Document:

Exhibit 4.03

 

CERTIFICATE TO PROVIDE FOR THE DESIGNATION, PREFERENCES,

RIGHTS, QUALIFICATIONS, LIMITATIONS OR

RESTRICTIONS THEREOF, OF THE SERIES C PREFERRED STOCK, 15%

REDEEMABLE NON-CONVERTIBLE SERIES

 

Williams Controls, Inc., a
Delaware corporation (the “Corporation”), hereby certifies that pursuant
to the authority vested in the Board of Directors of the Corporation by the
provisions of its Certificate of Incorporation, and by the provisions of
Section 151 of The General Corporation Law of the State of Delaware, the
Board of Directors adopted the following resolution:

 

RESOLVED, there is hereby
created a series of preferred stock, $.01 par value, of the Corporation,
consisting of 100,000 shares of the authorized, but unissued preferred stock
and designated the “Series C Preferred Stock, 15% Redeemable Non-Convertible
Series” (hereinafter referred to as the “Series C”); and that to the
extent that the terms, relative rights, preferences, qualifications and
limitations of the Series C are not fixed and determined by the Certificate of
Incorporation of the Corporation, as amended, they hereby are fixed and
determined as set forth in Attachment A attached hereto.

 

I, being the duly authorized
officer of the Corporation, do hereby certify under penalty of perjury that the
foregoing resolution amending the Williams Controls, Inc. Certificate of
Incorporation to provide for the designation, preferences, rights,
qualifications, limitations or restrictions thereof, of the Series C Preferred
Stock, 15% Redeemable Non-Convertible Series, is the act and deed of the
Corporation and that the facts stated herein are true and, accordingly, have
hereunto set my hand this 29th day of September, 2004.

 

	
   

  	
  WILLIAMS CONTROLS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis E. Bunday

  	
   

  
	
   

  	
  Name:

  	
  Dennis E. Bunday

  	
   

  
	
   

  	
  Office:

  	
  Chief Financial Officer
  & Secretary

  	
   

  
						

 

 

ATTACHMENT A

 

CERTIFICATE TO PROVIDE FOR THE DESIGNATION, PREFERENCES,

RIGHTS, QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,

OF THE SERIES C PREFERRED STOCK, 

15% REDEEMABLE NON-CONVERTIBLE SERIES

 

SECTION 1.                         DESIGNATION, PAR VALUE AND NUMBER. 100,000
shares of authorized preferred stock of the Corporation are hereby constituted
as a series of preferred stock, having a par value of $0.01 per share,
designated as “Series C Preferred Stock, 15% Redeemable Non-Convertible Series”
(hereinafter called “Series C”). 
In accordance with the terms hereof, each share of Series C shall have
the same relative rights as and be identical in all respects with each other
share of Series C.  The Series C may be
issued solely to American Industrial Partners Capital Fund III, L.P. (“AIP”)
in connection with that certain Put and Call Agreement dated September 30,
2004, (the “Put and Call Agreement”) between AIP and the Corporation, or
to any affiliate of AIP to which AIP is permitted to assign and has assigned
its rights under the Put and Call Agreement.

 

SECTION 2.                         DIVIDENDS.

 

(a)                                  Cumulative Dividends. 
When and as declared by the Corporation’s Board of Directors and to the
extent permitted under the General Corporation Law of State of Delaware, the
Corporation shall pay preferential dividends in cash to the holders of shares
of Series C as provided in this Section 2.  Except as otherwise provided herein,
cumulative preferential dividends on each share of Series C shall accrue on a
daily basis at an initial rate (the “Dividend Rate”) of 15% per annum on
the sum of $100 plus accumulated and unpaid dividends thereon.  On the first day of the first full Dividend
Period commencing after the issuance of the Series C, and on the first day of
each Dividend Period thereafter, the Dividend Rate will increase by 0.25%  over the Dividend Rate in effect for the
previous Dividend Period, but in no event shall the Dividend Rate exceed 20%
per annum.  Dividends may be paid in
cash or, at the option of the Corporation, in additional shares of Series C,
and if the Corporation elects to pay any portion of the dividends payable on
the Series C in additional shares of Series C, one (1) share of Series C shall
be issuable for each $100 of accrued but unpaid dividends.  Dividends shall accrue commencing and
including the date of issuance of such share to and including the first to
occur of (i) the date on which the amount payable pursuant to Section 6
on such share is paid to the holder thereof in connection with the liquidation
of the Corporation, (ii) the date on which such share is redeemed by the
Corporation as provided herein or (iii) the date on which such share is
otherwise acquired by the Corporation. Such dividends shall accrue whether or
not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of
dividends.  The date on which the
Corporation initially issues any share shall be deemed to be its “date of
issuance” regardless of the number of times

 

 

transfer of such share is
made on the stock records maintained by or for the Corporation and regardless
of the number of certificates which may be issued to evidence such share.

 

(b)                                 Dividend Reference Dates.  To
the extent not paid on January 2, April 1, July 1 and
October 1 of each year, beginning on the last day of the first full
Dividend Period commencing after the issuance of the Series C (the “Dividend
Reference Dates”), all dividends which have accrued on each share of Series
C outstanding during the three-month period (or other period in the case of the
initial Dividend Reference Date) ending upon each such Dividend Reference Date
(each such period, a “Dividend Period”) shall be accumulated and shall
remain accumulated dividends with respect to such share until paid to the
holder thereof.

 

(c)                                  Distribution of Partial Dividend Payments. 
Except as otherwise provided herein, if at any time the Corporation pays
less than the total amount of dividends then accrued with respect to the Series
C, such payment shall be distributed pro rata among the holders thereof based
upon the aggregate accrued but unpaid dividends on the shares held by each such
holder.

 

SECTION 3.                         PRIORITY. 
All shares of the Series C shall rank on a parity with each other and
shall be senior to the Corporation’s Common Stock and any other class or series
of stock of the Corporation hereafter created by the Board of Directors the
terms of which do not expressly provide that it ranks senior to the Series C,
in all cases as to the payment of dividends and the distribution of assets upon
the liquidation, dissolution or winding up of the Corporation.

 

SECTION 4.                         OPTIONAL REDEMPTION.

 

(a)                                  Redemption.  The Corporation may at its
option redeem all or any portion of the Series C at any time or from time to
time, in minimum increments of 500 shares, at a price per share equal to $100
plus all accrued but unpaid dividends thereon (each such price shall be
referred to as the “Redemption Price”). 
If the Corporation elects to redeem fewer than all outstanding shares of
Series C at any time, the Corporation shall redeem a ratable portion of the
shares of Series C held by each holder thereof.

 

(b)                                 Notice of Redemption.  The
Corporation shall give written notice by certified mail, return receipt
requested, postage prepaid to each holder of the Series C, at each such
holder’s last address appearing on the books of the Corporation (but no failure
to receive such a notice by any holder, so long as mailed in accordance with
the provisions herein, shall affect the validity of the redemption of any
shares of Series C) at least ten (10) but not more than sixty (60) days prior
to the date fixed for redemption.

 

(c)                                  Rights Following Redemption.  If
notice of redemption shall have been duly given as provided in Section 4(b),
and if, on the redemption date, funds necessary for such redemption have been
deposited in trust with a bank or trust company, or have been set aside, in
trust, by the Corporation, for the purpose of redeeming shares of the Series C,
the shares of the Series C called for redemption shall, as of the close of
business on the redemption date, no longer be transferable on the books of the
Corporation and shall no longer be deemed to be outstanding, the right to
receive dividends thereon shall cease to accrue, and all rights with respect to
such shares so called for redemption shall terminate, except only the right of
the

 

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holders thereof to receive
the Redemption Price, without interest thereon, upon surrender of the
certificates for such shares.

 

(d)                                 Escheat.  In case any holder of shares
of the Series C which shall have been redeemed shall not, within three years of
the date of redemption thereof, claim the amount deposited in trust for the
redemption of such shares, the bank or trust company with which such funds were
deposited, upon request of the Corporation, shall pay over to the Corporation
such unclaimed amount and shall thereupon be relieved of all responsibility in
respect thereof.  The Corporation shall
not be required to hold the amount so paid over to it, or any amount
theretofore set aside by it, in trust after such three-year period, separate
and apart from its other funds, and thereafter the holders of such shares of
the Series C shall look only to the Corporation for payment of the Redemption
Price thereof, without interest.  All
liability of the Corporation to any holder of shares of the Series C for
payment of the Redemption Price for shares of the Series C called for
redemption shall cease and terminate as of the close of business on the fourth
anniversary of the redemption date for such shares.

 

(e)                                  Cancellation of Shares. 
Shares of the Series C redeemed pursuant to this Section 4
shall be canceled by the Corporation and thereafter shall be authorized and
unissued shares of preferred stock, undesignated as to series, subject to
reissuance by the Corporation as shares of any series of preferred stock other
than the Series C.

 

SECTION 5.                         VOTING

 

Except as and only to the
extent expressly required by the Delaware General Corporation Law, the holders
of the Series C shall not have any voting rights.  Subject to the foregoing, with respect to any matter on which the
holders of the Series C shall have voting rights, each share of Series C shall
be entitled to one vote.  Except as
provided by Delaware law, holders of shares of the Series C shall not be
entitled to vote as a separate class.

 

SECTION 6.                         LIQUIDATION

 

(a)                                  Liquidation Preference.  In
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation (hereinafter collectively called “liquidation”),
before any amount shall be paid to or set aside for, or any assets shall be
distributed among, the holders of shares of Common Stock or of any other equity
security of the Corporation subordinate to the Series C as provided in Section 3
hereof, each holder of a share of the Series C shall be entitled to receive out
of the assets of the Corporation or the proceeds thereof, a preferential
payment in an amount equal to the Redemption Price.

 

(b)                                 Proportional Rights.  In
the event the amount available for distribution as liquidation preference
payments to holders of the Series C and any other stock ranking on a parity
therewith is insufficient to pay the full amount of their respective
preferences, such amount shall be divided among and paid to such holders
ratably in proportion to the respective amounts which would be payable to such
holders if their respective liquidation preferences were to be paid in full.

 

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(c)                                  Insufficient Funds.  In
the event any liquidation preference payment to be made on the shares of the
Series C shall amount in the aggregate to less than the Redemption Price, the
Corporation in its discretion may require the surrender of certificates for
shares of the Series C and issue a replacement certificate or certificates, or
it may require the certificates evidencing the shares in respect of which such
payments are to be made to be presented to the Corporation, or its agent, for
notation thereon of the amounts of the liquidation preference payments made in
respect of such shares.  In the event a
certificate for shares of the Series C on which payment of one or more partial
liquidation preferences has been made is presented for exchange or transfer
shall bear an appropriate notation as to the aggregate amount of liquidation
preference payments theretofore made in respect thereof.

 

(d)                                 Merger or Sale. 
Neither the consolidation or merger of the Corporation into or with any
other entity or entities (whether or not the Corporation is the surviving
entity), nor the sale or transfer by the Corporation of all or any part of its
assets, nor the reduction of the capital stock of the Corporation nor any other
form of recapitalization or reorganization affecting the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
the purposes of this Section 6.

 

SECTION 7.                         REPLACEMENT CERTIFICATES.

 

(a)                                  Mutilated Certificate.  If
any mutilated certificate of Series C is surrendered to the Corporation, the
Corporation shall execute and deliver in exchange therefor a new certificate
for Series C of like tenor and principal amount, bearing a number not
contemporaneously outstanding.

 

(b)                                 Destroyed, Lost or Stolen Certificate.  If
there is delivered to the Corporation (i) evidence to its reasonable
satisfaction of the destruction, loss or theft of any certificate of Series C
and (ii) such reasonable security or indemnity as may be required by it to save
it harmless, then, in the absence of notice to the Corporation that such
certificate of Series C has been acquired by a bona fide purchaser, the
Corporation shall execute and deliver in lieu of any such destroyed, lost or
stolen certificate of Series C, a new certificate of Series C of like tenor and
principal amount and bearing a number not contemporaneously outstanding.

 

(c)                                  Status of New Certificate. 
Upon the issuance of any new certificate of Series C under this Section 7,
the Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.  Every new
certificate of Series C issued pursuant to this Section 10 in lieu of any
destroyed, lost or stolen certificate of Series C, shall constitute an original
additional contractual obligation of the Corporation, whether or not the
destroyed, lost or stolen certificate of Series C shall be at any time
enforceable by anyone.  Any new
certificate for Series C delivered pursuant to this Section 7 shall
be so dated that neither gain nor loss in interest shall result from such
exchange.  The provisions of this
Section 7 are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen certificate of Series C.

 

4

 

SECTION 8.                         AMENDMENT AND WAIVER.  No amendment, modification or waiver shall
be binding or effective with respect to any provision of Sections 1 to 9
hereof without the prior written consent of the holders of a majority of the
shares of Series C outstanding at the time such action is taken.

 

SECTION 9.                         NOTICES.  
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when
so mailed or sent (i) to the Corporation, at its principal executive offices
and (ii) to any stockholder, at such holder’s address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).

 

5Exhibit 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

 

2

 

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

 

3

 

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:

 

4

 

	
  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

 

5

 

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.

 

6

 

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

  
						

 

7

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