Exhibit
10.03


 


AMENDED AND RESTATED MANAGEMENT SERVICES AGREEMENT


 


This AMENDED AND RESTATED MANAGEMENT SERVICES
AGREEMENT (“Agreement”), dated as of September 30, 2004, is among Williams
Controls, Inc., a Delaware corporation (the “Company”), American Industrial
Partners, a Delaware general partnership (“AIP”) and Dolphin Advisors, LLC, a
Delaware limited liability company (“Dolphin” and, so long as this Agreement
becomes effective pursuant to Section 1, collectively with AIP and any of their
respective designees, the “Advisors”). 
Capitalized terms used herein but not defined herein have the meanings
assigned thereto in that certain Series B Preferred Stock Purchase Agreement,
dated as of May 31, 2002, by and among the Company, American Industrial
Partners Capital Fund III, L.P. (“AIP III”) and the other purchasers named
therein (the “Stock Purchase Agreement”).


 


The Company and AIP are parties to a Management
Agreement dated as of July 1, 2002 (the “Original Agreement”), whereunder the
Company and AIP agreed that AIP would provide certain ongoing management and
advisory services to the Company and its subsidiaries.  The parties no longer desire that AIP
provide the full amount of such services. 
In addition, the Company desires for Dolphin to provide certain ongoing
management and advisory services to the Company and its subsidiaries, and
Dolphin is willing to provide such services subject to the terms and conditions
contained herein.


 


NOW, THEREFORE, for good and valuable consideration,
the receipt of which is hereby acknowledged, the Company, AIP and Dolphin
hereby agree as follows:


 


Section 1.               Effective
Date.  Contemporaneously with the
execution and delivery of this Agreement, AIP and the Company have executed and
delivered a First Amendment to the Management Services Agreement (Option 1)
(the “Option 1 Amendment”) and a First Amendment to Management Services
Agreement (Option 2) (the “Option 2 Amendment” and collectively with the Option
1 Amendment, the “Amendments”).  This
Agreement or the Amendments shall become effective as follows:


 


(a)           If
(i) the Company redeems at least the lesser of 98,114 shares of Preferred Stock
or the number of shares of Preferred Stock set forth in all Acceptance Notices
submitted to the Company by the holders of Preferred Stock pursuant to the
amended Certificate of Designation for the Preferred Stock at a redemption
price of at least $265.00 per share on or before December 31, 2004 (the
“Redemption”), and (ii) Dolphin Offshore Partners, L. P. (“Offshore”) does not
submit an Acceptance Notice pursuant to the amended Certificate of Designation,
this Agreement shall become effective on the effective date of the Redemption
and shall amend and restate the Original Agreement in its entirety, and the
Amendments shall be null and void.


 


(b)           If
(i) the Redemption occurs on or before December 31, 2004, and (ii) Offshore
submits an Acceptance Notice pursuant to the amended Certificate of
Designation, this Agreement and the Option 2 Amendment shall be null and void
and the Option 1 Amendment shall become effective on the effective date of the
Redemption.


 

















 


(c)           If
the Redemption has not occurred by December 31, 2004, this Agreement and the
Option 1 Amendment shall be null and void, and the Option 2 Amendment shall
become effective on January 1, 2005.


 


Section 2.               Services.  During the term of this Agreement, the
Advisors shall provide such advisory and management services to the Company and
its subsidiaries as the Board of Directors of the Company shall reasonably
request and the Advisors shall agree to provide from time to time.  The Company agrees that the Advisors shall
have the right, but not the obligation, to act as the sole advisors to the
Company and its subsidiaries with respect to significant business
transactions.  Such services shall be
performed at the Advisors’ respective offices or at such other locations as the
Advisors shall reasonably determine.


 


Section 3.               Compensation.  .In consideration of the services previously
provided and to be provided in accordance with Section 2, the Company agrees to
pay to each of AIP and Dolphin, subject to the conditions precedent to liability
set forth in Section 4 below, an annual management fee (“Annual Fee”), payable
in quarterly installments in advance on January 1, April 1, July 1 and October
1 (or the next succeeding business day, if such day is not a business day) of
each year, commencing January 1, 2005 (each, a “Payment Date”) equal to $80,000
payable to AIP and $120,000 payable to Dolphin.   The Annual Fee shall be subject to reduction as set forth in
Section 5 hereof.


 


Section 4.               Billing
as Condition Precedent to Liability; Forfeiture.  Notwithstanding anything in Section 3 to the contrary, the
Company shall not owe the Annual Fee to AIP or Dolphin, and such amount shall
not in any manner be payable, unless and until AIP or Dolphin, as the case may
be, sends the Company a bill for the amount owed to such person.  AIP or Dolphin, as the case may be, may send
the Company multiple, partial bills for amounts owed as of the same Payment
Date; provided, that for the avoidance of doubt the aggregate amount so billed
shall not exceed the amount that would otherwise be due under Section 3.  To the extent AIP or Dolphin does not bill
the Company for an amount which but for this Section 4 would be owed as of a
Payment Date within 24 months of such Payment Date, such amount shall be deemed
irrevocably forfeited by AIP or Dolphin, as the case may be, and the Company
shall have no further obligation whatsoever to pay such amount to such person.  Forfeiture of one installment (or partial
installment) of the Annual Fee shall not in any way affect any other
installment (or partial installment) of the Annual Fee which is billed within
24 months of its applicable Payment Date. 
No default by AIP hereunder and no defense to the Company’s obligation
to pay AIP its portion of the Annual Fee hereunder shall affect the Company’s
obligation to pay Dolphin its portion of the Annual Fee hereunder.  Likewise, no default by Dolphin hereunder
and no defense to the Company’s obligation to pay Dolphin its portion of the
Annual Fee hereunder shall affect the Company’s obligation to pay AIP its
portion of the Annual Fee hereunder.


 


Section 5.               Reduction
of Annual Fee.  The Annual Fee shall
be subject to reduction or termination as follows:


 


(a)           Except as set forth in Section 5(d),
the amount of the Annual Fee payable to the AIP or Dolphin, as the case may be,
shall be reduced from time to time by 10 percent for each 10 percent reduction,
in one or a series of related or unrelated transactions, in the number of
Conversion Shares held by the AIP or Dolphin, as applicable, from the


 


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number of Conversion Shares held by such person
immediately following the effective date of the conversion (the “Conversion
Date”), such reduction in the amount of the Annual Fee to be effective on the
first day of any quarterly period following the date any such reduction occurs.


 


(b)           Except as set forth in Section 5(d),
the Company’s obligation to pay its portion of the Annual Fee to the AIP or
Dolphin, as the case may be, shall terminate on the first day of the first
quarterly period following the date on which AIP or Dolphin, as applicable, no
longer holds a beneficial interest in or voting control of at least 50 percent
of the Conversion Shares it held at the end of the month in which the
Conversion Date occurred.


 


(c)           Any reduction in or termination of
the Annual Fee payable to AIP pursuant to this Section shall not affect the
Company’s obligation to pay the Annual Fee payable to Dolphin unless and until
such Annual Fee is reduced or terminated with respect to Dolphin.  Likewise, any reduction in or termination of
the Annual Fee payable to Dolphin pursuant to this Section shall not affect the
Company’s obligation to pay the Annual Fee payable to AIP unless and until such
Annual Fee is reduced or terminated with respect to AIP.


 


(d)           Notwithstanding the foregoing, if AIP
III exercises its right (the “Put”) to require the Company to purchase and
redeem its shares of Common Stock pursuant to the Put and Call Agreement
between the Company and AIP III, dated September 30, 2004, and the Company
either fails to pay the “put price” or issues shares of Series C Preferred
Stock thereunder, no reduction in or termination of the Annual Fee payable to
AIP pursuant to this Section shall take effect until the Put Price has been
paid or all shares of the Company’s Series C Preferred Stock have been redeemed
by the Company.


 


Section 6.               Reimbursement.  The Advisors and their respective affiliates
shall be entitled to reimbursement of all reasonable out-of-pocket expenses
(including travel, consultant and legal expenses) incurred in connection with
the performance of this Agreement (other than salary expenses and associated
overhead charges).  The Company agrees
to pay such amounts promptly, in no event later than 30 days of request
therefor.


 


Section 7.               Indemnity;
No Liability.  In consideration of
the execution and delivery of this Agreement by the Advisors, the Company
hereby agrees to indemnify, exonerate and hold each of the Advisors and their
respective affiliates, and each of their respective partners, shareholders,
affiliates, directors, officers, fiduciaries, employees and agents and each of
the partners, shareholders, affiliates, directors, officers, fiduciaries,
employees and agents of each of the foregoing (collectively, the “Indemnitees”)
free and harmless from and against any and all actions, causes of action,
suits, losses, liabilities and damages, and expenses in connection therewith,
including without limitation reasonable attorneys’ fees and disbursements
(collectively, the “Indemnified Liabilities”), incurred by the Indemnitees or
any of them as a result of, or arising out of, or relating to the execution,
delivery, performance, enforcement or existence of this Agreement or the
transactions contemplated hereby or thereby, and will reimburse each Indemnitee
for all Indemnified Liabilities as they are incurred (and in no event later
than 30 days after requested), except for any such Indemnified Liabilities
arising solely on account of such


 


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Indemnitee’s gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Company hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.  None of the Indemnitees shall be
liable to the Company or any of their affiliates for any act or omission
suffered or taken by such Indemnitee that is not finally judicially determined
to constitute gross negligence or willful misconduct.  The Company shall not, without the prior written consent of the
applicable Advisor, settle, compromise, consent to the entry of any judgment in
or otherwise seek to terminate any action, claim, suit or proceeding in respect
of which indemnification may be sought hereunder (whether or not any Indemnitee
is a party thereto) unless such settlement, compromise, con-sent or termination
includes a full, complete and unconditional release of each Indemnitee for any
liabilities arising out of such action, claim, suit or proceeding.


 


Section 8.               Independent
Contractor; No Joint Venture.  The
Advisors are performing services hereunder as independent contractors (and not
as agents, representatives or employees of the Company), and the Advisors are
not and shall not be deemed to be co-venturers with, or partners of, the
Company or each other in any respect.


 


Section 9.               Governing
Law; Submission to Jurisdiction. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to conflicts of law
principles.


 


Section 10.             Termination.  This Agreement may be terminated with
respect to AIP and the Company at any time by written notice from AIP to the
Company, and this Agreement may be terminated with respect to Dolphin and the
Company at any time by written notice from Dolphin to the Company.  In addition, this Agreement will terminate
automatically as of August 1, 2007; provided, however, if AIP III exercises the
Put, this Agreement shall not terminate with respect to AIP until the put price
has been paid or all shares of the Company’s Series C Preferred Stock have been
redeemed by the Company. 
Notwithstanding the foregoing, this Agreement shall always remain in
effect to the extent that any money is owed under Sections 3, 6, 7 or 11
hereof, and Sections 4, 7, 9 and 15 hereof shall survive the termination of
this Agreement.


 


Section 11.             Payment
Default.  In the event that the
Company is in payment de-fault with respect to any amounts due the Advisors
under this Agreement (after expiration of a 7 day grace period from the date
due), such amounts (a) shall accrue interest daily at a rate equal to 15% per
annum, compounding quarterly, and (b) shall be paid in full prior to any
payments being made to any class or series of preferred stock of the Company.


 


Section 12.             Entire
Agreement; Amendment.  This
Agreement constitutes the entire agreement and understanding between the
parties with respect to the subject matter hereof.  This Agreement may be amended or modified, or any provision
hereof may be waived, provided that such amendment or waiver is set forth in
writing and, if it affects AIP, it is executed by AIP and the Company, and if
it affects Dolphin, it is executed by Dolphin and the Company.  No courses of dealing between or among any
persons having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement.


 


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Section 13.             No
Assignment.  Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any party hereto without the prior written consent of the other parties hereto;
provided that either Advisor may assign any or all of its rights and
obligations hereunder to any affiliate without the consent of the other
parties; and provided, further, that either Advisor may assign any or all of
its rights hereunder, without the consent of the other parties (i) to any
lender providing financing to it or its affiliates and (ii) in connection with
any sale of all or substantially all of the assets, capital stock or business
of it or the Company (whether effected by sale, exchange, merger, consolidation
or other transaction).


 


Section 14.             Effect.  In the event of assignment of this Agreement
pursuant to Section 13 hereunder, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and permitted
assigns.


 


Section 15.             Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given by
personal delivery, by reputable overnight courier or by mail (registered or
certified mail, postage prepaid, return receipt re-quested) to the respective
parties as follows:


 


	
   

  	
  If to the Advisor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to Dolphin:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Dolphin Asset management Corp.

  	
   

  	
   

  
	
   

  	
   

  	
  129 East 17th Street

  	
   

  	
   

  
	
   

  	
   

  	
  New York, NY 10003

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopy:

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
   

  
								



 


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  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hughes, Hubbard & Reed LLP

  	
   

  	
   

  
	
   

  	
   

  	
  One Battery Park Plaza

  	
   

  	
   

  
	
   

  	
   

  	
  New York, NY 10004-1482

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopy:

  	
   

  	
  212-422-4726

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
  212-837-6000

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Gary Simon

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to the Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Williams Controls, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  14100 SW 72nd Avenue

  	
   

  	
   

  
	
   

  	
   

  	
  Portland, OR 97224

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopy:

  	
   

  	
  (503) 624-3812

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
  (503) 670-3307

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Dennis E. Bunday

  
							



 


or to such other address as any party hereto may, from time to time,
designate in a written notice given in like manner.  Notices will be deemed to have been given hereunder when
delivered personally, five days after deposit in the U.S. mail and one business
day after deposit with a reputable overnight courier service.


 


[SIGNATURE PAGE FOLLOWS]


 


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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first written above.


 


 


	
   

  	
  WILLIAMS CONTROLS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Dennis Bunday

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN INDUSTRIAL PARTNERS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DOLPHIN ADVISORS, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


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