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.


 

















 


“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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