Exhibit 10.01

 

PUT AND CALL AGREEMENT

 

This Put and Call Agreement (this “Agreement”) is made and entered into as of
September 30, 2004 (the “Effective Date”), by and among Williams Controls, Inc.,
a Delaware corporation (the “Company”) and American Industrial Partners Capital
Fund III, L.P., a Delaware limited partnership (“AIP”).

 

RECITALS

 

WHEREAS, AIP is the holder of shares of the Company’s Series B Preferred Stock,
15% Redeemable Convertible Series (the “Series B”); and

 

WHEREAS, AIP has indicated that it intends to vote its shares of Series B in
favor of an amendment in its entirety of the Certificate to Provide for the
Designation, Preferences, Rights, Qualifications, Limitations or Restrictions
Thereof, of the Series B Preferred Stock, 15% Redeemable Convertible Series (the
“Series B Designation”), pursuant to which all of AIP’s shares of Series B will
either be redeemed or converted to shares of the Company’s common stock, par
value $0.01 (the “Common Stock”); and

 

WHEREAS, the Company has agreed to grant to AIP certain put rights, and AIP has
agreed to grant to the Company certain call rights, with respect to Common Stock
of the Company owned by AIP, on the terms and subject to the conditions
contained in this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises and covenants set forth herein, the parties hereby agree as follows:

 

AGREEMENT

 

1.                                       Definitions. In addition to the terms
defined elsewhere in this Agreement, the following terms, when used herein,
shall have the following meanings:

 

“Business Day” means a day, other than Saturday or Sunday, on which banks in
Portland, Oregon, and New York, New York are open to the public for the
transaction of their normal banking business.

 

 “Call Price” means $2.00 per Call Share, subject to adjustment as provided in
Section 3.2.

 

“Call Shares” means all shares of the Company’s Common Stock held of record by
AIP on the day before the date of delivery of the Call Notice, up to a maximum
of the Maximum Call Shares, but shall not include any shares of the Company’s
Common Stock as to which AIP has exercised the Put.

 

“Expiration Date” means September 30, 2007.

 

“Initial Exercise Date” means September 30, 2006.

 

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“Maximum Call Shares” means 7,000,000 shares of Common Stock, subject to
adjustment as provided in Section 3.2.

 

“Maximum Put Price” means $1.00 per share of Common Stock, subject to adjustment
as provided in Section 2.4.

 

“Maximum Put Shares” means 7,000,000 shares of Common Stock, subject to
adjustment as provided in Section 2.4.

 

“Organic Change” means a reorganization, consolidation, share exchange or merger
of the Company, in each case which is effected in such a manner that the holders
of the Company’s Common Stock are entitled to receive with respect to or in
exchange for Common Stock, shares of the Company’s stock or other securities
(other than shares of Common Stock), stock or other securities of other Persons,
cash or assets, or a sale of substantially all assets of the Company, but shall
not include a Reclassification.

 

“Put Price” means the lesser of (a) the Maximum Put Price, or (b) the average
(rounded to the nearest 1/10,000) of the closing trading prices of the Company’s
Common Stock on the stock exchange on which such stock is then listed or
admitted to trading,  or if the Common Stock shall not at the time be listed or
admitted to trading on any stock exchange, the average of the last bid and asked
prices for the Common Stock in the OTC Bulletin Board, or, if the Common Stock
is not then included in the OTC Bulletin Board, as furnished by the National
Quotation Bureau, Inc. or if such firm is not at the time engaged in the
business of reporting such prices, as furnished by any firm then engaged in such
business or by any member of the National Association of Securities Dealers,
Inc., selected by the Company, in each case for the thirty (30) trading days
immediately preceding the third Business Day before the Put Notice is delivered.

 

“Put Shares” means all shares of Common Stock held of record by AIP on the day
before the date of delivery of the Put Notice, up to a maximum of the Maximum
Put Shares.

 

“Reclassification” means an amendment to the Certificate of Incorporation of the
Company to change the classification of the Common Stock.

 

2.                                       Put.

 

2.1                                 Put Right.  Commencing on the Initial
Exercise Date and ending on the Expiration Date, AIP shall have the right to
require the Company to repurchase and redeem (the “Put”) the Put Shares, in
whole or in part, at the Put Price.  In order to exercise the Put, AIP shall
deliver to the Company not later than 5:00 p.m. Pacific time on the Expiration
Date a written notice of AIP’s election to exercise (the “Put Notice”), which
notice shall specify the number of Put Shares (up to the Maximum Put Shares),
and wire transfer instructions for the account to which the Put Price is to be
paid, together with stock certificate(s) representing the Put Shares properly
endorsed for transfer.  The Put may be exercised only once.  The Put Notice
shall be irrevocable.  If not exercised, the Put shall expire at 5:00 p.m.
Pacific time on the Expiration Date.  The Put shall terminate upon the
occurrence of an Organic Change.  Not later than thirty (30) days after timely
delivery by AIP of the Put Notice and stock certificate(s) representing the Put
Shares properly endorsed for transfer, the Company shall pay the Put Price to
AIP by federal wire transfer of immediately available funds, and shall deliver
to AIP a certificate representing

 

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any shares of Common Stock which were represented by the certificate or
certificates delivered to the Company in connection with the Put but which were
not subject to the Put.

 

2.2                                 Reissuance of Preferred Shares.  If the
Company fails, for any reason other than AIP’s failure to comply in all material
respects with the provisions of this Agreement (including without limitation
AIP’s failure to timely exercise the Put), to pay the Put Price within thirty
days after delivery by AIP of the Put Notice and stock certificate(s) properly
endorsed for transfer, the Company shall promptly issue to AIP a number of
shares of its Series C Preferred Stock, 15% Redeemable Non-Convertible Series
(the “Series C Preferred”)  determined by dividing the aggregate Put Price for
the Put Shares the Company was required but failed to purchase by $100.  Upon
issuance of Series C Preferred to AIP, (a) the Put shall terminate, (b) the
certificate(s) representing shares of Common Stock as to which the Put was
exercised shall be cancelled, and (c) the Company shall deliver to AIP a
certificate representing any shares of Common Stock which were represented by
the certificate or certificates delivered to the Company in connection with the
Put but which were not subject to the Put.

 

2.3                                 Representations of the Company.  The Company
represents and warrants to AIP that the Designation, Preferences, Rights,
Qualifications, Limitations or Restrictions Thereof, of the Series C Preferred
Stock (the “Series C Designation”) has been duly authorized and approved by all
necessary corporate action of the Company, and has been duly filed with the
Delaware Secretary of State.  The Company shall reserve and keep available out
of its authorized but unissued shares of preferred stock, solely for the
purposes of issuance of the Series C Preferred, 70,000 shares of Series C
Preferred.  All shares of Series C shall, when issued, be duly and validly
issued, fully paid and nonassessable.  Subject to Section 2.2, the Company shall
take all such actions as may be necessary to assure that all shares of Series C
may be so issued without violation of any applicable law or governmental
regulation. The Company agrees that AIP shall have the right to specific
enforcement of the Company’s obligation to issue the Series C pursuant to
Section 2.2 hereof, and the right of specific performance granted hereby shall
not be deemed to foreclose or limit any other remedy or right of  AIP under this
Agreement, at law or in equity.

 

2.4                                 Adjustments.

 

(a)                                  If the Company shall at any time subdivide
its outstanding shares of Common Stock into a greater number of shares of Common
Stock, or declare a dividend or make any other distribution upon the Common
Stock payable in shares of Common Stock, the Maximum Put Price in effect
immediately prior to such subdivision or dividend or other distribution shall be
proportionately reduced and the Maximum Put Shares shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined into a smaller number of shares of Common Stock, the Maximum Put
Price in effect immediately prior to such combination shall be proportionately
increased and the Maximum Put Shares shall be proportionately reduced.

 

(b)                                 In the case of any amendment to the
Certificate of Incorporation to change the classification of the Common Stock,
the Put shall continue to apply to the stock or securities into which the Common
Stock has been reclassified.  Without limiting the foregoing, if the change in
classification of the Common Stock effects an increase or decrease in the number

 

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of shares into which the Common Stock has been reclassified, the provisions of
Paragraph 2.4(a) shall apply in connection with any such reclassification.  This
Paragraph shall apply in the same manner to successive reclassifications.

 

3.                                       Call.

 

3.1                                 Call Rights.  The Company shall have the
right to purchase and redeem (the “Call”) the Call Shares on October 31, 2007
(the “Call Date”), at the Call Price.  In order to exercise the Call, the
Company shall deliver to the AIP not more than 30 nor fewer than ten days prior
to the Call Date a written notice of the Company’s election to exercise (the
“Call Notice”).  If the Company exercises the Call and delivers the Call Notice
as required by this Section, AIP shall deliver stock certificate(s) representing
the Call Shares properly endorsed for transfer within ten (10) days prior to the
Call Date, and the Company shall, on the Call Date, (i) pay the Call Price to
AIP by federal wire transfer of immediately available funds, and (ii) deliver to
AIP a certificate representing any shares of Common Stock which were represented
by the certificate or certificates delivered to the Company in connection with
the Call but which were not subject to the Call.  The Call shall terminate upon
the earlier of (a) exercise of the Put, and (b) the occurrence of an Organic
Change.

 

3.2                                 Adjustments.

 

(a)                                  If the Company shall at any time subdivide
its outstanding shares of Common Stock into a greater number of shares of Common
Stock, or declare a dividend or make any other distribution upon the Common
Stock payable in shares of Common Stock, the Call Price in effect immediately
prior to such subdivision or dividend or other distribution shall be
proportionately reduced and the Maximum Call Shares shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined into a smaller number of shares of Common Stock, the Call Price in
effect immediately prior to such combination shall be proportionately increased
and the Maximum Call Shares shall be proportionately reduced.

 

(b)                                 In the case of any amendment to the
Certificate of Incorporation to change the classification of the Common Stock,
the Call shall continue to apply to the stock or securities into which the
Common Stock has been reclassified.  Without limiting the foregoing, if the
change in classification of the Common Stock effects an increase or decrease in
the number of shares into which the Common Stock has been reclassified, the
provisions of Paragraph 3.2(a) shall apply in connection with any such
reclassification.  This Paragraph shall apply in the same manner to successive
reclassifications.

 

4.                                       Miscellaneous Provisions.

 

4.1                                 Notices.  Any notice, request or other
communication required or permitted hereunder shall be in writing and shall be
deemed to have been duly given or delivered if personally delivered, deposited
in the U.S. mail by registered or certified mail, return receipt requested,
postage prepaid, or deposited with Federal Express or other nationally
recognized overnight delivery service, charges prepaid, as follows:

 

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If to the Company:

 

Williams Controls, Inc.

 

 

14100 SW 72nd

 

 

Portland, Oregon  97224

 

 

Attention:  Chief Financial Officer

 

 

 

If to AIP:

 

 

 

 

 

 

 

c/o  American Industrial Partners

 

 

551 Fifth Avenue, Suite 3800

 

 

New York, NY  10176

 

 

Telecopy:

212-986-5099

 

 

Telephone:

212-983-1399

 

 

Attention:

Kirk Ferguson

 

 

 

with a copy to:

 

 

 

 

 

 

 

McGuireWoods LLP

 

 

1750 Tysons Boulevard; Suite 1800

 

 

McLean, VA 22102-4215

 

 

Telecopy:

703-712-5050

 

 

Telephone:

703-712-5061

 

 

Attention:

Robert G. Marks

 

Any party hereto may by notice so given change its address for future notices
hereunder.  Notice shall be deemed conclusively given (a) when personally
delivered, (b) three (3) Business Days after deposit in the mail, or (c) one (1)
Business Day after deposit with an overnight delivery service, in each case in
the manner set forth above.

 

4.2                                 Entire Agreement.  This Agreement
constitutes and contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or obligations
between the parties respecting the subject matter hereof.

 

4.3                                 Governing Law.  This Agreement shall be
governed by and construed exclusively in accordance with the internal laws of
the State of Delaware.

 

4.4                                 Severability.  If one or more provisions of
this Agreement are held to be unenforceable under applicable law, then such
provision(s) shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.

 

4.5                                 Third Parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any person, other than the
parties hereto and their successors and assigns, any rights or remedies under or
by reason of this Agreement.

 

4.6                                 Successors and Assigns.  AIP may assign its
rights and obligations under this Agreement to any Person that holds,
immediately prior to such assignment, at least

 

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6,000,000 shares of Common Stock of the Company; provided, however, that upon
any such assignment, Section 2.2 and Section 2.3 hereof shall terminate, and
further provided that AIP may not assign the Put separately from the Call.  AIP
may assign its rights and obligations under this Agreement to any Person that
controls, is controlled by or is under common control with AIP; provided that
AIP may not assign the Put separately from the Call.  Except as set forth above,
no party may assign this Agreement or its rights or obligations hereunder,
voluntarily, involuntarily or by operation of law, without the prior written
consent of the other party.  Nothing herein shall be construed to require AIP’s
consent (except in its capacity as a holder of Common Stock) to an Organic
Change by the Company.  Subject to the foregoing, the provisions of this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the parties hereto.  This Agreement may not be amended
except in a writing signed by the parties.

 

4.7                                 Captions.  The captions to sections of this
Agreement have been inserted for identification and reference purposes only and
shall not be used to construe or interpret this Agreement.

 

4.8                                 Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

4.9                                 Costs and Attorneys’ Fees.  In the event
that any action, suit or other proceeding is instituted concerning or arising
out of this Agreement or any transaction contemplated hereunder, the prevailing
party shall recover all of such party’s costs and attorneys’ fees incurred in
each such action, suit or other proceeding, including any and all appeals or
petitions therefrom.

 

4.10                           Delays or Omissions.  It is agreed that no delay
or omission to exercise any right, power, or remedy accruing to any party, upon
any breach, default or noncompliance of the other party under this Agreement
shall impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. All remedies, either under this Agreement, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.

 

 

WILLIAMS CONTROLS, INC.

 

 

 

 

 

By:

 

 

 

 

Dennis Bunday, Chief Financial Officer and
Secretary

 

 

 

AMERICAN INDUSTRIAL PARTNERS
CAPITAL FUND III, LP

 

 

 

By:

American Industrial Partners III, L.P.

 

Its:

General Partner

 

 

 

 

By:

American Industrial Partners III Corporation

 

Its:

General Partner

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Kirk R. Ferguson

 

 

Title: Authorized Person

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Nathan L. Belden

 

 

Title: Authorized Person

 

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