating to *** and the ***, the
parties have agreed that within *** from the date hereof, GM
shall designate substitute business that is mutually agreeable
to GM and AAM and that is not covered by the CSA or by the
MOU. Such substitute business will have an annual purchase
value equal to or greater than $*** at the time of award. The
parties agree that programs covered by Article 1 of the CSA
and/or the MOU are not eligible as substitute business.
Sourcing of such substitute business to AAM shall be for the
life of the program or programs and be done in accordance with
Section 1.2, Sourcing of New Components, of the CSA and shall
be included in Lifetime Program Contracts as set forth in
Paragraph 1 of the MOU.


3 4


If for any reason sourcing of such substitute business to AAM
does not result from the procedure set forth above, other
mutually agreeable substitute business will be designated by
GM without delay. This procedure shall be repeated until such
time as substitute business as specified herein is sourced to
AAM.


L. The parties acknowledge the cost reduction provisions of
Section 3.2 of the CSA and recommit themselves to this effort
in this regard.


M. The parties agree that quarterly business planning meetings
will be held with appropriate executives between both parties
to discuss matters such as cooperative cost reduction efforts,
current and future sourcing, commercial and financial issues,
future business opportunities and current performance in terms
of quality, service, technology and price.


N. Upon GM program release of the replacement for the GMT
820/830, GM shall utilize the process set forth in Section 1.2
of the CSA for the sourcing of replacement components
manufactured by AAM for the GMT 820/830.


O. As of the date of this Agreement and based on the provisions
herein, the parties are not aware of any circumstances or
other matters which would result in the failure to meet the
conditions set forth in Paragraph 1.c. of the MOU ((i)
transition of the purchasing function, and (ii) inclusion of
all Existing Components (as defined in the CSA) to Lifetime
Program Contracts) as it relates to the March 1, 2001 date. If
either party becomes aware of any such circumstances or other
matters, they will be brought promptly to the attention of the
other party for prompt resolution.


3. Release.


A. AAM hereby fully and forever releases and discharges GM, and
its officers, directors, employees, agents, successors and
assigns, from all manner of action and causes of action,
suits, damages, demands and rights whatsoever, in law or in
equity, existing or accrued as of the date hereof, whether
known or unknown, by ...