<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____ to ____
Commission file number 0-18083
Williams Controls, Inc.
(Exact name of registrant as specified in its charter)
Delaware 84-1099587
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14100 SW 72nd Avenue
Portland, Oregon 97224
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code:
(503) 684-8600
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares outstanding of the registrant's common stock as of April
28, 1995: 17,008,507.
<PAGE>
Williams Controls, Inc.
Index
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets, March 31, 1995
(unaudited) and September 30, 1994 1-2
Unaudited Consolidated Statement of Stockholders'
Equity, six months ended March 31, 1995 3
Unaudited Consolidated Statements of Operations,
three and six months ended March 31, 1995 and 1994 4
Unaudited Consolidated Statements of Cash Flows,
six months ended March 31, 1995 and 1994 5
Notes to Unaudited Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 11-13
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15-17
Signature Page 18
<PAGE>
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
----------- ------------
(unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash ................................................... 177 242
Accounts receivable, net ............................... 11,275 8,380
Inventories (note 3) ................................... 10,247 6,607
Note receivable, affiliate ............................. 6,829 4,913
Prepaid expenses ....................................... 1,012 732
------- ------
Total current assets ............................. 29,540 20,874
------- ------
Investment in affiliate .................................. 1,178 1,400
Property, plant and equipment:
Land and land improvements ............................. 1,053 1,027
Buildings .............................................. 5,999 4,742
Machinery and equipment ................................ 6,882 4,974
Office furniture and equipment ......................... 1,191 1,047
------- ------
15,125 11,790
Less accumulated depreciation and amortization ........... 3,093 2,721
------ ------
12,032 9,069
------ ------
Other assets ............................................. 1,022 816
------- ------
Total assets...................................... 43,772 32,159
======= ======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
1
<PAGE>
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
---------- -------------
(unaudited)
Liabilities and Stockholders' Equity
<S> <C> <C>
Current Liabilities:
Revolving lines of credit ..................................... 7,499 3,187
Current portion of long-term debt ............................. 2,041 2,046
Accounts payable and accrued expenses ......................... 7,925 4,779
------ ------
Total current liabilities ............................... 17,465 10,012
------ ------
Long-term debt .................................................. 9,403 8,063
Other liabilities ............................................... 1,816 1,636
Commitments and contingencies (notes 6 and 7) ................... -- --
Minority interest in consolidated subsidiaries .................. 717 --
Stockholders' equity:
Preferred stock of $.01 par value, 50,000,000 shares authorized -- --
Common stock of $.01 par value, 50,000,000 shares authorized,
16,676,181 shares issued .................................. 167 167
Additional paid-in capital .................................... 7,066 7,066
Unearned ESOP shares (note 6) ................................. (480) --
Pension liability adjustment .................................. (273) (273)
Retained earnings ............................................. 7,891 5,488
------ ------
14,371 12,448
------ ------
43,772 32,159
====== ======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
2
<PAGE>
Unaudited Consolidated Statement of Stockholders' Equity
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
<TABLE>
<CAPTION>
Number of Additional Pension Unearned
Shares Common Paid-in Retained Liability ESOP Stockholders'
Issued Stock Capital Earnings Adjustment Shares Equity
---------- ------ ---------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1994... 16,676,181 167 7,066 5,488 (273) 0 12,448
Unearned ESOP shares ......... 0 0 0 0 0 (480) (480)
Net earnings ................. 0 0 0 2,403 0 0 2,403
---------- ------ ---------- -------- ---------- -------- -----------
Balance, March 31, 1995 ...... 16,676,181 167 7,066 7,891 (273) (480) 14,371
========== ===== ========= ======== ========== ======== ===========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
3
<PAGE>
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
March 31, 1995 March 31, 1994 March 31, 1995 March 31, 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales .................................. 15,238 11,076 26,814 19,083
Cost of sales............................... 10,795 7,991 19,037 13,722
------ ------ ------ ------
Gross margin................................ 4,443 3,085 7,777 5,361
------ ------ ------ ------
Operating expenses:
Research and development................. 293 288 568 544
Selling 740 506 1,220 945
Administrative........................... 829 502 1,365 903
----- ------ ------ ------
Total operating expenses.................... 1,862 1,296 3,153 2,392
----- ------ ------ ------
Earnings from operations.................... 2,583 1,789 4,624 2,969
Other (income) expense:
Interest income, affiliate............... (183) 0 (330) 0
Interest expense......................... 496 208 909 417
Equity interest in loss of affiliate..... 6 0 222 0
------ ------- ------- -------
Total other (income) expense................ 319 208 799 417
----- ------ ------- ------
Earnings before income taxes................ 2,262 1,581 3,825 2,552
Income taxes................................ 830 596 1,405 963
----- ------ ------ ------
Earnings before minority interest
and preferred stock dividends............ 1,432 985 2,420 1,589
Minority interest in net earnings
of consolidated subsidiaries............. 17 0 17 0
Preferred stock dividends................... 0 0 0 10
-------- ------- -------- -------
Net earnings applicable
to common stockholders................... 1,415 985 2,403 1,579
====== ====== ======= ======
Earnings per common share................... .08 .06 .14 .10
======= ======= ======= =======
Weighted average number of
shares outstanding....................... 17,500 17,300 17,500 16,200
====== ====== ====== ======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
4
<PAGE>
Unaudited Consolidated Statements of Cash Flows
(Dollars in thousands) Williams Controls, Inc.
<TABLE>
<CAPTION>
Six months Six months
ended ended
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C>
Cash flows from operations:
Net earnings 2,403 1,589
Non-cash adjustments to net earnings:
Depreciation and amortization 764 458
Deferred income taxes 0 94
Minority interest in earnings of consolidated subsidiaries 17 0
Equity interest in loss of affiliate 222 0
Changes in working capital items net of the effects of acquisitions:
Receivables, net (2,311) (2,209)
Inventories (1,177)
(1,152)
Prepaid expenses (869) (347)
Accounts payable and accrued expenses 1,272 1,837
Note receivable, affiliate (1,916) -
------- -------
Net cash provided by (used for) operations (1,595) 270
------- -------
Cash flows from investing:
Payment for acquisitions (1,167) (935)
Payment for equipment (635) (248)
------- -------
Net cash used for investing (1,802) (1,183)
------- -------
Cash flows from financing:
Net borrowings (repayments) under revolving loan 3,056 (364)
Payments of long term debt (833) (322)
Proceeds from long-term debt 1,284 0
Payments of capital leases (66) (45)
Preferred stock dividends 0 (10)
Proceeds from stock issuance 0 1,911
Debt costs (109) 0
------- -------
Net cash provided by financing 3,332 1,170
------- ------
Net increase (decrease) in cash (65) 257
Cash at beginning of period 242 116
------- -------
Cash at end of period 177 373
======= =======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
5
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three and Six Months ended March 31, 1995 and 1994
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
1. Organization
The Company includes its wholly-owned subsidiaries, Williams Controls
Industries, Inc. ("Williams"); Kenco Williams, Inc. ("Kenco"); NESC
Williams, Inc. ("NESC"); Williams Technologies, Inc. ("WTI");
Williams World Trade, Inc. ("WWT"); and its 80% owned subsidiaries
Hardee Williams, Inc. ("Hardee") and Waccamaw Wheel Williams, Inc.
("Waccamaw").
Williams Controls, Inc. through its subsidairy companies,
manufactures and markets electronic, pneumatic, hydraulic and
mechanical sensors and controls, communications components and
consumer products, serving the transportation and telecommunication
industries. Williams'distribution is accomplished directly or through
independent distributors. Kenco manufactures light-truck and utility
vehicle accessories which are sold primarily through aftermarket
distribution channels. NESC manufactures conversion kits to allow
vehicles to use compressed natural gas and gas metering and
regulating products. WTI performs research and development activities
for the Company. WWT provides foreign sourcing for the Company.
Hardee manufactures implements for farming, landscaping and highway
and park maintenance. Waccamaw manufactures rubber tail wheels used
on implements manufactured by Hardee.
2. The Interim Consolidated Financial Statements
The interim consolidated financial statements have been prepared by
the Company and, in the opinion of management, reflect all material
adjustments which are necessary to a fair statement of results for
the interim periods presented. Certain information and footnote
disclosure made in the last annual report on Form 10-K have been
condensed or omitted for the interim consolidated statements. Certain
costs are estimated for the full year and allocated to interim
periods based on activity associated with the interim period.
Accordingly, such costs are subject to year-end adjustment. It is the
Company's opinion that, when the interim consolidated statements are
read in conjunction with the September 30, 1994 annual report on Form
10-K, the disclosures are adequate to make the information presented
not misleading. The interim consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
3. Inventories
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
--------- -------------
<S> <C> <C>
Raw material 4,186 2,138
Work-in-process 620 414
Finished goods 5,441 4,055
------ ------
10,247 6,607
====== ======
</TABLE>
Inventories are valued at the lower of cost (first-in, first out) or
market. Finished goods include component parts and finished product
ready for shipment.
6
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three and Six Months ended March 31, 1995 and 1994
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
4. Earnings per Share
Earnings per share are based on the weighted average number of shares
and common stock equivalent shares outstanding during the period
assuming proceeds therefrom are used to purchase common stock at the
average market price during the period (treasury stock method). The
weighted average number of common shares used in computation of
earnings per share were 17,500,000 for the three and six months ended
March 31, 1995 and 17,300,000 and 16,200,000 for the three and six
months ended March 31, 1994. Common stock equivalents which are
antidilutive are not included in the earnings per share calculation.
5. Note Receivable, Affiliate
On May 5, 1994 the Company obtained a $6,000 non-revolving line of
credit from its lender. The Company used the proceeds to provide
investment and financing to Ajay Sports, Inc. ("Ajay") for Ajay's
operating subsidiary. The loan from Ajay of $6,829 at March 31, 1995
is recorded as a note receivable, affiliate in the unaudited
Consolidated Balance Sheets. The financing arrangement between the
Company and Ajay expires in February, 1996 and requires Ajay to make
monthly interest-only payments at the bank's prime rate plus 3.25%.
In October 1994 the Company exercised options to acquire 4,117,647
shares of Ajay common stock through a reduction in the note
receivable in the amount of $1,400, resulting in the Company owning
approximately 18% of Ajay's then outstanding common stock. The
investment in Ajay is recorded as an investment in affiliate in the
unaudited Consolidated Balance Sheets net of the Company's equity
interest in Ajay's loss of $222 for the six-month period ending March
31, 1995. The Company is required to account for the investment in
Ajay on the equity method due to common ownership. The Chairman and
President of the Company is also Chairman and President of Ajay, and
has guaranteed Ajay's obligation to the Company.
Ajay has made all payments on the note to the Company as required by
the loan agreement. In March 1995, in connection with the
modification of its joint venture agreement with Ajay, the Company
waived noncompliance by Ajay of certain nonmonetary covenants of the
loan agreement and agreed to modify the loan agreement to remove the
covenants with which Ajay was not in compliance. As modified, the due
date of the Ajay loan is February 1, 1996, provided that the maximum
loan amount shall be reduced from $7,000 to $5,600 effective August
1, 1995. The Company and Ajay are in the process of restating the
loan agreement to incorporate these amendments. The Company's joint
venture agreement with Ajay, which provides the Company with
manufacturing rights in certain Ajay facilities, has been modified to
provide a three-year extension through August 1, 2002. Ajay is in the
process of completing a public offering of convertible preferred
stock and warrants. In order to facilitate the receipt of equity
funds by Ajay, the Company has agreed to waive its rights to maintain
its proportionate share of Ajay common stock with respect to new
issuances by Ajay, subject to reinstatement of the right if the
public offering of Ajay preferred stock and warrants is not completed
within certain time limits. If the loan is repaid in full by August
1, 1995, the Company has agreed to modify its option to acquire
additional shares of Ajay common stock
7
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three and Six Months ended March 31, 1995 and 1994
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
5. Note Receivable, Affiliate (continued)
by reducing the exercise price and number of additional shares which
it may acquire. If the loan is not repaid in full by August 1, 1995,
Ajay has agreed to reduce the price of the Company's options to
acquire additional shares of Ajay common stock and extend the
exercise period for two years.
6. Debt
In January 1995 the Company entered into an agreement with its bank
for a $18,600 financing package comprised of term loans of $8,600 and
a revolving line of credit of $10,000. The new financing package
consolidated the borrowings at the parent level rather than
independent financing arrangements for each subsidiary. The revolving
line of credit expires in February 1996 and bears interest at the
bank's prime lending rate. The new line is secured by substantially
all of the Company's assets. The amount outstanding under the
revolving line may not exceed the lesser of $10,000 or an agreed upon
percentage of eligible accounts receivable or inventories. The term
loans amortize over a period of three to ten years and bear interest
at the bank's prime lending rate plus 1/2% to 3%.
At March 31, 1995 the outstanding balance of the revolving loan was
$7,499 at an interest rate of 9.0%. The unused amount available under
the revolving line of credit was approximately $1,900.
The Company maintains an Employee Stock Ownership Plan ("ESOP") for
salaried employees. The ESOP may buy shares on the open market or
directly from the Company. The ESOP had previously borrowed $565 to
purchase 386,000 shares of common stock. In December 1994 the ESOP
borrowed $565 from a bank to repay the Company. The Company is
required to make contributions to the ESOP through 1999 to repay the
loan including interest. The unissued ESOP shares are shown as a
reduction of stockholders' equity and the ESOP loan is included in
the Company's debt in the unaudited Consolidated Balance Sheets.
8
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three and Six Months ended March 31, 1995 and 1994
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
7. Acquisitions
On February 3, 1995 the Company acquired substantially all the assets
of Hardee Manufacturing Company, Inc. and the Waccamaw Wheel division
of Red Bluff Grain and Farm Supply, Inc., of Loris, South Carolina.
The Company acquired assets of approximately $5,400. The acquisition
was financed through a combination of the assumption of liabilities,
debt and cash. Hardee is a manufacturer of equipment used in highway
and park maintenance, landscaping and farming. Its product line
includes sprayers, rotary cutters, discs, harrows and highway
trailers. Waccamaw Wheel manufactures solid rubber tail wheels from
recycled truck and bus tires that are sold to Hardee and other rotary
cutter manufacturers. Hardee's and Waccamaw Wheel's products are sold
primarily in the southeastern United States. The Company completed
the acquisitions through two new subsidiaries each owned 80% by the
Company and 20% by the seller. The acquisition has been accounted for
as a purchase and, accordingly, the results of operations have been
included in the Company's Consolidated Financial Statements from the
purchase date. The unaudited results of operations on a proforma
basis as though Hardee and Waccamaw had been acquired as of October
1, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Sales 28,952 22,519
Net income 2,364 1,678
Earnings per common share .14 .10
</TABLE>
On April 18, 1994 the Company completed the acquisition of the business
assets of Aptek Technologies, Inc. ("Aptek") of Deerfield Beach, Florida,
for $1,400 in cash and stock. The Company expects to acquire the land and
building comprising the Aptek operating facilities for $4,600 prior to
the end of the fiscal year; provided, that, clear title can be conveyed
by the seller. Aptek designs and produces microcircuits, cable assemblies
and other electronic products used in telecommunication, computer and
medical industries. The acquisition has been accounted for as a purchase;
and accordingly, the results of operations will be included in the
Consolidated Statements of Operations from the purchase date.
9
<PAGE>
Notes to Unaudited Consolidated Financial Statements
Three and Six Months ended March 31, 1995 and 1994
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
8. Segment Information
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
March 31, 1995 March 31,1994 March 31, 1995 March 31, 1994
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales by classes of similar products
Heavy vehicle components 9,259 7,416 16,946 13,327
Automotive accessories 4,341 3,660 8,230 5,756
Farm implements 1,638 - 1,638 -
------ ------ ------ ------
15,238 11,076 26,814 19,083
====== ====== ====== ======
Earnings from operations
Heavy vehicle components 2,054 1,378 3,909 2,437
Automotive accessories 362 411 550 532
Farm implements 165 - 165 -
------ ------ ------ ------
2,581 1,789 4,624 2,969
====== ====== ====== ======
Identifiable assets
Heavy vehicle components 24,009 13,853
Automotive accessories 12,810 10,867
Farm implements 6,953 0
------ ------
Total assets 43,772 24,720
====== ======
Capital expenditures
Heavy vehicle components 222 57 321 132
Automotive accessories 68 108 285 116
Farm implements 29 0 29 0
------ ------ ------ ------
319 165 635 248
====== ====== ------ ======
Depreciation and amortization
Heavy vehicle components 409 236 649 390
Automotive accessories 46 37 87 68
Farm implements 28 0 28 0
------- ------ ------ ------
483 273 764 458
======= ====== ====== ======
<FN>
Heavy vehicle components include electronic throttles, exhaust brakes and
pneumatic and hydraulic controls. Automotive accessories include bed
mats, running boards, bug shields and other accessories. Farm implements
include sprayers, rotary cutters, discs, harrows, highway trailers and
tail wheels.
</FN>
</TABLE>
10
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
Financial Condition, Liquidity and Capital Resources
The Company's financial condition improved due to the strong operating results
for the three and six months ended March 31, 1995. The Company's increased
operating earnings resulted from significant increases in sales while
maintaining gross margins and operating expenses relative to sales.
At March 31, 1995 the Company had working capital of $12,075 compared to $10,862
at September 30, 1994. The current ratio on March 31, 1995 was 1.7 compared to
2.1 at September 30, 1994. Current assets include a note receivable of $6,829
from an affiliated company, which increased $1,916 from September 30, 1994. The
increase in the note receivable has been financed primarily by using the
Company's revolving line of credit. See note 5 to the Notes to Unaudited
Consolidated Financial Statements. During the six months ended March 31, 1995,
the Company's accounts receivable increased by $2,895 and inventories increased
by $3,640 due primarily to a 41% increase in sales for the period and includes
the acquisitions of Hardee and Waccamaw. The increase in accounts receivable and
inventories was financed by increases in accounts payable and accrued expenses
and the revolving line of credit.
In May 1994 the Company obtained a $6,000 non-revolving line of credit from its
lender. The Company used the proceeds to provide investment and financing to
Ajay Sports, Inc. ("Ajay") for Ajay's operating subsidiary. The loan to Ajay of
$6,829 at March 31, 1995 is recorded as a note receivable, affiliate in the
unaudited Consolidated Balance Sheets. The financing arrangement between the
Company and Ajay expires in February 1996 and requires Ajay to make monthly
interest-only payments at the bank's prime rate plus 3.25%.
In exchange for the Company providing this financing, Ajay (a) reimbursed the
Company all of its costs incurred in obtaining the financing, (b) granted the
Company an option to purchase an equity position in Ajay and (c) entered into a
joint venture agreement providing the Company manufacturing rights in certain
Ajay facilities through May 1998, although the Company has not used these
facilities. Ajay reimbursed the Company for costs associated with the financing
transaction of approximately $100 through March 31, 1995. The Company received
options to purchase up to 23,715,000 shares of Ajay common stock (which would
represent approximately 51% of Ajay's then outstanding common stock) at prices
ranging from $.34 to $1.00 per share. The vesting of the options is dependent
upon the duration of the loan.
In October 1994 the Company exercised options to acquire 4,117,647 shares of
Ajay common stock through a reduction of the note receivable in the amount of
$1,400, resulting in the Company owning approximately 18% of Ajay's then
outstanding common stock. The investment in Ajay is recorded as an investment in
affiliate in the unaudited Consolidated Balance Sheets net of the Company's
equity interest in Ajay's loss of $222 for the six-month period ending March 31,
1995. The Company is required to account for the investment in Ajay on the
equity method due to common ownership. The Chairman and President of the Company
is also Chairman and President of Ajay and has guaranteed Ajay's obligation to
the Company.
11
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
Financial Condition, Liquidity and Capital Resources (continued)
Ajay is continuing to work on obtaining working capital financing from an
independent financial institution, however, no commitment for refinancing has
been obtained. The management of Ajay is optimistic that financing can be
obtained.
Ajay has made all payments on the note to the Company as required by the loan
agreement. In March 1995, in connection with the modification of its joint
venture agreement with Ajay, the Company waived noncompliance by Ajay of certain
nonmonetary covenants of the loan agreement and agreed to modify the loan
agreement to remove the covenants with which Ajay was not in compliance. As
modified, the due date of the Ajay loan is February 1, 1996, provided that the
maximum loan amount shall be reduced from $7,000 to $5,600 effective August 1,
1995. The Company and Ajay are in the process of restating the loan agreement to
incorporate these amendments. The Company's joint venture agreement with Ajay,
which provides the Company with manufacturing rights in certain Ajay facilities,
has been modified to provide a three-year extension through August 1, 2002. Ajay
is in the process of completing a public offering of convertible preferred stock
and warrants. In order to facilitate the receipt of equity funds by Ajay, the
Company has agreed to waive its rights to maintain its proportionate share of
Ajay common stock with respect to new issuances by Ajay, subject to
reinstatement of the right if the public offering of Ajay preferred stock and
warrants is not completed within certain time limits. If the loan is repaid in
full by August 1, 1995, the Company has agreed to modify its option to acquire
additional shares of Ajay common stock by reducing the exercise price and number
of additional shares which it may acquire. If the loan is not repaid in full by
August 1, 1995, Ajay has agreed to reduce the price of the Company's options to
acquire additional shares of Ajay common stock and extend the exercise period
for two years.
In January 1995 the Company entered into an agreement with its bank to obtain an
$18,600 financing package comprised of term loans of $8,600 and a revolving line
of credit of $10,000. The new financing arrangement increased the Company's
borrowing capacity to finance future growth and created a new financial
structure. It also consolidated the borrowings at the parent level rather than
independent financing arrangements for each subsidiary, allowing the Company to
utilize funds for its operating subsidiaries as it determines best and providing
additional flexibility for future acquisitions. The new line is secured by
substantially all of the Company's assets.
The Company anticipates that cash generated from operations and utilization of
the revolving line of credit will be sufficient to satisfy working capital and
capital expenditure requirements for the foreseeable future and will provide the
Company with financial flexibility to respond quickly to business opportunities,
including opportunities for growth through internal development or through
strategic joint ventures or acquisitions.
Results of Operations
Three and six months ended March 31, 1995 compared to the three and six months
ended March 31, 1994.
NET EARNINGS: Net earnings for the three months ended March 31, 1995 increased
44% to $1,415 or $.08 per share compared to $985 or $.06 per share for the same
period in the prior year. Net earnings for the six months ended March 31, 1995
increased 52% to $2,403 or $.14 per share compared to $1,589 or $.10 per share
for the same period in the year.
12
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Dollars in thousands, except per share amounts) Williams Controls, Inc.
SALES: Sales for the three months ended March 31, 1995 were $15,238 compared to
sales of $11,076 for the three months ending March 31, 1994, an increase of 38%.
Heavy vehicle component sales were $9,259 and automotive accessories sales were
$4,341 for the three months ended March 31, 1995. Heavy vehicle component sales
increased 25% and automotive sales increased 19% compared to the same period in
the prior year.
Sales for the six months ended March 31, 1995 increased 41% to $26,814 compared
to $19,083 for the same period in the prior year. Heavy vehicle component sales
increased 27% to $16,946 and automotive accessories sales increased 43% to
$8,230 compared to the same period in the prior year.
GROSS MARGIN: Gross margin as a percentage of sales for both the three and six
months ended March 31, 1995 was 29% compared to a gross margin of 28% for both
the three and six months ended March 31, 1994. The gross margin as a percentage
of sales improved over the prior year as a result of changes in product mix and
improved production efficiency.
OPERATING EXPENSES: Operating expenses for the three months ended March 31, 1995
were $1,861 or 12% of sales compared to $1,296 or 12% of sales for the same
period in the prior year. Operating expenses for the six months ended March 31,
1995 were $3,152 or 12% of sales compared to $2,392 or 13 % of sales for the
same period in the prior year.
OTHER EXPENSES: Interest expense for the three and six months ended March 31,
1995 was $497 and $908 compared to $208 and $417 for the three and six months
ended March 31, 1994. The increase in interest expense is due primarily to debt
incurred to finance the acquisitions and higher interest rates.
13
<PAGE>
Part II
Item 4. Submission of Matters to a Vote of Security Holders
On February 22, 1995 the Company held its annual meeting of
stockholders. The stockholders approved the four proposals submitted to
stockholders for vote. Proposal number one was the election of six
directors. Proposal number two was the approval of an amendment to the
Company's Certificate of Incorporation to establish a classified Board
of Directors. Proposal number three was the approval of an amendment to
the Company's 1993 Stock Option Plan to increase the aggregate number
of shares available for grant thereunder to 1,700,000 shares. Proposal
number four was the approval of the 1995 Stock Option Plan for
Non-Employee Directors.
The tabulation of votes cast for the three proposals is as follows:
Proposal Number One - Election of Directors
<TABLE>
<CAPTION>
For Withhold
---------- --------
<S> <C> <C>
Thomas W. Itin 13,981,366 26,067
Stanley V. Intihar 13,985,415 22,018
R. William Caldwell 13,969,991 37,442
H. Samuel Greenawalt 13,984,515 22,918
Timothy S. Itin 13,975,717 31,716
Robert L. Ridgley 13,979,515 27,918
</TABLE>
<TABLE>
<CAPTION>
Proposal Number Two - Approval of an Amendment to Certificate of Incorporation
For Against Abstain Not Voted
--------- ------- ------- ---------
<C> <C> <C> <C>
8,373,455 658,730 79,968 4,898,280
</TABLE>
<TABLE>
<CAPTION>
Proposal Number Three - Approval of an Amendment to 1993 Stock Option Plan
For Against Abstain Not Voted
--------- ------- ------- ---------
<C> <C> <C> <C>
8,504,527 507,633 96,993 4,898,280
</TABLE>
<TABLE>
<CAPTION>
Proposal Number Four - Approval of 1995 Stock Option Plan
For Against Abstain Not Voted
--------- ------- ------- ---------
<C> <C> <C> <C>
8,601,662 378,618 128,873 4,898,280
</TABLE>
14
<PAGE>
Item 5. Other Information
On April 18, 1995 Williams Controls, Inc. (the "Company") acquired
substantially all the assets of Aptek Technologies, Inc. ("Aptek")
through its recently formed subsidiary, Aptek Williams, Inc. Aptek
designs and manufactures microcircuits, cable assemblies and other
electronic products for a wide array of applications, including the
telecommunications, computer and medical industries. The purchase price
was $1,400,000 including $1,100,000 of the Company's stock (332,326
shares) and the balance in cash. The acquisition was financed through a
combination of cash, assumption of liabilities and stock, and has been
accounted for as a purchase. The Company did not complete the purchase
of the real estate pending the resolution of certain issues related to
the underlying title. At the completion of the acquisition of the
business, the Company obtained an option to lease the property
(exercisable through December 31, 1995) and a five-year option to
purchase the property. The Company anticipates completing this
$4,600,000 purchase of the real property as soon as the title issues
have been resolved.
In early May 1995, the Company entered into letters of intent to
acquire the assets of Dytek Plastics, Inc. ("Dytek"), located in
Pompano Beach, Florida, and Agrotec, Inc. ("Agrotec"), located in
Pendleton, North Carolina. The Company's obligations to complete these
proposed acquisitions are contingent upon receipt of Board approval,
lender's consent, acceptable financing, due diligence and definitive
acquisition agreements.
Dytek is a manufacturer of thermoformed products, primarily pickup
truck bedliners which had 1994 revenues of approximately $2,000,000. If
the acquisition is completed, Dytek's business will be operated as a
division of Kenco Williams, Inc., a wholly-owned subsidiary of the
Company, and the current owner will be retained in a management
position.
Agrotec is a manufacturer of quality spraying equipment, serving the
professional lawn care, nursery and pest control industries, which had
1994 revenues of approximately $1,500,000. If this acquisition is
completed, Agrotec's business is expected to be operated as a division
of Hardee Williams, Inc., an 80% owned subsidiary of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
2.1(a) Asset Purchase Agreement by and among the Company,
Aptek Williams, Inc., Aptek Technologies, Inc.,
Hillsboro Realty Associates and David H. Rush.
2.1(b) Closing Agreement and Escrow Agreement by and among
Hillsboro Realty Associates, Aptek Williams, Inc. and
Ricca & Whitmire, P.A.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(a) Exhibits
Exhibit
Number Description
------- -----------
10.1(a) Letter Agreement dated March 6, 1995 between First
Interstate Bank of Oregon, N.A. ("FIOR") and the
Company, amending the Amended and Restated Loan
Agreement (the "Loan Agreement"), dated January 18,
1995 between the Company and FIOR.
10.1(b) Second Amendment, dated March 9, 1995, to the Loan
Agreement.
10.1(c) Third Amendment, dated March 29, 1995, to the Loan
Agreement.
10.1(d) Fourth Amendment, dated April 14, 1995, to the Loan
Agreement.
10.1(e) Fifth Amendment, dated April 28, 1995, to the Loan
Agreement.
10.1(f) Form of Amended and Restated Continuing Unconditional
Guaranty (with Arbitration), dated April 1995, in the
principal amount of $3,000,000, in favor of FIOR
signed by each of Hardee Williams, Inc. and Waccamaw
Wheel Williams, Inc., delivered in connection with
the Fourth and Fifth Amendments to the Loan Agreement
in replacement of the $21,000,000 principal amount
guaranties delivered earlier.
10.1(g) Form of Continuing Unconditional Guaranty (with
Arbitration), dated April 1995, in the principal
amount of $1,000,000 in favor of FIOR made by Thomas
W. Itin, delivered in connection with the Fourth
Amendment to the Loan Agreement.
10.2 Guaranty dated as of October 3, 1994 by Thomas W.
Itin in favor of the Company and Williams, replacing
the guaranty dated as of May 4, 1994.
10.3 The Company's 1995 Stock Option Plan for Non-Employee
Directors.
10.4 Williams/Ajay Loan and Joint Venture Implementation
Agreement dated May 6, 1994, as amended by letter
agreement dated April 3, 1995.
10.5 Letter of Intent, dated May 1, 1995, between the
Company and Dytek Plastics, Inc.
10.6 Letter of Intent, dated May 2, 1995, between the
Company and Agrotec, Inc.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
(b) Reports on Form 8-K
A. Report on Form 8-K dated February 3, 1995 reported
the following: Item 2. Acquisition or Disposition of
Assets.
B. Report on Form 8-KA dated April 21, 1995 amending
Form 8-K dated February 3, 1995 for Item 2.
Acquisition or Disposition of Assets.
17
<PAGE>
Williams Controls, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILLIAMS CONTROLS, INC.
By: /s/ Thomas W. Itin
-------------------------------------------
Thomas W. Itin, Chairman, President and CEO
By: /s/ Dale J. Nelson
------------------------------------------
Dale J. Nelson, Chief Financial Officer
Date: May 12, 1995
18
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- - - - ------- -----------
2.1(a) Asset Purchase Agreement by and among the Company, Aptek
Williams, Inc., Aptek Technologies, Inc., Hillsboro Realty
Associates and David H. Rush.
2.1(b) Closing Agreement and Escrow Agreement by and among Hillsboro
Realty Associates, Aptek Williams, Inc. and Ricca & Whitmire,
P.A.
10.1(a) Letter Agreement dated March 6, 1995 between First Interstate
Bank of Oregon, N.A. ("FIOR") and the Company, amending the
Amended and Restated Loan Agreement (the "Loan Agreement"),
dated January 18, 1995 between the Company and FIOR.
10.1(b) Second Amendment, dated March 9, 1995, to the Loan Agreement.
10.1(c) Third Amendment, dated March 29, 1995, to the Loan Agreement.
10.1(d) Fourth Amendment, dated April 14, 1995, to the Loan Agreement.
10.1(e) Fifth Amendment, dated April 28, 1995, to the Loan Agreement.
10.1(f) Form of Amended and Restated Continuing Unconditional Guaranty
(with Arbitration), dated April 1995, in the principal amount
of $3,000,000, in favor of FIOR signed by each of Hardee
Williams, Inc. and Waccamaw Wheel Williams, Inc., delivered in
connection with the Fourth and Fifth Amendments to the Loan
Agreement in replacement of the $21,000,000 principal amount
guaranties delivered earlier.
10.1(g) Form of Continuing Unconditional Guaranty (with Arbitration),
dated April 1995, in the principal amount of $1,000,000 in
favor of FIOR made by Thomas W. Itin, delivered in connection
with the Fourth Amendment to the Loan Agreement.
10.2 Guaranty dated as of October 3, 1994 by Thomas W. Itin in
favor of the Company and Williams, replacing the guaranty
dated as of May 4, 1994.
10.3 The Company's 1995 Stock Option Plan for Non-Employee
Directors.
10.4 Williams/Ajay Loan and Joint Venture Implementation Agreement
dated May 6, 1994, as amended by letter agreement dated April
3, 1995.
10.5 Letter of Intent, dated May 1, 1995, between the Company and
Dytek Plastics, Inc.
10.6 Letter of Intent, dated May 2, 1995, between the Company and
Agrotec, Inc.
19
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 12th day of April, 1995, by and among
APTEK WILLIAMS, INC., a Delaware corporation ("AWI"), WILLIAMS CONTROLS, INC., a
Delaware corporation ("WCI") and APTEK TECHNOLOGIES, INC. ("Aptek"), a Minnesota
corporation, HILLSBORO REALTY ASSOCIATES (the "Partnership"), a Florida general
partnership, and DAVID H. RUSH. There are numerous other defined terms which are
capitalized in this Agreement, all of which are set forth in Article 1, below.
RECITALS
A. The Sellers are willing to sell, and the Purchaser is willing to
purchase, the Assets and assume the Assumed Liabilities of Aptek and the
Partnership on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Acquisition" means the transactions contemplated hereby, including
the acquisition of the Aptek Assets from Aptek and the acquisition of the
Partnership Assets from the Partnership.
1.2 "Aptek" means Aptek Technologies, Inc., a Minnesota corporation.
1.3 "Aptek Assets" include all assets of the Business as it was being
conducted on December 31, 1994 and subsequent thereto, all as more specifically
described in Section 3.1, hereof.
1.4 "Assets" means the Aptek Assets and the Partnership Assets.
1.5 "Assumed Liabilities" mean those liabilities of Aptek or the
Partnership, as the case may be, which have been specifically identified to the
Purchaser and which the Purchaser has agreed, in writing, to assume following
the completion of the Transactions and which are, or will be, listed on Schedule
1.5 to this Agreement prior to the Closing Date.
1002B1E1/EXH2.1A
<PAGE>
1.6 "AWI" means Aptek Williams, Inc., a Delaware corporation to be
formed prior to the Closing.
1.7 "Business" means the business and business operations as conducted
by Aptek on December 31, 1994, and subsequent thereto, as a going concern.
1.8 "Closing" and "Closing Date" shall be the date and place at which
the completion of the transactions contemplated herein occurs. The Closing Date
shall be established by mutual agreement of the parties on a date not later than
April 18, 1995 (the "Final Closing Date"), although the Final Closing Date may
be extended from time to time as provided herein. If the parties are making
substantial progress toward the completion of the Transaction and the related
due diligence during the period prior to the Final Closing Date, the parties
will mutually agree to extend the Final Closing Date for additional periods of
up to thirty days each period. No party may withhold its consent to the first
two extensions.
1.9 "Closing Documents" shall have the meaning given thereto in Section
6.4, hereof.
1.10 "Disclosed Seller Information" shall have the meaning given
thereto in Paragraph 4 of Schedule 7 hereto.
1.11 "Environmental Liabilities" shall mean any and all liabilities for
the violation of, or remediation under, any Environmental Laws. For the purposes
hereof, the term "Environmental Laws" shall mean any and all federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, or requirements of any governmental authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including all requirements pertaining to
reporting, licensing, permitting, investigation, removal or remediation of
emissions, discharges, releases, or threatened releases of Hazardous Materials
(as hereinafter defined), chemical substances, pollutants or contaminants or
relating to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous Materials,
chemical substances, pollutants or contaminants.
1.12 "Excluded Assets" shall mean any items owned by either Mr. Rush,
personally, or which may be located on the Aptek premises and which are listed
on Schedule 1.12 hereto (the "Excluded Assets").
1.13 "Excluded Liabilities" shall mean any expense or liability of
either Aptek or the Partnership (which arises out of the negotiations for this
Agreement or the transfer of Assets
-2-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
provided for hereunder and any other expense or liability) which is not
specifically identified to WCI and AWI as an Assumed Liability.
1.14 "Facility" means the real property and associated fixtures owned
by the Partnership which are included as a part of the Partnership Assets, more
specifically described as being approximately 8.2 acres of land in an industrial
park in Deerfield Beach, Florida (with an addres700 N.W. 12th Avenue, Deerfield
Beach, Florida 33442, a 47,000 square foot building located thereon, and all
fixtures located therein. The Facility is subject to a mortgage to an unrelated
third party of approximately $3,200,000 which will be repaid in full and
satisfied at Closing from the proceeds of sale of the facility.
1.15 "GAAP" means generally accepted accounting principles consistently
applied in the United States. Where this term refers to unaudited interim
financial statements for periods after December 31, 1994, such term shall assume
that the unaudited financial statements shall be read in conjunction with the
audited financial statements for the fiscal year ending December 31, 1994, and
the notes thereto.
1.16 "Hazardous Materials" shall mean any substance (i) the presence of
which requires investigation, removal or remediation under any federal, state or
local statute, regulation, rule, ordinance, order, action, policy or common law,
(ii) which is defined as a "hazardous substance," "hazardous material,"
"pollutant" or "contaminant" under any federal, state or local statute,
regulation, rule or ordinance, and/or (iii) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any governmental authority.
1.17 "Intangible Property" shall have the meaning given in
Section 3.1(d).
1.18 "IRC" means the Internal Revenue Code of 1986, as
amended.
1.19 "Letter Agreement" means that certain letter agreement between
WCI, Aptek, the Partnership, and Mr. Rush dated February 10, 1995, which
agreement is being superseded and replaced hereby.
1.20 "Market Value" of the WCI Shares shall be equal to $3.31 per
share, being the closing price per share on April 10, 1995 as reported on NASDAQ
National Market System.
1.21 "Motor Technology" means that particular technology, and the uses
and applications thereof, more particularly described in paragraph 1 of Schedule
1.12 attached hereto and by this reference incorporated herein.
-3-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
1.22 "Partnership" means Hillsboro Realty Associates, a general
partnership formed under the laws of Florida.
1.23 "Partnership Assets" include the Facility and certain equipment
referred to as the "ITT Equipment," all as more specifically described in
Section 4.1 hereof. The Partnership Assets also includes any lease or other
arrangement by which the facility is being occupied by Aptek, as well as the
Partnership's entire interest in all Aptek Assets, whether such interest is in
the nature of a security interest, a possessory interest, or otherwise. The
Partnership Assets do not include the Excluded Assets.
1.24 "Permits" means those permits more particularly described in
Paragraph 7 of Schedule 7, hereto.
1.25 "Products" means the lines of products being manufactured,
developed, or sold by Aptek in the Business.
1.26 "Products Liability" means any liability (other than Assumed
Liabilities) to which the Sellers, Aptek, or the Purchasers or any affiliate of
the Purchasers as successor to the Business may become subject insofar as such
liability is based upon, arises out of or is otherwise in respect of any express
or implied representation, warranty, agreement or guaranty to a customer, user
or purchaser, or due to, or asserted to be arising out of or due to, any Product
sold on or before the Closing Date.
1.27 "Purchase Price" shall have the meaning set forth in Sections 6.1
and 6.2, below.
1.28 "Purchaser" means AWI.
1.29 "Regulation S-K" means Regulation S-K of the Rules and Regulations
of the Securities and Exchange Commission.
1.30 "Rush Inventions" shall have the meaning given in the Consulting
Agreement to be entered into between AWI and Mr. Rush described in Section 5.2
hereof and attached hereto as Schedule 5.2.
1.31 "Seaboard Liability" is that liability for which Aptek may be
liable for allegedly improper disposal of approximately 8,000 gallons into a
super-fund site, and for which Aptek expects to be offered the opportunity to be
a part of a "de minimis" group with a contemplated $10,000 buy-out of further
remediation responsibility.
1.32 "Seller" or "Sellers" means either Aptek as the person conveying
the Aptek Assets, or the Partnership as the person conveying the Partnership
Assets, or both, as the case may be.
-4-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
1.33 "Tangible Property" shall include the property described in
Section 3.1(b), 3.1(c), 3.1(e), 3.1(f), and 3.1(o), below.
1.34 "Transaction" means one or both of the asset purchase transactions
contemplated by this Agreement.
1.35 "WCI" means Williams Controls, Inc.
1.36 "WCI Developments" shall have the meaning given in the Consulting
Agreement to be entered into between AWI and Mr. Rush described in Section 5.2
hereof and attached hereto as Schedule 5.2.
1.37 "WCI Shares" means shares of the $.01 par value common stock of
WCI, which shares shall be "restricted" as that term is defined in Rule 144 of
the rules and regulations promulgated under the 1933 Act by the Securities and
Exchange Commission.
1.38 "1933 Act" means the Securities Act of 1933, as amended.
1.39 "1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE 2
PARTIES
-------
2.1 WCI is a Delaware corporation with its common stock registered
under Section 12(g) of the 1934 Act.
(a) Its common stock is trading in the over-the- counter market
and is quoted on NASDAQ National Market System under the symbol "WMCO."
(b) WCI is current in all of its filings with the Securities and
Exchange Commission.
(c) WCI has delivered a copy of the following documents to Aptek
and the Partnership: Its annual report on Form 10-K for the fiscal year ended
September 30, 1994; its quarterly report on Form 10-Q for the quarter ended
December 31, 1994; its current report on Form 8-K dated February 3, 1995; its
proxy statements used in connection with its 1994 and 1995 annual meeting of
stockholders.
2.2 AWI is a recently-formed (or to-be-formed), wholly-owned subsidiary
of WCI, which has not engaged in operations except as required for the
completion of the Transactions.
-5-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
2.3 Aptek has one shareholder, the Partnership. Aptek has not been
subject to the reporting requirements of the 1934 Act since before 1993. Aptek
has no residual reporting obligations under either the 1933 Act or the 1934 Act.
(a) Prior to Closing Aptek will deliver to AWI:
(1) A copy of the audited financial statements for Aptek for
its year ended December 31, 1994 as well as other relevant financial
information and a description of its material assets (including any
real property, equipment, and other assets owned as of December 31,
1994).
(2) The information required for disclosure by WCI in its
periodic reports filed under the 1934 Act.
2.4 The Partnership is a Florida general partnership of which David
Rush is a general partner and the tax matters partner, and which has five
partners: David H. Rush, Miriam Rush, Rush Holdings, Inc., Aaron Baer, and
Maurice Baer. The Partnership has never filed a registration statement under the
1933 Act, and is not subject to the reporting requirements of the 1934 Act.
(a) Prior to Closing the Partnership will deliver to WCI:
(1) A copy of the partnership tax return for the Partnership
for its year ended December 31, 1994 as well as other relevant
financial information and a description of its material assets
(including real property, equipment, and other assets owned as of
December 31, 1994).
(2) The information required for disclosure by WCI in its
periodic reports filed under the 1934 Act.
2.5 Mr. Rush is an individual, resident in Florida who controls,
directly or indirectly, each of Aptek, and the Partnership.
(a) Mr. Rush has, directly or indirectly through the Partnership,
a security interest in certain of the Aptek Assets and certain of the
Partnership Assets as a result of loans made by him to or for the benefit of the
Partnership and Aptek, which security interests have been perfected and are
fully enforceable under Florida law.
(b) Prior to Closing Mr. Rush will cause the delivery to WCI the
documents required under ss.2.3 or ss.2.4, above, as applicable.
-6-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
2.6 Each party represents and warrants to the other party that the
information set forth (or to be set forth) in the documents delivered (or to be
delivered) to the other party is, for disclosure purposes, complete and
accurate, contains no misstatement of a material fact, and omits to state no
fact necessary in order to make the other statements contained therein not
misleading.
ARTICLE 3
ACQUISITION OF APTEK ASSETS
3.1 Purchase and Sale of the Aptek Assets. At the Closing and subject
to the terms and conditions stated herein, Aptek agrees to sell, assign, convey
and transfer to AWI, and AWI agrees to purchase from Aptek the Aptek Assets
together with all of the properties, rights and goodwill associated therewith of
every kind and description, tangible and intangible, personal or mixed, with the
exception of the Excluded Assets, as hereinafter more particularly described.
Without limitation, the Aptek Assets shall include all of the items enumerated
in subparagraphs (a) through (o) below:
(a) All cash and cash equivalents of Aptek.
(b) All vehicles, machinery and equipment, tools, furniture,
leasehold improvements, fixtures, dies, jigs, and supplies, or any related
capitalized items and other tangible property owned by the Sellers located at
the Facility and/or used by the Business as of the date of this Agreement,
whether at the Facility, over the road or at any other location, all as
described on Schedule 3.1(b).
(c) All finished goods, inventory, raw materials and components,
supplies and similar tangible assets of the Business leased, owned or otherwise
used by Aptek in the Business, whether located at the Facility or which are in
transit or in the possession of other parties for storage or for any other
reason.
(d) All intellectual property, proprietary and business
information of Aptek relating to the Business, including, to the extent
transferable or assignable, all of Sellers' right, title and interest in and to:
(1) the name "Aptek" and any variations thereof;
(2) all licenses relating to the Business;
(3) the Permits;
-7-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(4) Any and all inventions, discoveries, trade secrets,
designs, prototypes, formulas and know-how relating to the Business,
including the ideas of Aptek and key employees of Aptek for designs
related to the Business which were created prior to the Closing Date,
not including, however, the Excluded Assets;
(5) all patents (whether issued or pending), copyrights,
trademarks, tradenames set forth on Schedule 3.1(d); and
(6) copies of all business, financial and tax records
relating to the Business, including copies of all sales data, pricing
and cost information, customer and supplier lists, credit records,
sales literature and business and marketing plans relating to the
Business.
Schedule 3.1(d) sets forth all limitations known to the Sellers on the
transferability and assignability of the intellectual property, proprietary and
business information listed in items (1) through (6) in this section above. The
foregoing is referred to herein as "Intangible Property."
(e) All computer documentation, computer files, telephone numbers,
computer disks, computer tapes and all information stored on computer media used
in connection with the operation of the Business including all software, data,
and other information used in the Business in the possession of Aptek's
employees, subject to Aptek's right to retain copies of all of same.
(f) All accounting and other computer software relating to the
Business owned by Aptek, including information interfaced with those systems, as
listed on Schedule 3.1(f), subject to Aptek's right to retain copies of all of
same.
(g) All rights to customer and supplier lists, signs, advertising,
catalogues and brochures relating to the Business.
(h) All rights of Aptek under the contracts relating to the
Business to which Aptek is a party, as listed in Schedule 3.1(h).
(i) All rights of Aptek under open orders to purchase raw
materials or services in accordance with the Business' normal operating
procedures.
(j) All rights of Aptek as lessee under leases of personal
property relating to the Business, as listed in Schedule 3.1(j).
-8-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(k) All accounts receivable of Aptek.
(l) All purchase orders, back orders, open orders or contracts
from customers, including the backlog and parts manufactured or assigned to
Aptek.
(m) All goodwill and other general intangibles related to the
Aptek Assets unless specifically described herein as "Excluded Assets."
(n) All claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set-off and rights of recoupment
related to the Aptek Assets or the Business.
(o) All other assets of any nature used in the Business whether
owned or leased by Aptek unless specifically described herein as an "Excluded
Asset."
Aptek's sale, conveyance, assignment and transfer of the Aptek Assets
shall be free and clear of all liens, encumbrances, liabilities or obligations,
except for those expressly described herein as "Assumed Liabilities."
3.2 Excluded Assets. The Aptek Assets shall not include the Excluded
Assets.
ARTICLE 4
ACQUISITION OF PARTNERSHIP ASSETS
4.1 Purchase and Sale of the Partnership Assets. At the Closing,
subject to the terms and conditions stated herein, the Partnership agrees to
sell, assign, convey and transfer to AWI, and AWI agree to purchase the
Partnership Assets from the Partnership. Without limitation, the Assets shall
include all of the items enumerated in subparagraphs (a) through (f) below:
(a) The Facility, including all buildings situated thereon and all
leasehold improvements and including all rights in easements, driveways
and signs, as legally described on Schedule 4.1(a).
(b) All vehicles, machinery and equipment (whether or not affixed
to the Facility), tools, furniture, fixtures, dies, jigs and supplies
which are being used by Aptek in the Business, whether at the Facility,
over the road or at any other location, all as described on Schedule
4.1(b), not including, however, all Excluded Assets.
-9-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(c) All rights of the Partnership as lessee under leases of
personal property relating to the Business, as listed in Schedule
4.1(c).
(d) All goodwill and other general intangibles related to the
Partnership Assets or the Business unless specifically described as
Excluded Assets.
(e) All claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set-off and rights of
recoupment related to the Partnership Assets or the Business.
(f) All other assets of any nature used in the Business whether
owned or leased by the Partnership unless specifically described herein
as Excluded Assets.
The Partnership's sale, conveyance, assignment and transfer of the
Partnership Assets shall be free and clear of all liens, encumbrances,
liabilities or obligations, except for those expressly described herein as
Assumed Liabilities.
ARTICLE 5
CONSULTING AND EMPLOYMENT AGREEMENTS
5.1 Employment Agreements. At or prior to the Closing, Dwain Jenkins
and Gary Muter, currently employees of Aptek, have entered into employment
agreements with AWI in substantially the form of Schedule 5.1, attached hereto
and by this reference incorporated herein, which will be effective upon Closing.
5.2 Consulting Agreement. At or prior to the Closing, David H. Rush
will cause Rush Holdings, Inc. to enter into a consulting agreement with AWI in
substantially the form of Schedule 5.2 attached hereto and by this reference
incorporated herein.
ARTICLE 6
PURCHASE PRICE AND CLOSING
6.1 Purchase Price for Aptek Assets.
(a) AWI shall pay $2,000,000 to Aptek, including up to $1,800,000
payable (at AWI's option) in WCI Shares (which shares have a Market Value equal
to $1,800,000) and the balance payable in cash.
(b) In addition, AWI will reimburse Mr. Rush in cash for the
actual amount of (without interest or other charge) any working capital
contributions either made to or for the benefit of
-10-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
Aptek after February 10, 1995, and up to the Closing to the extent such advances
(and the expenditure thereof by Aptek) have been approved by AWI, which approval
will not be unreasonably withheld. AWI acknowledges that Mr. Rush (or Rush
Holdings, Inc., at Mr. Rush's direction) has advanced approximately $235,000 to
Aptek for working capital purposes through the date hereof, and AWI hereby
approves such advances and the expenditures by Aptek thereof.
(c) To the extent the Purchase Price includes WCI Shares, Aptek
will use its reasonable efforts to ensure that an exemption from registration is
available under the 1933 Act. Prior to the date of executing the Letter
Agreement, Mr. Rush, on behalf of himself, the Partnership and Aptek, had
conducted such investigation into the business, financial condition, assets,
management, risks, and liabilities of WCI as he deemed appropriate on behalf of
the Aptek, and had consulted with all appropriate personal financial, tax,
business, investment, and accounting advisors as he deemed appropriate or
necessary.
(1) In connection therewith, and in connection with the
completion of the Transactions, Mr. Rush represented and warranted (and
will at the Closing represent and warrant) on behalf of himself, the
Partnership, and Aptek, that each such person is a sophisticated
business person who has experience in such transactions, and that such
persons were introduced to WCI privately, without the use of any public
advertising or general solicitation.
(2) Aptek, the Partnership, Mr. Rush, and Rush Holdings, Inc.
(being the only persons who may have a benefi- cial interest in the WCI
Shares to be issued pursuant to this Section 6.1) will execute and
deliver an investment letter in the form attached hereto as Schedule
6.1(c).
6.2 Purchase Price for Partnership Assets. AWI shall pay $4,000,000 to
the Partnership by repayment of the existing mortgage on the Facility and the
balance in cash. AWI acknowledges that the Partnership has negotiated a discount
of 3% from the holder of the mortgage if the Existing Indebtedness is repaid in
full before June 17, 1995, and that such discount is for the benefit of the
Partnership. The Partnership acknowledges that if AWI is able to negotiate a
greater discount, any discount in excess of 3% will be for the benefit of AWI.
6.3 Allocation of the Purchase Price. The purchase price shall be
allocated among the Assets as set forth on Schedule 6.3.
(a) Although Sections 6.1 and 6.2 hereof set forth the Purchase
Price for the Aptek Assets and the Partnership Assets and Schedule 6.3 sets
forth a more detailed allocation among the Assets, AWI may, prior to or within
six months following the
-11-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
Closing, reallocate the Purchase Price among the Assets provided only that
neither the total purchase price nor the allocation between cash and WCI Shares
shall change without the consent of Aptek or the Partnership. WCI (for itself
and AWI) shall indemnify and defend Aptek and the Partnership with respect to
any claim or challenge by state or Federal tax authorities which directly
results from a decision made solely by WCI to reallocate the Purchase Price
following the Closing, excepting however, those claims or challenges resulting
from the failure of either Aptek or the Partnership to take a tax or other
position which is consistent with the reallocation decision of AWI.
(b) Aptek and the Partnership agree that neither of them will take
any tax or other position inconsistent with any allocation or reallocation of
the Purchase Price by AWI pursuant to this Section 6.3.
(c) AWI and the Sellers each covenant with the other that it will
promptly give written notice to the other of any inquiry or challenge of such
allocation by any federal, state or local tax authority.
6.4 Closing of the Purchase. The Closing will take place at a time and
place established pursuant to Section 1.8, above. At the Closing, the parties
will deliver to each other the Closing Documents, including (but not limited to)
the documents described in Article 13 hereof.
ARTICLE 7
REPRESENTATIONS OF THE SELLERS
As an inducement to AWI and WCI to enter into this Agreement and to
complete the Transactions, and with the knowledge that AWI and WCI will rely
thereon, the Sellers (which term for the purposes of this Article 7 includes Mr.
Rush, individually), will execute a certificate in the form of Schedule 7 hereto
and deliver such certificate to AWI at the Closing.
ARTICLE 8
REPRESENTATIONS OF THE PURCHASERS
As an inducement to the Sellers and Mr. Rush to enter into this
Agreement and to complete the Transactions and with the knowledge that the
Sellers and Mr. Rush will rely thereon, AWI and WCI, jointly and severally,
represent and warrant to the Sellers and Mr. Rush the following (both as of the
date hereof and as of the Closing Date):
-12-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
8.1 Due Incorporation and Qualification. Each of AWI and WCI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the corporate power and lawful authority to
carry on its business as now being conducted. On or before the Closing Date, AWI
will be duly qualified or otherwise authorized as a foreign corporation to
transact business and will be in good standing in Florida, the only jurisdiction
in which such qualification or authorization will be required by law.
8.2 Certificate of Incorporation and Bylaws. On or before the Closing
Date, AWI will deliver to the Sellers true and complete copies of its
Certificate of Incorporation (certified by the Secretary of State of Delaware)
and its Bylaws (certified by its corporate secretary) as then in effect.
8.3 Authority of AWI and WCI. Each of AWI and WCI has full power and
authority to execute and deliver this Agreement and the Closing Documents and to
carry out the transactions contemplated hereby. The Closing Documents are valid
and binding agreements of each of AWI and WCI, enforceable in accordance with
their terms. No consent, authorization or approval of, or declaration, filing or
registration with, any governmental or regulatory authority or any consent,
authorization or approval of any other third party is necessary in order to
enable either AWI or WCI to enter into and perform its obligations under the
Closing Documents, and neither the execution and delivery of the Closing
Documents nor the completion of the transactions contemplated thereby will:
(a) Be in violation of its Certificate of Incorporation or Bylaws
or constitute a breach of any evidence of indebtedness or agreement to which it
is a party;
(b) Cause a default under any mortgage or deed of trust or other
lien, charge or encumbrance to which any of its property is subject or under any
contract to it is a party, or permit the termination of any such contract by
another person;
(c) Result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any of its property or assets under any
agreement or commitment to which it is bound;
(d) Accelerate, or constitute an event entitling, or which would,
upon notice or lapse of time or both, entitle the holder of any indebtedness of
either to accelerate the maturity of any such indebtedness;
(e) Conflict with or result in the breach of any writ, injunction
or decree of any court or governmental instrumentality;
-13-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(f) Violate any statute, law or regulation of any jurisdiction as
such statute, law or regulation relates to it; or
(g) Violate or cause any revocation of or limitation on any
Permit.
8.4 Compliance with Laws; Permits. (a) Neither the AWI nor WCI is in
violation of any applicable order, judgment, injunction, award or decree
relating to the Assets. To the knowledge of AWI and WCI, neither is in violation
of any federal, state, local or foreign law, ordinance or regulation or any
other requirement of any governmental or regulatory body, court or arbitrator
applicable to the Assets.
8.5 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of the Purchaser is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein except
Century 21 which is entitled to a brokerage fee to be paid entirely by the
Partnership. Each party shall pay its own broker for any fees in connection with
the transaction, and each party will indemnify the other with respect to any
claims of its broker made as a result of the actions of the indemnifying party.
8.6 Issuance of WCI Shares. The WCI Shares, when issued as a part of
the Purchase Price, will be legally and validly issued, fully paid, and
non-assessable.
8.7 Disclosure. Neither this Agreement nor any Schedule, Exhibit or
certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of either AWI or
WCI in connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein not
misleading.
8.8 Continuing Disclosure Obligation. During the period from the date
hereof through the Closing, WCI will provide Mr. Rush, as representative of
Aptek and the Partnership, with copies of all reports filed by WCI under the
1934 Act, as well as any press releases issued to the public, and any letters to
shareholders.
8.9 Best Efforts. Purchasers will use their best efforts to timely
apply for and obtain all permits, consents and approvals and to complete any due
diligence deemed necessary by Purchasers in order to complete the transactions
contemplated herein by the Closing Date. Each of AWI and WCI will execute and
deliver such
-14-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
instruments and take such other action as may be reasonable or appropriate to
carry out the Acquisition and the intentions of this Agreement.
ARTICLE 9
REGULATORY COMPLIANCE
9.1 Bulk Sales Compliance. AWI hereby waive compliance by the Sellers
with the provisions of the bulk sales law of the State of Florida, if applicable
to the transfer of the Assets.
9.2 COBRA. The Sellers will comply with the provisions of COBRA, Pub.
L. No. 99-272, 99th Cong., 2d Sess. (1987) relating to continuation of health
benefits to employees as they apply to the transactions contemplated by this
Agreement. After the Closing Date, AWI will act as administrator for Sellers'
obligations related to COBRA coverage for persons who cease employment with the
Sellers on or before the Closing Date and, under the provisions of COBRA, elect
to continue to pay premiums for insurance coverage under the Sellers' insurance
policy.
ARTICLE 10
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
The parties hereto covenant and agree that between the date hereof and
the Closing Date:
10.1 Environmental Studies. (a) Phase I and (if required) Phase II
environmental studies shall be conducted by an environmental consulting firm
mutually acceptable to both parties. The cost of the Phase I study shall be
borne by AWI; the cost of the Phase II study (if one is recommended as a result
of the Phase I study) shall be borne by the Sellers.
(b) If the above environmental studies indicate that Environmental
Liabilities or the total estimated cost of remediation exceeds or is likely to
exceed $250,000: (1) AWI may agree to proceed with the Closing and indemnify Mr.
Rush and the Sellers for total liabilities in excess of $250,000; or (2) If AWI
fails to make the election under Paragraph 10.1(b)(1), above, Mr. Rush and the
Sellers may elect to terminate this Agreement and the Acquisition. If this
Agreement is terminated pursuant to this Paragraph 10.1(b), no party hereto will
have any further obligation to any other party hereto.
(c) If the above environmental studies indicate that Environmental
Liabilities or the total estimated cost of remedia- tion will not exceed
$250,000, AWI may elect to proceed with Closing, and Mr. Rush and the Sellers
will be jointly and severally
-15-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
liable for such Environmental Liabilities and the cost of remediation. If the
Environmental Liabilities or the cost of remediation thereafter exceed $250,000,
AWI will indemnify Mr. Rush and/or the Sellers for costs in excess of $250,000.
10.2 Title Insurance. Prior to the Closing, AWI will obtain a title
insurance commitment, including obligations to issue endorsements as may be
required by AWI, with respect to the Facility, using a current ALTA form of
Owner's Title Insurance issued by a title insurer satisfactory to AWI in such
amount as AWI may reasonably determine to be the fair market value of such real
property, including all improvements located thereon, insuring title to such
real property to be in AWI as of the Closing Date, subject only to such
exceptions and exclusions as provided in this Agreement or are acceptable to AWI
and insuring against all possible contractors', suppliers' and mechanics' lien
claims. Such title commitment is to contain a complete copy of each easement,
restriction, limitation, or condition of title which is referred to therein that
burdens or benefits said real property. At the Closing, the costs and premium
for the Title Insurance obtained shall be paid by AWI.
10.3 Survey. With respect to the Facility, the Partnership will provide
AWI a current survey of the Facility certified to AWI, prepared by a licensed
surveyor and conforming to Minimum Technical standards adopted by the Florida
Board of Professional Land Surveyors in Chapter 21 HH-6 of The Florida
Administrative Code, the Partnership, any mortgagee of AWI, and the title
insurer issuing title insurance in the transaction disclosing the location of
all improvements, easements, party walls, sidewalks, roadways, utility lines,
setback requirements, and other matters customarily shown on such surveys, and
showing access affirmatively to public streets and roads.
10.4 Conduct of Business. Aptek shall conduct the Business in the
ordinary course and in such a manner so that the representations and warranties
contained herein shall continue to be true and correct on and as of the Closing
Date as if made on and as of the Closing Date.
10.5 Preservation of Business. Aptek shall exert reasonable efforts
consistent with its past business practices to preserve the Business, keep
available the services of its present employees, consultants and agents,
maintain its present suppliers and customers and preserve its goodwill.
10.6 Notice of Events. Sellers and Mr. Rush shall promptly notify AWI
of: (1) any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement; or (2) any event, occurrence, transaction or other item which would
have been
-16-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
required to have been disclosed on any Schedule, Exhibit or statement delivered
hereunder, had such event, occurrence, transaction or item existed on the date
hereof, other than items arising in the ordinary course of business which would
not render any of the representations, warranties or other agreements of the
Sellers or Mr. Rush misleading.
10.7 Examinations and Investigations. (a) Prior to the Closing Date,
during normal business hours between 8:00 a.m. and 5:00 p.m., Monday through
Friday, or such other hours as the parties mutually agree to, AWI shall be
entitled, through their employees and representatives, including its counsel,
lenders, appraisers and accountants, to make such investigation of the assets,
properties, business and operations of the Business, and such examination and
copies of the books, records and financial condition of the Business as AWI
wishes.
(b) If this Agreement terminates: (1) AWI shall keep confidential
and shall not use in any manner any information or documents obtained from the
Sellers concerning the Business or the Assets, unless readily ascertainable from
public or published information, or trade sources, or subsequently developed by
AWI independent of any investigation of the Business, or received from a third
party not under an obligation to the Sellers to keep such information
confidential, and (b) any documents obtained from the Sellers or Mr. Rush shall
be promptly returned to them.
10.8 No Negotiation by the Sellers. Between the date hereof and the
earlier of (1) the Closing Date; or (2) the date of termination of this
Agreement, neither Mr. Rush nor any of the Sellers shall, directly or
indirectly:
(a) Solicit, initiate or encourage the submission of inquiries,
proposals or offers from any person (other than AWI) relating to any acquisition
or purchase of assets of, or any equity interest in, the Assets or any exchange
offer, merger, consolidation, purchase of assets, liquidation, dissolution or
similar transaction involving the Assets (each, an "Acquisition Proposal");
(b) Enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any person (other than AWI and its
representatives) any information with respect to the Assets, other than in the
ordinary course of business; or
(c) Otherwise cooperate in any way with, or assist or participate
in, facilitate or encourage, any effort or attempt by any person (other than
AWI) to do or seek any of the foregoing.
-17-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
Sellers will notify AWI immediately if any such Acquisition Proposal is
received or if any such discussions, negotiations or other events occur or are
sought to be initiated, and such notice will set forth in detail the terms or
other particulars thereof.
10.9 Physical Inventory. The Sellers shall conduct a physical inventory
of the Business on or about March 27, 1995. AWI shall have the right, at its own
expense, to have its internal accounting personnel and/or independent accounting
firm observe the taking of the inventory. The Parties agree that any inventory
conducted pursuant to this Section 10.9 will be conducted in a manner to
eliminate to the maximum extent possible any adverse impact such inventory may
have on the Business.
ARTICLE 11
CONDITIONS PRECEDENT TO THE OBLIGATION OF AWI TO CLOSE
The obligation of AWI to enter into and to complete the transactions
contemplated by this Agreement is subject to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by AWI only in writing:
11.1 Representations, Warranties and Other Agreements. The
representations, warranties and other agreements of the Sellers and Mr. Rush
contained in this Agreement or as may be delivered at Closing shall be true on
and as of the Closing Date, with the same force and effect as though made on and
as of the Closing Date. The Sellers and Mr. Rush shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date. The Sellers
and Mr. Rush shall have delivered to AWI certificates, dated the Closing Date,
to such effect.
11.2 Governmental Permits and Approvals. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
Transactions shall have been obtained.
11.3 Third Party Consents. All consents, permits and approvals from
parties to any contracts or other agreements that may be required in connection
with the performance by the Sellers and Mr. Rush of their obligations under this
Agreement or the continuance of such contracts or other agreements without
material modification after the Closing Date shall have been obtained.
11.4 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated by this Agreement or
to seek damages or
-18-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
a discovery order in connection with such transactions, or that has or could
reasonably be expected to have, in the opinion of AWI a materially adverse
effect on the Assets or the Business.
11.5 Real Property. With respect to the Facility:
(a) AWI shall receive good and marketable title to the Facility
free and clear of any security interest, easement, covenant, or other
restriction, except for installments of special assessments not yet delinquent
and recorded easements, covenants, and other restrictions which do not impair
the current use, occupancy, or the marketability of title, of the property
subject thereto;
(b) There shall not be pending or threatened condemnation
proceedings, lawsuits, or administrative actions of any type relating to the
Facility, or other matters affecting adversely the current use, or occupancy
thereof, including unpaid tap fees, contemplated special assessments or zoning
changes;
(c) The legal description for the Facility contained in the deed
thereof shall describe the Facility fully and adequately, the building and
improvements are located within the boundary lines of the described parcel(s) of
land, shall not be in violation of applicable setback requirements, zoning laws,
and ordinances, and shall not encroach on any easement which may burden the
land, and the land does not serve any adjoining property for any purpose
inconsistent with the use of the land, and the property shall not be located
within any flood plain or be included in any wetlands or be subject to any
similar type restriction for which any permits or licenses necessary to the use
thereof shall have not been obtained; and
(d) The Facility shall abut and have direct vehicular access to a
public road, or have access to a public road via a permanent, irrevocable,
appurtenant easement benefitting the Facility.
11.6 No Material Adverse Change. There shall be no material adverse
change in the Business or the Assets taken as a whole, financial or otherwise,
or, to either the Sellers' or Mr. Rush's knowledge, their customers, regardless
of reason, including those changes that are as a result of any legislative or
regulatory change, revocation of any Permits, licenses or rights to do business,
failure to obtain any Permit at the normal time or in the manner applied for by
the Sellers, fire, explosion, accident, casualty, labor trouble, flood, riot,
storm, condemnation or act of God or otherwise, and the Sellers shall have
delivered to AWI a certificate, dated the Closing Date, to such effect.
-19-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
11.7 Transfer Documents. AWI shall have received assignments and such
other instruments of sale, transfer, conveyance and assignment transferring all
of the Assets from the Sellers, each substantially in correct and proper legal
form to transfer assets under applicable law.
11.8 Books and Records. AWI shall have received all the books, books of
account, papers, records, correspondence and instruments of, or relating to, the
Assets and/or Business.
11.9 Resolutions. There shall have been delivered to AWI a copy of the
resolutions duly adopted by the governing bodies of each of the Sellers,
authorizing and approving the execution and delivery by the respective Seller of
this Agreement, and the completion by the respective Seller of the transactions
contemplated hereby, certified by the secretary or partner of the respective
Seller, dated as of the Closing Date.
11.10 Certificates, Etc. of Mr. Rush and the Sellers. Mr. Rush and the
Sellers shall have delivered all certified resolutions, certificates, documents
or instruments with respect to the Sellers' authority and such other matters as
AWI's counsel may have reasonably requested prior to the Closing Date.
11.11 Financing. AWI shall have obtained a commitment for financing to
effect the purchase of the Assets contemplated hereunder.
11.12 Consulting and Employment Agreements. The appropriate parties
shall have entered into the consulting and employment agreements contemplated
under Article 5 hereof.
11.13 General Warranty Deed. AWI shall receive a general warranty deed
in proper form for recording in the State of Florida for the Facility.
11.14 Evidence of Name Change. AWI shall have received evidence that
Aptek will change its corporate name to delete any reference to "Aptek" or any
variation thereof, within five days of the Closing Date.
11.15 Opinions of Counsel. The Sellers shall deliver to AWI opinions of
counsel in the form of Schedule 11.15 hereto.
11.16 Accountants Letter. The Sellers shall deliver to AWI a letter
from their accountants stating that (based on stated procedures accomplished
within five days of the Closing), such accountants have no knowledge that the
representations and warranties of the Sellers contained herein or in the Closing
Documents (with respect to financial information) are not accurate
-20-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
and complete in all material respects as of the date such procedures were
completed.
11.17 No Sales or Use Tax Due. There shall be no sales or use tax or
other similar tax payable by AWI as a result of the completion of the
Acquisition.
11.18 Approval of Counsel to AWI. All actions and proceedings hereunder
and all documents or other papers required to be delivered by Mr. Rush and the
Sellers hereunder or in connection with the completion of the transactions
contemplated hereby, and all other related matters shall have been approved by
Friedlob Sanderson Raskin Paulson & Tourtillott, counsel to AWI, as to their
form.
11.19 Investment Letter. Execution and delivery to WCI by the Sellers
of an investment letter in the form of Schedule 6.1(c).
11.20 Purchase of All Assets. AWI is not obligated to purchase either
the Aptek Assets or the Partnership Assets unless at the Closing AWI is able to
purchase both the Aptek Assets and the Partnership Assets pursuant to the terms
hereof.
ARTICLE 12
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE SELLERS TO CLOSE
The obligation of the Sellers and Mr. Rush to enter into and to
complete the transactions contemplated by this Agreement is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any one
or more of which may be waived by the Sellers and Mr. Rush only in writing:
12.1 Representations, Warranties and Other Agreements. The
representations, warranties and other agreements of AWI contained in this
Agreement shall be true on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. AWI shall have performed
and complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. AWI shall have
delivered to the Sellers certificates, dated the Closing Date, to such effect.
12.2 Governmental Permits and Approvals. All permits and approvals from
any governmental or regulatory body required for the lawful completion of the
transactions which are the subject of this Agreement shall have been obtained.
-21-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
12.4 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the transactions contemplated by this Agreement, or
to seek damages or a discovery order in connection with such transactions, or
that has or could reasonably be expected to have, in the opinion of the Sellers,
a materially adverse effect on the assets, properties, businesses, operations or
financial condition of AWI.
12.5 Approval of Counsel to the Sellers. All actions and proceedings
hereunder and all documents or other papers required to be delivered by the
Purchasers hereunder or in connection with the completion of the transactions
contemplated hereby, and all other related matters shall have been approved by
Fleming, O'Bryan & Fleming, counsel to the Sellers and Mr. Rush, as to their
form.
12.6 The Purchase Price. The Purchaser's payment of the full purchase
price for the Assets.
12.7 Consulting and Employment Agreements. The appropriate parties
shall have entered into the consulting and employment agreements contemplated
under Article 5 hereof.
12.8 Continuing Disclosure. WCI shall have provided Mr. Rush, as
representative of the Sellers with copies of all reports filed by WCI under the
1934 Act, as well as any press releases issued to the public, and any letters to
shareholders as required in Section 8.7, above.
12.9 Opinions of Counsel. AWI shall deliver to the Sellers opinions of
counsel in the form of Schedule 11.15 hereto.
ARTICLE 13
ACTIONS TO BE TAKEN AT THE CLOSING
The following actions shall be taken at the Closing, each of which
shall be conditioned on completion of all the others and all of which shall be
deemed to have taken place simultaneously:
13.1 Transfer Documents. The Sellers shall deliver duly executed
transfer documents and/or instruments of assignment.
13.2 The Purchase Price. AWI shall deliver to the Sellers the cash and
WCI Shares in accordance with the terms of Sections 6.1 and 6.2. The Sellers
shall deliver the investment letter in the form of Schedule 6.1(c).
-22-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
13.3 Consulting and Employment Agreements. The parties shall deliver to
one another the executed consulting and employment agreements as required by
Article 5.
13.4 General Warranty Deed. The Partnership shall deliver a general
warranty deed for the Facility in proper form for recording in the State of
Florida, as well as a cancellation of or (at AWI's election) an assignment of
the lease of the facility from the Partnership to Aptek.
13.5 Opinions and Letters. The parties shall deliver legal opinions and
the Sellers will deliver to AWI a letter from their accountants, as required by
Sections 11.15 and 11.16 hereof.
13.6 Closing Certificate of the Sellers. The Sellers shall deliver to
AWI a closing certificate dated the Closing Date, in a form satisfactory to AWI.
Said certificate shall be signed on behalf of each Seller by Mr. Rush in his
capacity as general partner of the Partnership and as an executive officer of
Aptek.
13.7 Closing Certificate of AWI. AWI shall deliver to the Sellers a
closing certificate dated the Closing Date, in a form satisfactory to the
Sellers. Said certificate shall be signed on behalf of AWI by an executive
officer of AWI.
13.8 Real Property Closing. As part of the Closing it is acknowledged
that a settlement statement shall be separately prepared relating to the
Facility, which settlement statement shall be provided by the a closing attorney
mutually agreed to among the parties, to the parties at least one business day
prior to the Closing. The purchase price for the Facility as set forth herein
and shall be subject to normal closing adjustments charged to the parties as
follows:
(a) Adjustments Charged to the Partnership. The Partnership shall
be charged with the following expenses, which shall be reflected on the
settlement statement prepared by the closing attorney and shall be withheld by
the closing attorney from the proceeds due to the Partnership and be disbursed
by the closing to the person to which each such expense is payable:
(1) Any amount necessary to satisfy and discharge of record
any lien or encumbrance that is not an Assumed Liability, including the
cost of recording or filing any necessary release or termination
document;
(2) Any and all real property taxes accrued through the
Closing Date (except to the extent such real property taxes are accrued
on the Disclosed Seller Information as of December 31, 1994, and are
accrued thereafter on a
-23-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
monthly basis in the ordinary course of business in which case they are
considered to be an "Assumed Liability");
(3) Any and all utility charges through the Closing Date
(except to the extent such real property taxes are accrued on the
Disclosed Seller Information as of December 31, 1994, and are accrued
thereafter on a monthly basis in the ordinary course of business in
which case they are considered to be an "Assumed Liability");
(4) The cost of the Survey;
(5) Any and all payments required to satisfy and discharge
the income tax liability related to the conveyance of the real property
interest, if any; and
(6) Fees for documentary stamps due upon the recordation of
the deed from the Partnership to AWI.
(b) Adjustments Charged to AWI. AWI shall be charged with the
following expenses, which shall be reflected on the real estate settlement
statement prepared by the closing attorney and shall be collected by the closing
attorney as part of the Purchase Price and be disbursed by the closing attorney
to the person to which each such expense is payable:
(1) The premium for the title insurance policy to be issued
to AWI pursuant to the Title Commitment;
(2) The premium for the title insurance policy to be issued
to AWI's lender (if any) pursuant to the title commitment.
Notwithstanding any provision in this Agreement to the contrary, the parties
agree to conduct the Closing for the purchase of the Facility in accordance with
the local practices for real estate closings in Broward County, Florida.
13.9 Evidence of Name Change. The Sellers shall deliver evidence to AWI
that Aptek will change its corporate name, in accordance with Section 11.14.
13.10 Titles to Vehicles. The Sellers shall deliver to AWI duly
executed titles to all vehicles included in the Assets free and clear of any
liens or other encumbrances other than Assumed Liabilities.
-24-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
ARTICLE 14
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1 Indemnity Agreements.
(a) The Sellers and Mr. Rush, jointly and severally, shall
indemnify, defend, reimburse and hold harmless AWI and WCI from and against any
and all Environmental Liabilities other than the Seabord Liability (to the
extent the Seabord Liability is an Assumed Liability).
(b) Aptek is lessee under one agreement with Colonial Pacific for
a Vitronics Reflow Machine which is guaranteed by Mr. Rush. AWI will indemnify,
defend, reimburse, and hold harmless Mr. Rush from and against any liability
which may derive from non-payment of any amounts due under that lease.
14.2 Indemnification Procedure for Third Party Claims.
(a) Notice of Claim and Defense. (1) If any party seeks
indemnification under Section 14.1 hereof, such party (the "Indemnified
Party") shall give the other party (the "Indemnifying Party") prompt
written notice of the assertion of any liability for which
indemnification may be sought (an "Indemnified Liability") of which
said party has knowledge which is covered by the indemnity agreements
set forth herein, and the Indemnifying Party will undertake the defense
thereof by representatives chosen by the Indemnified Party but
acceptable to the Indemnifying Party.
(2) If the Indemnifying Party, within a reasonable period of
time after notice of any such claim fails to defend, the Indemnified
Party will have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of
the party obligated to indemnify, subject to the Indemnifying Party's
right to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof.
(b) Payment of Sums Due. After any final judgment or award shall
have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction, or a settlement shall have been
completed, or the parties shall have arrived at a mutually binding
agreement, with respect to each separate Indemnified Liability,
Indemnified Party shall forward to Indemnifying Party notice of any
sums due and owing (and the times when due) by Indemnifying Party with
respect to such claim and Indemnifying Party shall pay such sums to the
party seeking indemnification in cash, within 30 days after the date of
such notice or, if any such sums are due more than 90 days after the
-25-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
date of such notice, ten days prior to the date each such sum is due.
14.3 Good Faith Efforts to Settle Disputes. Each of the parties agrees
that, prior to commencing any litigation against the other concerning any matter
with respect to which such party intends to claim a right of indemnification in
such proceeding, such parties shall meet in a timely manner and attempt in good
faith to negotiate a settlement of such dispute during which time such parties
shall disclose to the others all relevant information relating to such dispute.
14.4 Litigation Support. If, and for so long as, any party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (1) any
transaction contemplated hereunder, or (2) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, the other party will cooperate with the contesting or defending
party and its counsel in the contest or defense, make available its personnel
and provide such testimony and access to its books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party, unless the contesting or defending
party is entitled to indemnification therefor under this Article 14.
ARTICLE 15
TERMINATION OF AGREEMENT
15.1 Termination. This Agreement may be terminated prior to the Closing
Date as follows:
(a) At the election of AWI if any one or more of the material
conditions precedent to the obligation of AWI to close has not been fulfilled as
of the Closing Date, or if Mr. Rush or the Sellers have breached any material
representation, warranty, covenant or agreement contained in this Agreement
provided, however, Mr. Rush and the Sellers shall have at least fifteen days'
notice to cure any such breach;
(b) At the election of Mr. Rush or the Sellers if any one or more
of the material conditions precedent to the obligation of the Sellers to close
has not been fulfilled as of the Closing Date, or if AWI or WCI has breached any
material representation, warranty, covenant or agreement contained in this
Agreement provided, however, AWI and WCI shall have at least fifteen days'
notice to cure any such breach;
-26-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(c) At the election of AWI or WCI at any time prior to Closing if:
(1) prior to Closing Aptek is unable to provide unaudited
financial statements of Aptek for the period from January 1, 1995
through the end of the month immediately prior to the Closing (which
financial statements will be subject to the representations of Aptek as
to accuracy and completeness), or
(2) the Aptek financial statements described in Clause
15.1(c)(1) hereof plus any accrued interest on the Assumed Liabilities
not otherwise included in those Aptek financial statements reflects a
loss (calculated in accordance with GAAP consistently applied) of more
than $500,000 incurred for the period after January 31, 1995. If losses
during said period exceed $300,000, WCI and AWI may elect to proceed
with the Acquisition and to deduct from the Purchase Price of its Aptek
assets the amount of losses up to a maximum of $200,000; any such
reduction in the Purchase Price shall be effected by commensurately
reducing the number of WCI Shares payable under Section 6.1(a) hereof.
(d) At the election of AWI and WCI if they are unable to complete
due diligence in a manner satisfactory to a company obligated to file reports
under the 1934 Act or if they discover discrepancies in the books and records of
Aptek or Partnership during their due diligence;
(e) At the election of any party to this Agreement, if any legal
proceeding is commenced or threatened by any governmental or regulatory body or
other person directed against the completion of the transactions contemplated
under this Agreement and any of the parties, as the case may be, reasonably and
in good faith deem it impractical or inadvisable to proceed in view of such
legal proceeding or threat thereof;
(f) At the election of AWI in accordance with Section 10.1 if the
environmental remediation work set forth in the environmental studies referred
to in Section 10.1 shall be more than $250,000 and neither AWI nor Mr. Rush nor
the Sellers agrees to bear the expense in excess of $250,000.
(g) At the election of Mr. Rush and the Sellers if the
environmental remediation work set forth in the environmental studies referred
to in Section 10.1 shall be more than $250,000 and neither AWI nor Mr. Rush nor
the Sellers agrees to bear the expense in excess of $250,000.
(h) At any time on or prior to the Closing Date, by mutual written
consent of the parties; or
-27-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
(i) At any time after April 18, 1995, at the election of any
party, unless the Final Closing Date has been extended pursuant to Section 1.8.
15.2 Survival. If this Agreement is terminated pursuant to Section
15.1, this Agreement shall become void and of no further force and effect, and
none of the parties hereto shall have any liability in respect of such
termination, except that any party shall be liable to the extent that failure to
satisfy the conditions contained herein results from the intentional or willful
violation of the representations, warranties, covenants or agreement of such
party under this Agreement.
ARTICLE 16
CERTAIN ADDITIONAL AGREEMENTS
16.1 Public Statements; Confidentiality of Information. (a) No party
will make any public disclosure (including, without limitation, disclosure to
Aptek's employees or customers) of this Agreement or the Acquisition without the
prior consent of the other party hereto, which consent shall not be unreasonably
withheld, provided that the foregoing shall not preclude any party from making
any disclosure which, in the opinion of its counsel, is required to be made
under applicable federal and state securities laws. In no event shall any
disclosure be made without giving the other party an opportunity to comment on
the proposed disclosure.
(b) Subject to WCI's obligation as a public company to issue
appropriate public announcements of material events, and subject to this Section
16.1 hereof, each party will maintain the confidentiality of all non-public
information obtained from any other party.
16.2 Expenses. Each party shall pay its own costs and expenses,
including the fees and disbursements of its respective counsel, in connection
with the negotiation, preparation and execution of this Agreement and the
completion of the transactions contemplated hereby whether or not the
transactions contemplated hereby are completed. If the transactions contemplated
hereunder are completed, the Sellers and Mr. Rush shall pay all such costs and
expenses after the Closing from assets other than the Assets.
16.3 Waivers and Consents. All waivers and consents given hereunder
shall be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar, on the part of the same or any other party.
-28-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
16.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given only if and when: (1)
personally delivered; or (2) three business days after mailing, postage prepaid,
by certified mail; or (3) when delivered (and receipted for) by an overnight
delivery service; or (4) when delivered by facsimile transmission for which
automatic confirmation has been received, addressed in each case as follows:
If to WCI or AWI:
Thomas W. Itin, President
Thomas K. Ziegler, Esq., General Counsel
Williams Controls, Inc.
7001 Orchard Lake Road, Suite 424
West Bloomfield, Michigan 48322-3608
telephone: (810) 851-5651 (WCI)
fax: (810) 851-9080 (WCI)
With a copy to:
Mary M. Maikoetter, Esq.
Herrick K. Lidstone, Jr., Esq.
Friedlob Sanderson Raskin Paulson & Tourtillott
1400 Glenarm Place, Suite 300
Denver, Colorado 80202
telephone: (303) 571-1400
fax: (303) 595-3159
If to Aptek, the Partnership, or Mr. Rush:
c/o Aptek Technologies, Inc.
700 N.W. 12th Avenue
Deerfield Beach, Florida 33442
Attn: David Rush, President
telephone: (305) 421-8450
fax: (305) 421-8044
With a copy to:
Willard D. Dover, Esq.
Fleming, O'Bryan & Fleming, P.A.
500 East Broward Blvd., 17th Floor
Fort Lauderdale, FL 33338
telephone: (305) 764-3000
fax: (305) 764-3308
A Party may change its address by notice to every other Party.
16.5 Further Assurances. From and after the date of this Agreement,
each of the parties hereto will cooperate with each
-29-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
other and will use its or his best efforts to obtain all necessary waivers and
consents from third parties. The Sellers, at any time and from time to time on
and after the Closing, upon request by AWI and without further consideration,
shall take or cause to be taken such actions and execute, acknowledge and
delivery, or cause to be executed, acknowledged and delivered, such transfers,
conveyances and assurances as may be reasonably requested by AWI for the better
conveying, transferring, assigning, delivering, assuring and confirming the
Assets to AWI.
16.6 Retention of/Access to Business Records. In addition, for at least
six years following the Closing Date, Mr. Rush shall retain all business records
related to the Assets or the Business not delivered to AWI and AWI shall retain
all business records related to the Assets or the Business delivered to AWI.
During this period, from time to time on and after the Closing, upon reasonable
request by AWI or Mr. Rush, as applicable, and without further consideration,
Mr. Rush shall provide AWI access to or copies of any business records retained
by Mr. Rush and AWI shall provide Mr. Rush access to or copies of any business
records retained by AWI..
16.7 Entire Agreement. This Agreement, including all Schedules and
Exhibits hereto, and the other Closing Documents constitute the entire agreement
of the parties with respect to the subject matter hereof, supersedes the Letter
Agreement and may not be modified, amended or terminated except by a written
instrument specifically referring to this Agreement signed by each of the
parties hereto or as otherwise provided in this Agreement.
16.8 Construction. In the event of an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that the each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter,
regardless of the relative levels of specificity, which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
16.9 Rights of Third Parties. All conditions of the obligations of the
parties hereto, and all undertakings herein,
-30-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
except as otherwise provided by a written consent, are solely and exclusively
for the benefit of the parties hereto and their successors and assigns, and no
other person or entity shall have standing to require satisfaction of such
conditions or to enforce such undertakings in accordance with their terms or be
entitled to assume that any party hereto will refuse to complete the Transaction
contemplated hereby in the absence of strict compliance with any or all thereof,
and no other person or entity shall, under any circumstances, be deemed a
beneficiary of such conditions or undertakings, any or all of which may be
freely waived in whole or in part, by mutual consent of the parties hereto at
any time, if in their sole discretion they deem it desirable to do so.
16.10 Headings. The Table of Contents and Article and Section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
16.11 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Delaware except to the extent this Agreement, or any
agreement to be entered into at the Closing, contemplates that the laws of
Florida will govern.
16.12 Submission to Jurisdiction; Waivers. The parties each hereby
irrevocably and unconditionally: (1) agree that any action or proceeding related
to this Agreement shall be brought in, and hereby submits itself and its
property to the jurisdiction of, the courts of the State of Delaware, the courts
of the United States of America for the District of Delaware, and the appellate
courts from any thereof; (2) consent to the venue of any such action or
proceeding in any of said courts and waives any objection that it may have, now
or hereafter, that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same; and (3) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the party against whom the action or proceeding is
brought at its address set forth in Section 16.4.
16.13 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law, by assignment to the lender to WCI or AWI or with the consent of the
other parties. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
16.14 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
-31-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
16.15 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
16.16 Corporate Authority. The undersigned have executed this Agreement
with all requisite corporate authority.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
April , 1995 WILLIAMS CONTROLS, INC., for
itself and on behalf of APTEK
WILLIAMS, INC., a Delaware
corporation to be formed
By:
---------------------------
Thomas W. Itin, President
April , 1995 APTEK TECHNOLOGIES, INC.
By:
---------------------------
David H. Rush, President
April , 1995 HILLSBORO REALTY ASSOCIATES
By:
---------------------------
David H. Rush, General Partner
April , 1995 DAVID H. RUSH, Individually
------------------------------
-32-
--- ---
TWI DHR
1002B1E1/EXH2.1A
<PAGE>
INDEX OF SCHEDULES
Schedule Description
- - - - -------- -----------
1.5 "Assumed Liabilities," being those liabilities of Aptek or
the Partnership, as the case may be, which have been
specifically identified to AWI or WCI and which AWI has
agreed, in writing, to assume following the completion of
the Transactions.
1.12 "Excluded Assets," being those items owned by either Mr.
Rush, personally, or which may be located on the Aptek
premises.
3.1(b) "Tangible Property" and any exceptions to the warranty
thereto contained in Paragraph 11 of Schedule 7.
3.1(d) "Intangible Property", including all limitations known to
the Sellers on the transferability and assignability of
the Intangible Property, and other limitations
contemplated by Paragraph 12 of Schedule 7.
3.1(f) All accounting and other computer software relating to the
Business owned by Aptek, including information interfaced
with those systems.
3.1(h) Contracts relating to the Business to which Aptek is a
party.
3.1(j) Leases of personal property relating to the Business in
the name of Aptek.
4.1(a) Legal description of the Facility, including all buildings
situated thereon and all leasehold improvements and
including all rights in easements,
driveways and signs.
4.1(b) All vehicles, machinery and equipment (whether or not
affixed to the Facility), tools, furniture, fixtures,
dies, jigs and supplies which are being used by Aptek in
the Business, whether at the Facility, over the road or at
any other location.
4.1(c) Leases of personal property relating to the Business in
the name of the Partnership.
5.1 Form of employment agreement with Dwain Jenkins and Gary
Muter.
5.2 Form of consulting agreement with Rush Holdings, Inc..
1002B1E1/EXH2.1A
<PAGE>
6.1(c) Form of investment letter.
6.3 Allocation of the purchase price.
7 Sellers' Representations and Warranties.
Paragraph 10 -- A summary of the accounts receivable of
the Business as of December 31, 1994, and as of a date
within 5 days of the Closing Date. Such accounts
receivable are not subject to any material set-offs or
material counterclaims.
Paragraph 15 -- Any supplier from whom the Sellers
purchased supplies in 1994, and any customer who purchased
Product from the Business in 1994.
11.15(a) Form Opinion of Counsel to Sellers
11.15(b) Form Opinion of Counsel to AWI
- - - - -2-
1002B1E1/EXH2.1A
<PAGE>
CLOSING AGREEMENT AND
ESCROW AGREEMENT
THIS CLOSING AGREEMENT AND ESCROW AGREEMENT is entered into as of the
18th day of April 1995, by and among HILLSBORO REALTY ASSOCIATES, a Florida
general partnership (the "Partnership"), APTEK WILLIAMS, INC., a Delaware
corporation ("AWI"), and RICCA & WHITMIRE, P.A., a professional association in
the state of Florida licensed to practice law (the "Escrow Agent"), with
reference to the following facts:
A. The Partnership and AWI have entered into an Asset Purchase
Agreement dated April 12, 1995 (the "Asset Agreement").
B. Because the Partnership has been unable to convey good and
marketable title to certain real estate (known as the "Facility") to AWI as are
required by Sections 4.1, 10.2, and 11.5 of the Asset Agreement, the parties
have decided to complete a portion of the Asset Agreement pursuant to the escrow
arrangement described herein.
C. The Partnership and AWI have agreed to enter into this Agreement and
to be bound by the terms and conditions contained herein, and the Escrow Agent
has agreed to enter into this Agreement and to serve as escrow agent in
accordance with the terms contained herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions.
(a) Escrow Period. Shall mean the period from the date hereof
until the completion of the Real Estate Transaction as further defined herein.
(b) Promissory Note shall mean the non-interest bearing promissory
note to be deposited with the Escrow Agent, which is further described in
ss.2(b) hereof.
(c) Real Estate Transaction. Shall mean the transaction by which
the Partnership conveys the Facility to AWI pursuant to the terms of the Asset
Agreement.
(d) All capitalized terms used herein and not otherwise defined
herein shall have the same meaning ascribed to them in the Asset Agreement.
2. Closing Agreement. Because of difficulties in obtaining the title
insurance and in conveying good and marketable title to the Facility as required
in the Asset Agreement, the parties hereby
-1-
<PAGE>
agree to the following Closing procedure (which procedure amends Article 13 of
the Asset Agreement to the extent necessary):
(a) The "initial Closing" will be held at the offices of Fleming,
O'Bryan & Fleming, P.A., at which time AWI will purchase the Aptek Assets and
the Partnership Assets (not including the Facility) as follows:
(i) The Purchase Price for the Aptek Assets and the
Partnership Assets (not including the Facility) will be $1,400,000, payable in
cash ($300,000) and WCI Stock (332,326 shares, valued at $3.31 per share), which
purchase price will be paid to, or as directed by, Aptek and the Partnership at
the initial Closing; and
(ii) At the initial Closing, AWI will reimburse Mr. Rush for
approximately $235,000 in expenses advanced to Aptek, such reimbursement is as
required by ss.6.1(b) of the Asset Agreement.
(iii) At the initial Closing, Aptek and the Partnership will
deliver to AWI appropriate assignments of the Partnership Assets (not including
the Facility) and the Aptek Assets.
(iv) At the initial Closing, the Partnership will grant an
option to lease the Facility to AWI for a period of five years, with monthly
rental being $25,000.
(v) At the initial Closing, the legal opinion from Seller's
counsel will be expanded to include an opinion that the escrow closing for the
Real Estate Transaction does not result in the violation of a due-on-sale
clause, default under or other acceleration of the indebtedness encumbering the
Facility becoming effective.
(vi) At the initial Closing, Aptek, AWI, and the Escrow Agent
will establish the Escrow contemplated by Paragraph 3 hereof.
(b) The Closing of the Real Estate Transaction (the "second
Closing") will be held at the offices of Fleming, O'Bryan & Fleming, P.A., at
which time AWI will purchase the Facility as follows:
(i) The Purchase Price for the Facility will be payment in
full of the Promissory Note described in more detail in Paragraph 3(b), below.
3. Deposit into Escrow.
(a) Warranty Deed. The Partnership shall deposit with the Escrow
Agent a general warranty deed for the conveyance of the Facility to AWI.
-2-
<PAGE>
(b) Funds. AWI shall deposit with the Escrow Agent a non-interest
bearing promissory note in the amount of $4,600,000, which note will be payable
as follows:
(i) $700,000 of the Purchase Price will be payable by issuing
to the Partnership (or at its direction) 211,480 WCI Shares; and
(ii) The balance in cash or repayment of amounts due pursuant
to the existing mortgage on the Facility.
4. Documents to Be Delivered At First Closing
(a) Lease. The Partnership shall enter into and deliver to AWI a
fully-executed agreement granting AWI an option to lease the Facility for
$25,000 per month and shall file a memorandum of the option in the records of
Broward County, Florida. The lease will be for a term of five years with an
option to renew the lease for an additional term of five years, with no increase
in rent.
(b) Option Agreement. (i) The Partnership will enter into and
deliver to AWI an option agreement granting AWI an option to purchase the
Facility through December 31, 2000 for a purchase price equal to $4,600,000. The
purchase price will be payable in cash and not more than $700,000 in WCI Shares
pursuant to the terms of the Asset Agreement. (ii) David H. Rush will also grant
AWI an option exercisable through December 31, 2000 to acquire Mr. Rush's
interest in the Partnership for a purchase price equal to $4,600,000 times his
percentage Partnership interest.
5. Actions To Be Taken During the Escrow Period
(a) Title Insurance. During the Escrow Period, the Partnership
will use its best efforts to meet the requirements for title insurance as
required by ss.10.2 of the Asset Agreement. Based on information available at
the date hereof, it appears that there is one principal problem ("Title
Deficiencies") which the Partnership will, at its expense, resolve, namely the
title insuror has raised concerns regarding the manner by which the Partnership
plans to convey title. Other Title Deficiencies may be raised in the future
which the Partnership will resolve.
(b) Purchase of Mortgage. AWI (or an affiliate of AWI) will use
its best efforts to purchase the existing mortgage and promissory note from the
holder thereof within forty-five days following the First Closing, or as soon
thereafter as may be practicable.
(c) Transfer of Title to Facility. AWI and the Partnership will
endeavor to transfer good and marketable title to the Facility as soon after the
First Closing, as follows:
-3-
<PAGE>
(i) If the Partnership can obtain affidavits, deeds, and
other documents necessary to cure the Title Deficiencies by May 20,
1995, in a manner to satisfy the requirements of the title insuror
("Curative Documents"), the Partnership and AWI will promptly
thereafter complete the Real Estate Transaction as contemplated in the
Asset Agreement provided, however, the Purchase Price will be
$4,600,000, payable in cash (not less than $3,900,000, including
repayment of the outstanding mortgage) and not more than $700,000 in
WCI Shares valued at $3.31 per share. The Partnership will give AWI not
less than ten business days' notice that the Title Deficiencies have
been resolved, and the title insoror is ready and willing to provide a
title insurance policy for the Facility which meets the conditions of
ss.10.2 of the Asset Agreement. The Real Estate Transaction will be
completed at the second Closing not later than the tenth business day
after the date the notice was properly given.
(ii) If the Partnership is unable to obtain adequate Curative
Documents on or before May 20, 1995, AWI or its affiliate (if it
acquires the mortgage and if a default exists) shall use its best
efforts to foreclose the mortgage and acquire title to the Facility in
this manner provided, however, the amount bid by AWI or its affiliate
plus any additional amounts paid to the Partnership inside or outside
of the foreclosure proceeding so that the total paid is not less than
$4,600,000 (including not more than $700,000 in WCI Shares valued at
the greater of $3.31 or the average closing price for the ten days
ending on the date AWI will receive good and marketable title to the
Facility) less any and all costs of the foreclosure proceeding
(including reasonable attorneys' fees) and less all other expenses
allowed by Florida law and less all other expenses which may be
incurred by AWI or the AWI affiliate holding the mortgage in any other
litigation involving the Partnership or any of the partners thereof.
(d) Procedure for Completion of the Real Estate Transaction. The
second Closing will be conducted in the offices of the Escrow Agent. The Real
Estate Transaction will be completed pursuant to the custom and practice of
completing such transactions in Broward County, Florida, and as required by the
Asset Agreement.
(e) Payment of Discount. If AWI (or an affiliate) acquires the
mortgage and the note from the mortgage holder in a manner to give credit to the
3% prepayment discount granted by the lender or any other amounts of "unapplied
principal", AWI will give credit to the Partnership for that discount (or so
much of it as AWI realizes) provided however that the Real Estate Transaction
occurs not later than June 15, 1995 (unless delayed thereafter as a result of
actions or inactions by AWI).
6. Release of Documents from Escrow.
-4-
<PAGE>
(a) Completion of the Real Estate Transaction. If the Real Estate
Transaction is completed as contemplated in Paragraph 4 hereof, the Escrow Agent
will: (i) deliver the general warranty deed to AWI (or at AWI's direction) for
recording; (ii) deliver the Promissory Note to AWI in exchange for payment
thereof delivered to the Partnership or at the Partnership's direction; and
(iii) deliver a termination of all outstanding leases to AWI.
(b) If the Real Estate Transaction Is Not Completed. If the Real
Estate Transaction is not completed as contemplated in Paragraph 4 hereof on or
before September 30, 1995, the Escrow Agent will return the warranty deed to the
Partnership and the promissory note to AWI.
7. Expenses.
(a) The Escrow Agent's fee for acting in such capacity will be
such firm's normal legal fees, which fee will be paid equally by the Partnership
and AWI.
(b) The Partnership will bear all expenses for curing the Title
Deficiencies including (without limitation) any additional expenses incurred by
AWI's local counsel, Ricca & Whitmire, P.A., which may result from the Title
Deficiencies.
(c) Except as described in Paragraphs 7(a) and 7(b) (or in
Paragraph 5(c)(ii) in the event of a foreclosure proceeding), above, each of the
parties hereto will bear their own expenses.
8. Notices. Notices, other communications or deliveries required or
permitted under this Agreement shall be in writing directed as follows:
(a) To the Partnership
David H. Rush, General Partner
Hillsboro Realty Associates
c/o Aptek Technologies, Inc.
700 N.W. 12th Avenue
Deerfield Beach, FL 33442
tel: 305-421-8450
fax: 305-421-8044
(b) To AWI
Thomas W. Itin, President
Aptek Williams, Inc.
7001 Orchard Lake Road, Suite 424
West Bloomfield, MI 48322-3608
tel: 810-851-5651
fax: 810-851-90806
-5-
<PAGE>
(c) To the Escrow Agent:
Drennen L. Whitmire, Jr., Esq.
Ricca & Whitmire, P.A.
Clearlake Plaza, Suite 800
500 South Australian Avenue
West Palm Beach, FL 33401
tel 407-833-4544
fax 407-833-4524
Any of the parties hereto may designate by notice to each other party any new
address for the purpose of this Agreement. Unless otherwise specified herein,
all notices shall be deemed given when (i) personally delivered (including by
overnight courier); (ii) upon confirmation of receipt if transmitted by fax; or
(iii) on the third day after the date of mailing if mailed postage prepaid by
registered or certified mail, return receipt requested.
9. Responsibilities of Escrow Agent.
(a) This Agreement is a personal one among the Partnership, AWI,
and the Escrow Agent. No assignment of this Agreement or any interest hereunder
by any party hereto, shall be of any force or effect unless agreed to in writing
by all parties.
(b) No person, firm or corporation shall be recognized by the
Escrow Agent as a successor of either the Partnership or AWI until there shall
be presented to the Escrow Agent evidence reasonably satisfactory to it of such
succession.
(c) The Escrow Agent shall have no duties or respon- sibilities
except as expressly provided herein and shall neither be obligated to recognize
nor have any liability or responsibility arising under any other agreement to
which the Escrow Agent is not a party, even though reference thereto may be made
herein.
(d) The Escrow Agent shall not be responsible for the identity,
authority or rights of any person, firm or corporation executing or delivering
or purporting to execute or deliver this Agreement or any document or security
deposited hereunder or any endorsement thereon or assignment thereof.
(e) The Escrow Agent shall not be responsible for the sufficiency,
genuineness or validity or title to any document or security deposited or to be
deposited with it pursuant to this Agreement.
(f) The Escrow Agent shall not be required to invest Escrow Funds
or pay interest thereon.
(g) The Escrow Agent may rely upon any instrument of writing
believed by it to be genuine and sufficient and properly
-6-
<PAGE>
presented, and shall not be liable or responsible for any act taken or omitted
in accordance with the provisions thereof.
(h) The Escrow Agent shall not be liable or responsible for any
act it may do or omit to do in the exercise of reasonable care.
(i) In case any property held by the Escrow Agent hereunder shall
be attached, garnished or levied upon under an order of court, or the delivery
thereof shall be stayed or enjoined by any order of court, or any other writ,
order, judgment or decree shall be entered or issued by any court affecting such
property, or any part thereof, or any act of the Escrow Agent, the Escrow Agent
will give immediate notice to all parties of such fact, and the Escrow Agent
hereby is expressly authorized to use its sole discretion to obey and comply
with all writs, orders, judgments or decrees so entered or issued, whether with
or without jurisdiction. If the Escrow Agent obeys and complies with any such
writ, order, judgment or decree, it shall not be liable to any person, firm or
corporation by reason of such compliance notwithstanding the fact that such
writ, order, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated.
(j) The Escrow Agent may employ agents and attorneys for the
reasonable protection of the property held hereunder and of itself.
10. Indemnification of Escrow Agent. The Partnership and AWI shall
indemnify the Escrow Agent for and hold it harmless against, any loss, liability
or expense incurred without gross negligence or bad faith on the part of the
Escrow Agent arising out of or in connection with its acceptance of, or the
performance of its obligations under, this Agreement, as well as the reasonable
costs and expenses of the Escrow Agent.
11. Interpleading. If the Escrow Agent is threatened with litigation by
reason hereof, it is hereby authorized to interplead all interested parties in
any court of competent jurisdiction and to deposit with the clerk of such court
the Escrow Funds held by it pursuant hereto and thereupon shall stand fully
relieved and discharged of any further duties hereunder with respect thereto.
12. Scope and Modification. This Agreement and the applicable
provisions of the Asset Agreement constitute the entire agreement among the
parties pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings of the parties in connection
herewith. No changes, modifications, terminations or waivers of any of the
provisions hereof shall be binding unless in writing and signed by all of the
parties thereto.
No change, modification, waiver, termination, rescission, discharge or
cancellation of this Agreement shall affect the right
-7-
<PAGE>
of any party to enforce any claim, whether or not liquidated, which accrued
prior to the date of such modification, waiver, termination, rescission,
discharge or cancellation, and no waiver of any provision of, or default under,
this Agreement shall affect the right of any party thereafter to enforce such
provisions or to exercise any right or remedy in the event of any other default,
whether or not similar.
13. Arbitration of Disputes. Any disputes arising under this Agreement
concerning Reimbursement Requests and Objections, or any other matters, that are
not resolved by the parties prior to the expiration of the Escrow Period, shall
be submitted to arbitration in accordance with the rules of the American
Arbitration Association by a panel of three arbitrators located in Broward
County, Florida. Any party commencing arbitration shall give prompt notice to
the other parties hereto.
14. Binding Effect. The terms and conditions of this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns. Without the express prior written consent of
the parties hereto, this Agreement may not be assigned by any party. If any
provision of this Agreement is held to be invalid or unenforceable, it shall not
affect the validity of any other provision hereof, all of which other provisions
shall remain binding and in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Governing Law. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to principle of conflicts or choice of law.
17. Authority. Eachof the undersigned represents and warrants to the
others that such person has all necessary corporate or partnership authority for
the execution of this Agreement and for this Agreement to be an enforceable
agreement among the parties.
18. Headings. The sections and other headings contained in this
Agreement are for reference purposes only and shall not affect the
interpretation or meaning of this Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
DAVID H. RUSH HILLSBORO REALTY ASSOCIATES
By
- - - - ------------------------- ------------------------------
individually and as David H. Rush, General Partner
President of Rush Holdings, Inc.
APTEK WILLIAMS, INC. ESCROW AGENT
RICCA & WHITMIRE, P.A.
By
By----------------------- ------------------------------
Thomas W. Itin, President Drennen L. Whitmire, Jr., Esq.
-9-
<PAGE>
EXH10.1A
March 6, 1995
Tom Itin, Chairman
Williams Controls, Inc.
14100 SW 72nd Avenue
Portland, OR 97224
RE: Advance rates for Hardee Williams, Inc. and NESC Williams, Inc.
Dear Tom:
This letter is to advise you that effective February 2, 1995, at the Banks
sole discretion, two new affiliates have been approved as Account Creditors as
defined in the Amended and Restated Loan Agreement dated January 17, 1995.
Hardee Williams, Inc. and NESC Williams, Inc. are approved at the advance rates
as follows:
<TABLE>
<CAPTION>
Hardee Williams, Inc. NESC Williams, Inc.
<S> <C> <C>
Loan value of accounts: 70% 75% (temporary)
Loan value of inventory: 45% 45% (temporary)
</TABLE>
The NESC Williams, Inc. rates are temporary until a collateral exam can
allow us to set permanent advance rates. Please acknowledge by signing below.
Consequently, the definitions of "Loan Value of Accounts" and "Loan Value of
Inventory" are hereby amended as to read as follows:
"Loan Value of Accounts shall mean (i) eighty percent (80.0%), (from the
date hereof until the earlier of August 1, 1995, or the date on which the Ajay
term loan is paid in full), and thereafter seventy-five percent (75.0%) of the
aggregate of all accounts of Williams Controls Industries, Inc. and Kenco
Williams, Inc., and (ii) seventy-five percent (75.0%) of the aggregate of all
accounts of NESC Williams, Inc., and (iii) seventy percent (70.0%) of the
aggregate of all accounts of Hardee Williams, Inc., all less (iv) the face
amount of all outstanding commercial letters of credit issued by Bank for
Borrower s account, and less (v) the principal balance of the Ajay Loan, and
less (vi) Ineligible Accounts."
<PAGE>
"Loan Value of Inventory shall mean (i) fifty percent (50.0%) (from the
date hereof until the earlier of August 1, 1995, or the date on which the Ajay
term loan is paid in full), and thereafter forty-five percent (45.0%) of the
aggregate of all inventory of Williams Controls Industries, Inc. and Kenco
Williams, Inc., and (ii) forty-five percent (45.0%) of the aggregate of all
inventory of Hardee Williams, Inc. and NESC Williams, Inc., all less (iii)
Ineligible Inventory, but in no event shall the loan value of inventory exceed
Six Million and No/100 Dollars ($6,000,000.00)."
Sincerely,
Acknowledged
By: Date:
-------------------- -------------------
<PAGE>
EXHIBIT 10.1(b)
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, made
and entered into as of the 9th day of March, 1995, by and between FIRST
INTERSTATE BANK OF OREGON, N.A. (hereinafter referred to as "Bank"), and
WILLIAMS CONTROLS, INC., a Delaware corporation with its chief executive office
at 14100 S.W. 72nd Avenue, Portland, Oregon 97224 (hereinafter referred to as
"Borrower").
RECITALS:
The parties entered into an amended and restated loan
agreement dated as of January 17, 1995, which was subsequently amended by a
letter dated the 6th day of March, 1995 (hereinafter collectively referred to as
the "Agreement"), and the parties now desire to amend the Agreement as
hereinafter provided. Capitalized terms not otherwise defined herein shall have
the meanings assigned to them in the Agreement.
NOW, THEREFORE, the parties mutually agree as follows:
1. The Agreement is hereby amended to provide:
(a) Section 6.5 is hereby deleted, and in place
thereof the following new Section 6.5 is
inserted:
"6.5 Investments and Loans. Make any acquisition,
investment, loan, advance or extension of credit to any person, except
in the ordinary course of business as now and heretofore conducted;
provided, however, this shall not prohibit (a) the investment of its
excess funds in first quality money market investments; (b) loans of up
to a maximum amount of $7,000,000.00 until August 1, 1995, and
$5,600,000.00 thereafter to Ajay; (c) investment of up to a maximum
amount of $1,400,000.00 in Ajay; (d) up to a maximum of $5,207,000.00
for the acquisition of Hardee; (e) investment of up to $1,000,000 in
Baymex; and (f) other investments, acquisitions, loans, advances or
extensions of credit which do not in the aggregate exceed $500,000.00
until the Ajay loan is repaid in full, and $1,000,000.00 thereafter. As
used in this Section, the term "person" includes individuals,
partnerships, joint ventures, business trusts, limited liability
companies and corporations."
1 - SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI-AMND.DOC\EXH10.1(b)
<PAGE>
2. Except as herein amended, each and all of the terms and
provisions of the Agreement shall be and remain in full force and effect during
the term thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement, in duplicate, as of the date first hereinabove
written.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE
BANK AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE BANK TO BE ENFORCEABLE.
Borrower hereby acknowledges receipt of a copy of this
Amendment.
WILLIAMS CONTROLS, INC. FIRST INTERSTATE BANK OF
OREGON, N.A.
By ___________________________ By _____________________
Title ________________________ Title __________________
2 - SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI-AMND.DOC\EXH10.1(b)
<PAGE>
EXHIBIT 10.1(c)
THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, made and entered
into as of the 29th day of March 1995, by and between FIRST INTERSTATE BANK OF
OREGON, N.A. (hereinafter referred to as "Bank"), and WILLIAMS CONTROLS, INC., a
Delaware corporation with its chief executive office at 14100 S.W. 72nd Avenue,
Portland, Oregon 97224 (hereinafter referred to as "Borrower").
RECITALS:
A. The parties entered into an amended and restated loan agreement
dated as of January 17, 1995, which was subsequently amended by various
amendments, the latest of which is numbered "Second" and is dated the 9th day of
March, 1995 (hereinafter collectively referred to as the "Agreement"), and the
parties now desire to amend the Agreement as hereinafter provided. Capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
the Agreement.
B. Hardee Williams, Inc. ("HWI") is obtaining a loan in the approximate
amount of $1,000,000.00 from Southern National Bank of South Carolina ("SNB
Loan" and "SNB", respectively).
C. SNB has required that HWI's guaranty of Borrower's obligations to
Bank be reduced to $3,000,000.00 as a condition of the SNB Loan, to which Bank
has agreed subject to the further condition that Borrower agree to the
provisions of this Amendment.
NOW, THEREFORE, the parties mutually agree as follows:
1. The Agreement is hereby amended to provide:
(a) Section 6.8 of the Agreement is hereby deleted and in
place thereof the following new Section 6.8 is inserted:
"6.8 Leverage Ratio. Permit the ratio of consolidated total
liabilities to consolidated Tangible Net Worth to exceed 2.25 to 1.0 until of
September 30, 1995, 2.0 to 1.0 until September 30, 1996, and 1.75 to 1.0
thereafter."
1 - THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI3AMND.DOC\EXH10.1(c)
<PAGE>
(b) Section 6.9 of the Agreement is hereby deleted and in
place thereof the following new Section 6.9 is inserted:
"6.9 Debt Service Coverage Ratio. Permit the ratio of consolidated
net income plus consolidated depreciation and consolidated interest expense to
consolidated scheduled maturities of long-term debt (including consolidated
capital leases) plus consolidated interest expense and consolidated dividends
(subject to Section 6.10) to be less than 2.0 to 1.0, measured quarterly on a
twelve (12) month rolling average basis, provided Borrower shall only use fifty
percent (50%) of the net income of HWI, and one hundred percent (100%) of the
interest expense of HWI (and not any depreciation) in the numerator of this
ratio."
(c) The definitions of "Loan Value of Accounts" and "Loan
Value of Inventory" are hereby deleted, and in place thereof the following new
definitions are inserted:
"Loan Value of Accounts shall mean (i) eighty percent (80.0%),
(from the date hereof until the earlier of August 1, 1995, or the date on which
the Ajay term loan is paid in full), and thereafter seventy-five percent (75.0%)
of the aggregate of all accounts of Williams Controls Industries, Inc. and Kenco
Williams, Inc., and (ii) seventy-five percent (75.0%) of the aggregate of all
accounts of NESC Williams, Inc., and (iii) seventy percent (70.0%) of the
aggregate of all accounts of Hardee Williams, Inc. (but in no event shall the
combined loan value of the accounts and inventory of Hardee Williams, Inc.
exceed $3,000,000.00), all less (iv) the face amount of all outstanding
commercial letters of credit issued by Bank for Borrower's account, and less (v)
the principal balance of the Ajay Loan, and less (vi) Ineligible Accounts."
"Loan Value of Inventory shall mean (i) fifty percent (50.0%)
(from the date hereof until the earlier of August 1, 1995, or the date on which
the Ajay term loan is paid in full), and thereafter forty-five percent (45.0%)
of the aggregate of all inventory of Williams Controls Industries, Inc. and
Kenco Williams, Inc., and (ii) forty-five percent (45.0%) of the aggregate of
all inventory of Hardee Williams, Inc. (but in no event shall the combined loan
value of the accounts and inventory of Hardee Williams, Inc. exceed
$3,000,000.00) and NESC Williams, Inc., all less (iii) Ineligible Inventory, but
in no event shall the loan value of inventory exceed Six Million and No/100
Dollars ($6,000,000.00)."
2. Except as herein amended, each and all of the terms and
provisions of the Agreement shall be and remain in full force and effect during
the term thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement, in duplicate, as of the date first hereinabove
written.
2 - THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI3AMND.DOC\EXH10.1(c)
<PAGE>
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE
BANK AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE BANK TO BE ENFORCEABLE.
Borrower hereby acknowledges receipt of a copy of this Amendment.
WILLIAMS CONTROLS, INC. FIRST INTERSTATE BANK OF
OREGON, N.A.
By By
-------------------------- ---------------------
Title Title
----------------------- -------------------
3 - THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI3AMND.DOC\EXH10.1(c)
<PAGE>
EXHIBIT 10.1(d)
FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, made and entered
into as of the 14th day of April 1995, by and between FIRST INTERSTATE BANK OF
OREGON, N.A. (hereinafter referred to as "Bank"), and WILLIAMS CONTROLS, INC., a
Delaware corporation with its chief executive office at 14100 S.W. 72nd Avenue,
Portland, Oregon 97224 (hereinafter referred to as "Borrower").
RECITALS:
A. The parties entered into an amended and restated loan agreement
dated as of January 17, 1995, which was subsequently amended by various
amendments, the latest of which is numbered "third" and is dated the 29th day of
March, 1995 (hereinafter collectively referred to as the "Agreement"), and the
parties now desire to amend the Agreement as hereinafter provided. Capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
the Agreement.
NOW, THEREFORE, the parties mutually agree as follows:
1. The Agreement is hereby amended to provide:
(a) Section 1 of the Agreement is hereby deleted and in place
thereof the following new Section 1 is inserted:
"1. APPLICATION FOR AND PURPOSE OF LOAN
Borrower has applied to Bank and now renews the application for
financial accommodations in part for the purpose of refinancing certain
indebtedness of Williams Controls Industries, Inc. ("WCII") and Kenco Williams,
Inc. ("KWI") (both wholly owned subsidiaries of Borrower). It is the intent of
the parties to this agreement that Borrower will use these loan facilities for
the direct benefit of itself, and the Affiliates, and these loan facilities are
being made to Borrower to facilitate and simplify the credit relationship of its
corporate enterprise. The loan facilities shall be in the form of: (a) a
secured, revolving line of credit ("Revolving Loan") in the maximum amount of
the lesser of (1) Ten Million Five Hundred Thousand and No/100 Dollars
($10,500,000.00) or (2) the sum of the Loan Value of Accounts, the Loan Value of
Inventory and the Loan Value of Letters of Credit, plus
1 - FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI4AMND.DOC\EXH10.1(d)
<PAGE>
One million Dollars ($1,000,000.00) less (i) the face amount of any commercial
letters of credit, standby letters of credit, and Bankers Acceptances issued by
Bank for Borrower's account (subject to the Maximum LC and BA Limits), and (ii)
the principal amount outstanding of the Ajay Loan, for the purpose of working
capital and general corporate purposes of Borrower and its Affiliates; provided,
on the earlier of (x) forty-five (45) days from the date of this Amendment, (y)
May 15, 1995 or (z) disbursement of the Metlife Capital equipment loan estimated
by Borrower to be in the approximate amount of $2,265,000.00, the maximum amount
of the Revolving Loan shall be reduced to the lesser of (1) Ten Million and
No/100 Dollars ($10,000,000.00) or (2) the sum of the Loan Value of Accounts,
the Loan Value of Inventory and the Loan Value of Letters of Credit, less (i)
the face amount of any commercial letters of credit, standby letters of credit,
and Bankers Acceptances issued by Bank for Borrower's account (subject to the
Maximum LC and BA Limits), and (ii) the principal amount outstanding of the Ajay
Loan; (b) a secured term loan ("Term Loan") in the maximum amount of Three
Million Two Hundred Thousand and No/100 Dollars ($3,200,000.00) for the purpose
of refinancing certain equipment of Borrower and its Affiliates and for other
investment purposes permitted by the terms of this Agreement; (c) a secured,
term real property loan ("Real Estate Loan") in the maximum amount of Two
Million Three Hundred Ninety Thousand and No/100 Dollars ($2,390,000.00) for the
purpose of refinancing WCII's land and building located at 14100 S.W. 72nd
Avenue, Portland, Oregon 97224 and to provide financial support for Borrower's
investment in AJAY Leisure Products, Inc. ("Ajay") or for increased working
capital needs due to the KWI acquisition; and (d) a secured term loan in the
amount of Three Million and no/100 Dollars ($3,000,000.00) ("Ajay Loan") for the
purpose of refinancing indebtedness of WCII to Bank which was used to facilitate
the temporary refinancing of Ajay debt acquisition of Ajay. (The loans referred
to in this Section 1 shall be referred to collectively as the "Loans.")."
(b) The definitions of "Loan Value of Accounts" and "Loan
Value of Inventory" are hereby deleted, and in place thereof the following new
definitions are inserted:
"Loan Value of Accounts shall mean (i) eighty percent (80.0%),
(from the date hereof until the earlier of August 1, 1995, or the date on which
the Ajay term loan is paid in full), and thereafter seventy-five percent (75.0%)
of the aggregate of all accounts of Williams Controls Industries, Inc. and Kenco
Williams, Inc., and (ii) seventy-five percent (75.0%) of the aggregate of all
accounts of NESC Williams, Inc., and (iii) seventy percent (70.0%) of the
aggregate of all accounts of Hardee Williams, Inc. (but in no event shall the
combined loan value of the accounts and inventory of Hardee Williams, Inc.
exceed $3,000,000.00), and (iv) upon the consummation of the purchase of Aptek
Technologies, Inc. by Borrower, seventy-five percent of the aggregate of all
accounts of Aptek Williams, Inc. all less (v) the face amount of all outstanding
commercial letters of credit issued by Bank for Borrower's account, and less
(vi) the principal balance of the Ajay Loan, and less (vii)
2 - FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI4AMND.DOC\EXH10.1(d)
<PAGE>
Ineligible Accounts."
"Loan Value of Inventory shall mean (i) fifty percent (50.0%)
(from the date hereof until the earlier of August 1, 1995, or the date on which
the Ajay term loan is paid in full), and thereafter forty-five percent (45.0%)
of the aggregate of all inventory of Williams Controls Industries, Inc. and
Kenco Williams, Inc., and (ii) forty-five percent (45.0%) of the aggregate of
all inventory of Hardee Williams, Inc. (but in no event shall the combined loan
value of the accounts and inventory of Hardee Williams, Inc. exceed
$3,000,000.00) and NESC Williams, Inc., and (iii) upon the consummation of the
purchase of Aptek Technologies, Inc. by Borrower, forty-five percent (45.0%) of
the aggregate of all inventory of Aptek Williams, Inc., all less (iv) Ineligible
Inventory, but in no event shall the loan value of inventory exceed Six Million
and No/100 Dollars ($6,000,000.00)."
(c) A new definition of Loan Value of Letters of Credit is
hereby added to Section 8.1 of the Agreement as follows:
"Loan Value of Letters of Credit shall mean forty-five percent of
the face amount of all commercial letters of credit issued for the account of
Borrower (excluding any letters of credit to support Ajay Leisure Products, Inc.
or companies other than affiliates named in the definition of Affiliates in this
Agreement)."
(d) A new Section 6.13 is hereby added to the Agreement as
follows:
"6.13 Ratio of Liabilities to Earnings before Interest and Taxes.
Subject to any other restrictions in this Agreement concerning the Borrower
incurring additional indebtedness, the ratio of total indebtedness for borrowed
money of Borrower, of any type or nature, whether borrowed from Bank or any
other lender or person, including without limitation all amounts outstanding
under this Agreement, the face amount of all standby and commercial letters of
credit issued for Borrower's benefit, all capitalized lease obligations, amounts
outstanding under the Borrower's ESOP loan, and all accounts payable of Borrower
over 30 days past due, to earnings before interest and taxes for the four fiscal
quarters preceding the measurement date ("EBIT") to exceed 3.50 to 1.00. This
covenant shall be measured monthly based upon calculations of Total liabilities
and EBIT calculated at the end of each fiscal quarter of Borrower. For instance,
as of 12/31/94 Borrower's EBIT was $7,478,014 x 3.5 = $26,173,049 of allowable
debt to be measured at 1/31, 2/28 and 3/31 1995, when the EBIT and allowable
debt will be recalculated. Nothing in this Section 6.13 shall be construed to
permit Borrower to incur indebtedness otherwise prohibited by provisions of this
Agreement."
2. As a condition of Bank entering into this Amendment, Thomas W.
Itin shall provide an additional guaranty of $1,000,000.00 of the indebtedness
of Borrower, which shall be released by Bank upon the expiration of the period
specified in Section 1. and the
3 - FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI4AMND.DOC\EXH10.1(d)
<PAGE>
reduction of the maximum amount of the Revolving Loan and repayment of any
amount in excess of such reduced maximum amount.
3. Bank is not obligated to consent to any acquisitions by
Borrower under Section 6.5 of the Agreement at any time, and Bank shall not
consent to any new acquisitions by Borrower until the maximum amount of the
Revolving Loan is reduced in accordance with the provisions of Section 1. of the
Agreement.
4. Except as herein amended, each and all of the terms and
provisions of the Agreement shall be and remain in full force and effect during
the term thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement, in duplicate, as of the date first hereinabove
written.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE
BANK AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE BANK TO BE ENFORCEABLE.
Borrower hereby acknowledges receipt of a copy of this Amendment.
WILLIAMS CONTROLS, INC. FIRST INTERSTATE BANK OF
OREGON, N.A.
By By
--------------------- ---------------------------
Title Title
------------------ -------------------------
4 - FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI\WCI4AMND.DOC\EXH10.1(d)
<PAGE>
EXHIBIT 10.1(e)
FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT, made and
entered into as of the 28th day of April 1995, by and between FIRST INTERSTATE
BANK OF OREGON, N.A. (hereinafter referred to as "Bank"), and WILLIAMS CONTROLS,
INC., a Delaware corporation with its chief executive office at 14100 S.W. 72nd
Avenue, Portland, Oregon 97224 (hereinafter referred to as "Borrower").
RECITALS:
A. The parties entered into an amended and restated loan agreement
dated as of January 17, 1995, which was subsequently amended by various
amendments, the latest of which is numbered "Fourth" and is dated the 14th day
of April, 1995 (hereinafter collectively referred to as the "Agreement"), and
the parties now desire to amend the Agreement as hereinafter provided.
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Agreement.
NOW, THEREFORE, the parties mutually agree as follows:
1. The Agreement is hereby amended to provide:
(a) Section 6.9 of the Agreement is hereby deleted and in
place thereof the following new Section 6.9 is inserted:
"6.9 Debt Service Coverage Ratio. Permit the ratio of
consolidated net income plus consolidated depreciation and consolidated interest
expense to consolidated scheduled maturities of long-term debt (including
consolidated capital leases) plus consolidated interest expense and consolidated
dividends (subject to Section 6.10) to be less than 2.0 to 1.0, measured
quarterly on a twelve (12) month rolling average basis, provided Borrower shall
only use fifty percent (50%) of the net income of HWI and WACCAMAW WHEEL
WILLIAMS, INC. ("WWWl"), and one hundred percent (100%) of the interest expense
of HWI and WWWI (and not any depreciation) in the numerator of this ratio."
2. Except as herein amended, each and all of the terms and
provisions of the Agreement shall be and remain in full force and effect during
the term thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to the Agreement, in duplicate, as of the date first hereinabove
written.
UNDER OREGON LAW. MOST AGREEMENTS. PROMISES AND
1 - FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI \WCI5AMND.DOC\EXH10.1(e)
<PAGE>
COMMITMENTS MADF BY THE BANK AFTER OCTOBER 3. 1989. CONCERNING LOANS
AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL. FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST
BE IN WRITING. EXPRESS CONSIDERATION AND BE SIGNED BY THE BANK TO BE
ENFORCEABLE.
Borrower hereby acknowledges receipt ofa copy of this Amendment.
WILLIAMS CONTROLS, INC. FIRST INTERSTATE BANK OF
OREGON, N.A.
By By
-------------------- -------------------------
Title: Title:
2 - FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
DGE\WCI \WCI5AMND.DOC\EXH10.1(e)
<PAGE>
EXHIBIT 10.1(f)
AMENDED AND RESTATED
CONTINUING UNCONDITIONAL GUARANTY
(WITH ARBITRATION)
DATED ______ __, 1995 at Portland, Oregon
WILLIAMS CONTROLS, INC. ("DEBTOR")
_____________________ ("GUARANTOR")
PRINCIPAL AMOUNT OF THIS GUARANTY Three Million and No/100 Dollars
($3,000,000.00)
RECITALS
A. Guarantor executed a continuing unconditional guaranty in favor of Bank in
the principal amount of $21,000,000.00 on January 17, 1995.
B. Guarantor is obtaining a loan in the approximate amount of $1,000,000.00 from
Southern National Bank of South Carolina ("SNB Loan" and "SNB", respectively).
C. SNB has required that Guarantor's guaranty be reduced to $3,000,000.00 as a
condition of the SNB Loan, to which Bank and the affilliated corporations of
Guarantor executing this amended and restated continuing unconditional guaranty
have agreed.
The Parties hereby agree as follows:
IN CONSIDERATION of the granting of credit to the above-named
Debtor by FIRST INTERSTATE BANK OF OREGON, N.A. (hereinafter called "Bank") or
the extension of time for the payment of any Indebtedness of Debtor to Bank, and
for other good and valuable consideration, Guarantor does hereby unconditionally
guarantee to Bank, its successors and assigns, payment, on demand, in lawful
money of the United States of America, of any and all Indebtedness of Debtor to
Bank. Guarantor agrees that upon any default of Debtor in payment of Debtor's
Indebtedness to Bank or any part thereof, Guarantor will pay to Bank, upon
demand, the entire amount of the Indebtedness of Debtor to the full extent of
this Guaranty without any obligation on the part of Bank to endeavor to collect
such Indebtedness from or proceed against Debtor or any surety, endorser or
other guarantor or to liquidate any collateral then held by Bank securing
payment of such Indebtedness.
Page 1 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
1. Maximum Liability. The liability of Guarantor under this
guaranty shall not exceed the Principal Amount set forth above, plus interest,
and any costs, including attorney fees, that may be incurred in enforcing the
payment of the Indebtedness of Debtor or in connection with the collection or
sale of any collateral held by the Bank securing payment of such Indebtedness
whether or not suit or action is instituted.
2. "Indebtedness" defined. The word Indebtedness is used
herein in its most comprehensive sense and means any and all indebtedness of
every kind and nature for which Debtor may now be indebted or may in the future
become indebted to Bank however that indebtedness may be evidenced, whether
incurred voluntarily or involuntarily, in whatever form it may be, and at
whatever time it may be created, whether that indebtedness or any part of it is
evidenced by a promissory note or notes, by contract or agreement (whether
express or implied), overdraft, bank credit card debt or any other manner or
form whatsoever, and whether the liability of Debtor is primary, secondary or
contingent.
3. Obligations of and Payments by Debtor. The Principal Amount
of this Guaranty shall not operate as a restriction upon the amount of the
Indebtedness of Debtor to Bank, either in the aggregate or at any one time. Bank
shall have and is hereby given the right and privilege to apply all sums of
money or property which it may receive from Debtor, by setoff, or for Debtor's
benefit, to the reduction or payment of any Indebtedness of Debtor in excess of
the amount covered by this Guaranty, before any such amounts need be applied to
the reduction of the liability of Guarantor created by virtue of this Guaranty.
4. Bank's Rights in Dealing with Debtor. Guarantor consents to
any and all interest rate changes and modifications of terms and extensions of
time for the payment of Debtor's Indebtedness to Bank, or any part thereof, or
any renewals or modifications of instruments evidencing the Indebtedness or
relating to collateral or security for the Indebtedness. Guarantor authorizes
Bank, without notice or demand and without affecting his liability hereunder,
from time to time to renew, compromise, extend, accelerate or otherwise change
the time for payment of, or otherwise change the terms of the Indebtedness or
any part thereof. Bank may release any collateral given to Bank by Debtor, with
or without substitution of new collateral, and Bank may release, agree not to
sue, or choose not to proceed against the Debtor's sureties, endorsers or other
guarantors without affecting the liability of Guarantor herein. Guarantor
further waives: (a) presentment and demand for payment of any of the
Indebtedness of Debtor; (b) protest and notice of dishonor or default with
respect to any of the Indebtedness of Debtor; (c) all other notices to which he
might otherwise be entitled, other than notice requirements under the Loan
Agreement, Promissory Note and Pledge Agreement, entered into between Debtor and
Bank; and (d) any demand for payment under this Guaranty.
5. Waiver of Acceptance of or Reliance on Guaranty. This
Guaranty shall take effect when received by Bank without the necessity of any
acceptance of the Guaranty
Page 2 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
by Bank or any reliance upon the Guaranty by Bank and Guarantor hereby waives
any requirement of acceptance or reliance by Bank.
6. Bank's Rights in Dealing with Collateral of Debtor. On the
nonpayment of the Indebtedness or any part thereof, or on the default of Debtor
in any other particular, Bank may, at its option and without in any manner
affecting the liability of Guarantor herein, do any of the following: (a) choose
not to endeavor to realize upon or liquidate any collateral then held by Bank;
(b) sell at public or private sale, at such time and place, for such price, by
such method or manner and upon such terms as it may deem reasonable, any
collateral now or hereafter held by it; and (c) negotiate and compromise with
Debtor, or any person, firm or corporation liable upon any collateral now or
hereafter held by it. Guarantor further waives any right to notice of sale of
collateral by Bank whether by public or private sale and further waives the
right to object to the method, manner, time, place and terms of the sale of
collateral or the collection of or realization on Debtor's accounts or general
intangibles by Bank.
7. Effect of Certain Events. Without limiting the generality
of any other provisions hereof, this Guaranty shall remain in full force and
effect and shall not be in any way affected by nor shall Guarantor be exonerated
or his liabilities and obligations discharged in whole or in part by any of the
following events: (a) any merger, acquisition, consolidation or change in
structure of Debtor or any sale, lease, transfer or other disposition of any or
all of the assets or capital stock of Debtor; (b) any claim, defense,
counterclaim or setoff which Debtor may have or assert; (c) any action by Bank
which impairs collateral, including but not limited to any failure by Bank to
perfect a security interest in any collateral or relating to Bank's custody and
preservation of collateral; or (d) any action by Bank which limits or affects
any rights of Guarantor to proceed against or seek recourse to any other
guarantor, surety or endorser with respect to payments made by Guarantor
pursuant to this Guaranty.
8. Subordination of Guarantor' Rights Against Debtor. In the
event of payment by Guarantor to Bank of any amount whatsoever and the resultant
subrogation of Guarantor to the rights of Bank by reason of such payment or in
the event Guarantor shall for any other reason acquire a claim against Debtor,
the amount of the indebtedness of Debtor to Bank after the payment by Guarantor
pursuant to this Guaranty shall have priority over any claim that Guarantor may
have against Debtor, whether or not Debtor is at such time or thereafter becomes
insolvent. Guarantor further expressly subordinates any claim Guarantor now has
or in the future obtains against Debtor to any claim that Bank may have against
Debtor at any time and for any reason.
9. Guarantor's Familiarity with Debtor. Guarantor hereby
acknowledges that he is making this Guaranty at Debtor's request based solely on
his familiarity with and independent investigation of Debtor's financial
condition, affairs and circumstances and not
Page 3 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
in reliance upon any investigation or knowledge of Bank. Guarantor represents
that he is fully aware of such conditions, affairs and circumstances and
acknowledges that as between himself and Bank, he will have full responsibility
to inform himself as to any changes in such condition, affairs and
circumstances. Guarantor hereby waives any duty on the part of Bank, and
acknowledges that he is not relying upon and is not expecting Bank, to disclose
to him any fact now or hereafter known by Bank relating to such condition,
affairs or circumstances.
10. Enforceability of Guaranty Not Conditional. The
enforceability of this Guaranty is not conditioned upon any other person or
entity also guarantying the payment of Debtor's Indebtedness to Bank or upon any
other act to be performed by Bank or any other person or entity as a condition
to the full enforceability of this Guaranty.
11. Duration of Guaranty. This Guaranty shall be an open and
continuous one and shall continue in full force and effect until terminated by
written notice of such termination delivered by Guarantor to Bank personally or
by certified mail. In the event of such termination this Guaranty shall continue
to remain in full force and effect with respect to the amount of Indebtedness
covered by this Guaranty outstanding and owing from Debtor to Bank and all
amounts which Bank has committed itself to lend to Debtor at the time such
notice is received by Bank, including all renewals, extensions and refinancings
of such amounts. If the Indebtedness or any part thereof is in the nature of
revolving debt, the amount of said revolving debt covered by this Guaranty is
the total aggregate amount owing as of the date of termination hereunder, plus
interest, even though payments are received and applied by Bank and money is
reborrowed by Debtor subsequent to the date of termination.
12. Requirement of Writing. Guarantor understands and agrees
that this Guaranty cannot be waived, abandoned, terminated, released, or
modified in any way by Bank except in writing signed by an authorized agent of
Bank. Guarantor further understands and agrees that he cannot rely in any
respect upon any oral statements or representations relating to this Guaranty
and hereby warrants that he has not so relied.
13. Assignment of Guaranty. Bank may assign this Guaranty and
its rights hereunder shall be enforceable by any assignee of the Indebtedness
herein guarantied.
14. Not Affected by Bankruptcy Code. Guarantor agrees that
this Guaranty shall remain in full force and effect notwithstanding any action
by or against Bank or concerning any collateral which is secured to Bank in
connection with the Indebtedness of Debtor in any proceeding in the United
States Bankruptcy Court including, but not limited to: (a) matters relating to
valuation of collateral; (b) election or imposition of secured or unsecured
claim status upon claims by Bank; or (c) confirmation of any reorganization plan
or other payment plan pursuant to any Chapter of the Bankruptcy Code. In the
event any payment received upon this obligation and paid by any person or entity
including Guarantor
Page 4 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
shall be deemed by final order of a court to have been a voidable preference
under the bankruptcy laws of the United States, or a court otherwise declares
that Bank is not entitled to retain any such payment for any reason, the
obligation of Guarantor shall remain as an obligation due hereunder and shall
not be considered as having been extinguished by said payment or payments
notwithstanding any purported cancellation of this Guaranty by Bank or return of
this Guaranty by Bank to Guarantor.
15. Existence of Other Guaranties. Guarantor's liability
hereunder is several and is independent of any other guaranties given by
Guarantor or any other party at any time with respect to all or any part of the
Debtor's Indebtedness to Bank. Guarantor's liability hereunder may be enforced
regardless of the existence of any such other guaranties. Such other guaranties,
if any, also remain fully enforceable upon their own terms.
16. Bank's Right to Setoff. Bank shall have a general lien on
and security interest in and a right of setoff against all property of the
Guarantor now or hereafter in Bank's possession or on deposit with Bank, whether
held in a general or special account, or for safekeeping or otherwise, and such
lien, security interest and right of setoff may be enforced or exercised without
demand upon or notice to Guarantor.
17. Attorney Fees Recoverable. In the event any arbitration,
suit or action is instituted to enforce or interpret any of the terms of this
Guaranty, including any action or participation in or in connection with a case
or proceeding under any Chapter of the Bankruptcy Code or any successor statute,
the prevailing party shall be entitled to such sum as the arbitrator or court
may adjudge reasonable as attorney fees in such arbitration, suit, action or
proceeding or upon any appeal from any judgment, order or decree entered
therein. Whether or not any court action is involved, all reasonable attorney
fees incurred by Bank that are necessary at any time in Bank's opinion for the
protection of its interests or enforcement of its rights hereunder shall become
a part of the indebtedness payable on demand.
18. Joint and Several Liability. The word "Guarantor" and the
language of this Guaranty shall, where there is more than one Guarantor, be
construed as plural and be binding jointly and severally upon all Guarantors.
However, termination by a Guarantor pursuant to paragraph 11 shall not affect
the liability of any other Guarantor hereunder.
Masculine pronouns include the feminine and neuter.
19. Severability. If any provision of this Guaranty is
declared invalid by any court, the remaining provisions of the Guaranty shall
not be affected thereby and shall remain fully enforceable.
Page 5 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
20. Death of Guarantor. The death of Guarantor shall not
terminate liability hereunder and the Guaranty shall be binding upon Guarantor's
heirs, devisees and personal representative. This Guaranty shall continue in
full force and effect after Guarantor's death until terminated by a legal
representative of Guarantor in accordance with paragraph 11.
21. Sole Agreement. This writing is intended by the parties as
a final and complete expression of this Guaranty Agreement. No prior course of
dealing between the parties, no usage of trade, and no oral or extrinsic
evidence of any nature shall be used to supplement or modify any term.
22. Governing Law and Jurisdiction. This Guaranty shall be
construed and enforced according to the laws of the State of Oregon without
regard to the principle of conflicts of laws. Any suit or action in regard to or
arising out of the terms or conditions of this Guaranty shall be litigated in
the state or federal courts situated in the State of Oregon and Guarantor hereby
submits to the jurisdiction of these courts.
23. FINANCIAL REPORTING. Guarantor hereby agrees to deliver to
Bank, promptly upon receipt thereof and within one hundred twenty (120) days
after close of the fiscal year of Guarantor the report of an independent public
accountant satisfactory to the Bank representing the financial condition of
Guarantor at the close of such fiscal year and the operations of Guarantor
during such year prepared in accordance with generally accepted audit standards.
24. Arbitration Program
(a) Binding Arbitration. Upon the demand of any party
("Party/Parties"), to a Document (as defined below), whether made before or
after the institution of any judicial proceeding, but limited to not more than
sixty (60) days after service of a complaint, third party complaint, cross-claim
or counterclaim or any answer thereto or any amendment to any of these
pleadings, any Dispute (as defined below) shall be resolved by binding
arbitration in accordance with the terms of the Arbitration Program defined in
this paragraph 24. A "Dispute" shall include but is not limited to any action,
dispute, claim or controversy of any kind, whether founded in contract, tort,
Federal or State statutory or common law, equity, or otherwise, now existing or
hereafter arising between any of the Parties arising out of, under, pertaining
to or in connection with any agreement, document or instrument to which this
Arbitration Program is attached or in which it appears or is referenced or any
related agreements, documents, or instruments ("Documents"). Any Party who fails
to submit to binding arbitration following a demand made under this paragraph by
another Party shall bear all costs and expenses, including reasonable attorneys'
fees (including those incurred in any trial, bankruptcy proceeding, or on
appeal), incurred
Page 6 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
by the other Party in obtaining a stay of any pending judicial proceeding or in
obtaining an order compelling arbitration of any Dispute. The parties agree that
any agreement, document or instrument which includes, attaches to or
incorporates this Arbitration Program represents a transaction involving
"commerce" as that term is used in the Federal Arbitration Act, ("FAA") Title 9
United States Code.
(b) Governing Rules. Arbitrations conducted pursuant
to this Arbitration Program shall be administered by the American Arbitration
Association ("AAA"), or other mutually agreeable administrator ("Administrator")
in accordance with the Commercial Arbitration Rules of the AAA. The FAA shall
govern any judicial proceedings, resolve any issue of arbitrability, and
procedurally govern any arbitration related to this Arbitration Program. The
arbitrator(s) shall resolve all Disputes in accordance with the applicable
substantive law designated in the Documents. The Parties agree not to assert any
claim for punitive damages or prejudgment interest except to the extent such
remedies or provisions of law are specifically authorized by statute. Judgment
upon any award rendered hereunder may be entered in any court of competent
jurisdiction.
(c) Preservation of Remedies. No provision of, nor
the exercise of any rights under, this arbitration clause shall limit any right
any Party may have to: (1) foreclose against any real or personal property
collateral or other security, or obtain a personal or deficiency award; (2)
exercise self-help remedies (including repossession and setoff rights); or (3)
obtain provisional or ancillary remedies such as injunctive relief,
sequestration, attachment, replevin, garnishment, or the appointment of a
receiver from a court having jurisdiction. Such rights can be exercised at any
time except to the extent such action is contrary to a final arbitration award
or decision where any such relief, or remedy could have been requested. The
institution and maintenance of an action as described above shall not constitute
a waiver of the right of any Party to submit the Dispute to arbitration, nor
render inapplicable the compulsory arbitration provisions hereof. Any claim or
Dispute related to exercise of any self-help, auxiliary or other rights under
this subparagraph shall be a Dispute hereunder.
(d) Arbitrator Powers and Qualifications; Awards.
Notwithstanding any contrary provisions of the Commercial Arbitration Rules of
the AAA, the Parties agree to select a neutral "qualified" arbitrator or a panel
of three "qualified" arbitrators to resolve any Dispute hereunder. "Qualified"
means a practicing attorney, with not less than ten (10) years practice in
commercial law, licensed to practice in the state of the applicable substantive
law designated in the Documents. A Dispute in which the claims or amounts in
controversy do not exceed One Million and No/100 Dollars ($1,000,000.00), shall
be decided by a single arbitrator. A single arbitrator shall have authority to
render an award up to but not to exceed One Million and No/100 Dollars
($1,000,000.00) including all damages of any kind whatsoever (including, without
limitation, any statutory or punitive damages authorized by this Arbitration
Program), interest, costs, fees, attorneys' fees and
Page 7 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
expenses. Submission to a single arbitrator shall be a waiver of all Parties'
claims to recover more than One Million and No/100 Dollars ($1,000,000.00). A
Dispute involving claims or amounts in controversy exceeding One Million and
No/100 Dollars ($1,000,000.00) shall be decided by a majority vote of a panel of
three qualified arbitrators. If the Parties dispute the amount of the claim(s)
and the resolution would impact the number of arbitrators, a single arbitrator
shall be selected under this subparagraph and decide the amount of the claim(s)
as a preliminary matter. The arbitrator(s) shall not have the power to award
punitive or exemplary damages except where such damages are specifically
provided for by statute upon which the award is based. The arbitrator(s) shall
be empowered to, at the written request of any Party in any Dispute, (1)
consolidate in a single proceeding any multiple party claims that are
substantially identical; (2) consolidate any claims and Disputes between other
Parties which arise out of or relate to the subject matter hereof; and (3)
administer multiple arbitration claims as class actions in accordance with Rule
23 of the Federal Rules of Civil Procedure. The arbitrator(s) shall be empowered
to resolve any disputed issues of arbitrability, and other disputes regarding
the terms of this Arbitration Program but shall have no power to change or alter
the terms of this Arbitration Program. The prevailing Party in any Dispute shall
be entitled to recover its reasonable attorneys' fees in any arbitration, and
the arbitrator(s) shall have the power to award such fees.
(e) Miscellaneous. All statutes of limitation
applicable to any Dispute shall apply to any proceeding in accordance with this
Arbitration Program. The Parties agree, to the maximum extent practicable, to
take any action necessary to conclude an arbitration hereunder within 180 days
of the filing of a Dispute with the Administrator. The arbitrator(s) shall be
empowered to impose sanctions for any Party's failure to proceed within the
times established herein. Arbitrations shall be conducted in the state of
Oregon, County of Multnomah. The provisions of this Arbitration Program shall
survive any termination, amendment, or expiration hereof or of the Documents
unless the Parties otherwise expressly agree in writing. Each Party agrees to
keep all Disputes and arbitration proceedings strictly confidential, except for
disclosures of information required in the ordinary course of business of the
Parties or as required by applicable law or regulation. If any provision of this
Arbitration Program is declared invalid by any court, the remaining provisions
shall not be affected thereby and shall remain fully enforceable. The Parties
understand they have decided that upon demand of any of them, their Disputes may
be resolved by arbitration rather than in a court and once so decided cannot
later be brought, filed, or pursued in court.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED
Page 8 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
BY THE BANK TO BE ENFORCEABLE. GUARANTOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS
GUARANTY.
I HAVE READ THIS GUARANTY. I UNDERSTAND THAT THIS GUARANTY IS
EFFECTIVE UNTIL TERMINATED IN THE MANNER SET FORTH IN PARAGRAPH 11.
_____________________(Guarantor)
By _____________________________
Title __________________________
Guarantor
ACKNOWLEDGED AND AGREED:
WILLIAMS CONTROLS, INC.
By ____________________________________
Thomas W. Itin
Chief Executive Officer and President
WILLIAMS CONTROLS INDUSTRIES, INC.
By ____________________________________
Title ________________________________
KENCO WILLIAMS, INC.
By ____________________________________
Title ________________________________
NESC WILLIAMS, INC.
By ____________________________________
Title ________________________________
WILLIAMS TECHNOLOGIES, INC.
Page 9 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
By ____________________________________
Title ________________________________
WILLIAMS AUTOMOTIVE, INC.
By ____________________________________
Title ________________________________
WILLIAMS WORLD TRADE, INC.
By ____________________________________
Title ________________________________
WILLIAMS INTERNATIONAL, INC
By ____________________________________
Title ________________________________
WACCAMAW WHEEL WILLIAMS, INC.
By ____________________________________
Title ________________________________
Page 10 - Guaranty
DGE\WCI\WCIHWamd.GTY\EXH10.1(f)
<PAGE>
EXHIBIT 10.1(g)
CONTINUING UNCONDITIONAL GUARANTY
(WITH ARBITRATION)
DATED April 14, 1995 at Portland, Oregon
WILLIAMS CONTROLS, INC. ("DEBTOR")
THOMAS W. ITIN ("GUARANTOR")
PRINCIPAL AMOUNT OF THIS GUARANTY One Million and No/100 Dollars
($1,000,000.00)
THIS GUARANTY IS GIVEN IN ADDITION TO THE GUARANTY GIVEN BY GUARANTOR ON JANUARY
17, 1995, AND NOT IN LIEU THEREOF.
IN CONSIDERATION of FIRST INTERSTATE BANK OF OREGON, N.A.
(hereinafter called "Bank") entering into the Fourth Amendment of Amended an
Restated Loan Agreement, of even date with this guaranty, and for other good and
valuable consideration, Guarantor does hereby unconditionally guarantee to Bank,
its successors and assigns, payment, on demand, in lawful money of the United
States of America, of any and all Indebtedness of Debtor to Bank. Guarantor
agrees that upon any default of Debtor in payment of Debtor's Indebtedness to
Bank or any part thereof, Guarantor will pay to Bank, upon demand, the entire
amount of the Indebtedness of Debtor to the full extent of this Guaranty without
any obligation on the part of Bank to endeavor to collect such Indebtedness from
or proceed against Debtor or any surety, endorser or other guarantor or to
liquidate any collateral then held by Bank securing payment of such
Indebtedness.
1. Maximum Liability. The liability of Guarantor under this
guaranty shall not exceed the Principal Amount set forth above, plus interest,
and any costs, including attorney fees, that may be incurred in enforcing the
payment of the Indebtedness of Debtor or in connection with the collection or
sale of any collateral held by the Bank securing payment of such Indebtedness
whether or not suit or action is instituted.
2. "Indebtedness" defined. The word Indebtedness is used
herein in its most comprehensive sense and means any and all indebtedness of
every kind and nature for which Debtor may now be indebted or may in the future
become indebted to Bank however that indebtedness may be evidenced, whether
incurred voluntarily or involuntarily, in whatever form it may be, and at
whatever time it
Page 1 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
may be created, whether that indebtedness or any part of it is evidenced by a
promissory note or notes, by contract or agreement (whether express or implied),
overdraft, bank credit card debt or any other manner or form whatsoever, and
whether the liability of Debtor is primary, secondary or contingent.
3. Obligations of and Payments by Debtor. The Principal Amount
of this Guaranty shall not operate as a restriction upon the amount of the
Indebtedness of Debtor to Bank, either in the aggregate or at any one time. Bank
shall have and is hereby given the right and privilege to apply all sums of
money or property which it may receive from Debtor, by setoff, or for Debtor's
benefit, to the reduction or payment of any Indebtedness of Debtor in excess of
the amount covered by this Guaranty, before any such amounts need be applied to
the reduction of the liability of Guarantor created by virtue of this Guaranty.
4. Bank's Rights in Dealing with Debtor. Guarantor consents to
any and all interest rate changes and modifications of terms and extensions of
time for the payment of Debtor's Indebtedness to Bank, or any part thereof, or
any renewals or modifications of instruments evidencing the Indebtedness or
relating to collateral or security for the Indebtedness. Guarantor authorizes
Bank, without notice or demand and without affecting his liability hereunder,
from time to time to renew, compromise, extend, accelerate or otherwise change
the time for payment of, or otherwise change the terms of the Indebtedness or
any part thereof. Bank may release any collateral given to Bank by Debtor, with
or without substitution of new collateral, and Bank may release, agree not to
sue, or choose not to proceed against the Debtor's sureties, endorsers or other
guarantors without affecting the liability of Guarantor herein. Guarantor
further waives: (a) presentment and demand for payment of any of the
Indebtedness of Debtor; (b) protest and notice of dishonor or default with
respect to any of the Indebtedness of Debtor; (c) all other notices to which he
might otherwise be entitled, other than notice requirements under the Loan
Agreement, Promissory Note and Pledge Agreement, entered into between Debtor and
Bank; and (d) any demand for payment under this Guaranty.
5. Waiver of Acceptance of or Reliance on Guaranty. This
Guaranty shall take effect when received by Bank without the necessity of any
acceptance of the Guaranty by Bank or any reliance upon the Guaranty by Bank and
Guarantor hereby waives any requirement of acceptance or reliance by Bank.
6. Bank's Rights in Dealing with Collateral of Debtor. On the
nonpayment of the Indebtedness or any part thereof, or on the default of Debtor
in any other particular, Bank may, at its option and without in any manner
affecting the liability of
Page 2 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
Guarantor herein, do any of the following: (a) choose not to endeavor to realize
upon or liquidate any collateral then held by Bank; (b) sell at public or
private sale, at such time and place, for such price, by such method or manner
and upon such terms as it may deem reasonable, any collateral now or hereafter
held by it; and (c) negotiate and compromise with Debtor, or any person, firm or
corporation liable upon any collateral now or hereafter held by it. Guarantor
further waives any right to notice of sale of collateral by Bank whether by
public or private sale and further waives the right to object to the method,
manner, time, place and terms of the sale of collateral or the collection of or
realization on Debtor's accounts or general intangibles by Bank.
7. Effect of Certain Events. Without limiting the generality
of any other provisions hereof, this Guaranty shall remain in full force and
effect and shall not be in any way affected by nor shall Guarantor be exonerated
or his liabilities and obligations discharged in whole or in part by any of the
following events: (a) any merger, acquisition, consolidation or change in
structure of Debtor or any sale, lease, transfer or other disposition of any or
all of the assets or capital stock of Debtor; (b) any claim, defense,
counterclaim or setoff which Debtor may have or assert; (c) any action by Bank
which impairs collateral, including but not limited to any failure by Bank to
perfect a security interest in any collateral or relating to Bank's custody and
preservation of collateral; or (d) any action by Bank which limits or affects
any rights of Guarantor to proceed against or seek recourse to any other
guarantor, surety or endorser with respect to payments made by Guarantor
pursuant to this Guaranty.
8. Subordination of Guarantor' Rights Against Debtor. In the
event of payment by Guarantor to Bank of any amount whatsoever and the resultant
subrogation of Guarantor to the rights of Bank by reason of such payment or in
the event Guarantor shall for any other reason acquire a claim against Debtor,
the amount of the indebtedness of Debtor to Bank after the payment by Guarantor
pursuant to this Guaranty shall have priority over any claim that Guarantor may
have against Debtor, whether or not Debtor is at such time or thereafter becomes
insolvent. Guarantor further expressly subordinates any claim Guarantor now has
or in the future obtains against Debtor to any claim that Bank may have against
Debtor at any time and for any reason.
9. Guarantor's Familiarity with Debtor. Guarantor hereby
acknowledges that he is making this Guaranty at Debtor's request based solely on
his familiarity with and independent investigation of Debtor's financial
condition, affairs and circumstances and not in reliance upon any investigation
or knowledge of Bank. Guarantor represents that he is fully aware of such
conditions, affairs and circumstances and acknowledges that
Page 3 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
as between himself and Bank, he will have full responsibility to inform himself
as to any changes in such condition, affairs and circumstances. Guarantor hereby
waives any duty on the part of Bank, and acknowledges that he is not relying
upon and is not expecting Bank, to disclose to him any fact now or hereafter
known by Bank relating to such condition, affairs or circumstances.
10. Enforceability of Guaranty Not Conditional. The
enforceability of this Guaranty is not conditioned upon any other person or
entity also guarantying the payment of Debtor's Indebtedness to Bank or upon any
other act to be performed by Bank or any other person or entity as a condition
to the full enforceability of this Guaranty.
11. Duration of Guaranty. This Guaranty shall be an open and
continuous one and shall continue in full force and effect until terminated by
written notice of such termination delivered by Guarantor to Bank personally or
by certified mail. In the event of such termination this Guaranty shall continue
to remain in full force and effect with respect to the amount of Indebtedness
covered by this Guaranty outstanding and owing from Debtor to Bank and all
amounts which Bank has committed itself to lend to Debtor at the time such
notice is received by Bank, including all renewals, extensions and refinancings
of such amounts. If the Indebtedness or any part thereof is in the nature of
revolving debt, the amount of said revolving debt covered by this Guaranty is
the total aggregate amount owing as of the date of termination hereunder, plus
interest, even though payments are received and applied by Bank and money is
reborrowed by Debtor subsequent to the date of termination.
12. Requirement of Writing. Guarantor understands and agrees
that this Guaranty cannot be waived, abandoned, terminated, released, or
modified in any way by Bank except in writing signed by an authorized agent of
Bank. Guarantor further understands and agrees that he cannot rely in any
respect upon any oral statements or representations relating to this Guaranty
and hereby warrants that he has not so relied.
13. [Deleted]
14. Not Affected by Bankruptcy Code. Guarantor agrees that
this Guaranty shall remain in full force and effect notwithstanding any action
by or against Bank or concerning any collateral which is secured to Bank in
connection with the Indebtedness of Debtor in any proceeding in the United
States Bankruptcy Court including, but not limited to: (a) matters relating to
valuation of collateral; (b) election or imposition of secured or unsecured
claim status upon claims by Bank; or (c) confirmation of any reorganization plan
or other payment plan pursuant to any Chapter
Page 4 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
of the Bankruptcy Code. In the event any payment received upon this obligation
and paid by any person or entity including Guarantor shall be deemed by final
order of a court to have been a voidable preference under the bankruptcy laws of
the United States, or a court otherwise declares that Bank is not entitled to
retain any such payment for any reason, the obligation of Guarantor shall remain
as an obligation due hereunder and shall not be considered as having been
extinguished by said payment or payments notwithstanding any purported
cancellation of this Guaranty by Bank or return of this Guaranty by Bank to
Guarantor.
15. Existence of Other Guaranties. Guarantor's liability
hereunder is several and is independent of any other guaranties given by
Guarantor or any other party at any time with respect to all or any part of the
Debtor's Indebtedness to Bank. Guarantor's liability hereunder may be enforced
regardless of the existence of any such other guaranties. Such other guaranties,
if any, also remain fully enforceable upon their own terms.
16. Bank's Right to Setoff. Bank shall have a general lien on
and security interest in and a right of setoff against all property of the
Guarantor now or hereafter in Bank's possession or on deposit with Bank, whether
held in a general or special account, or for safekeeping or otherwise, and such
lien, security interest and right of setoff may be enforced or exercised without
demand upon or notice to Guarantor.
17. Attorney Fees Recoverable. In the event any arbitration,
suit or action is instituted to enforce or interpret any of the terms of this
Guaranty, including any action or participation in or in connection with a case
or proceeding under any Chapter of the Bankruptcy Code or any successor statute,
the prevailing party shall be entitled to such sum as the arbitrator or court
may adjudge reasonable as attorney fees in such arbitration, suit, action or
proceeding or upon any appeal from any judgment, order or decree entered
therein. Whether or not any court action is involved, all reasonable attorney
fees incurred by Bank that are necessary at any time in Bank's opinion for the
protection of its interests or enforcement of its rights hereunder shall become
a part of the indebtedness payable on demand.
18. Joint and Several Liability. The word "Guarantor" and the
language of this Guaranty shall, where there is more than one Guarantor, be
construed as plural and be binding jointly and severally upon all Guarantors.
However, termination by a Guarantor pursuant to paragraph 11 shall not affect
the liability of any other Guarantor hereunder. Masculine pronouns include the
feminine and neuter.
19. Severability. If any provision of this Guaranty is
Page 5 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
declared invalid by any court, the remaining provisions of the Guaranty shall
not be affected thereby and shall remain fully enforceable.
20. Death of Guarantor. The death of Guarantor shall not
terminate liability hereunder and the Guaranty shall be binding upon Guarantor's
heirs, devisees and personal representative. This Guaranty shall continue in
full force and effect after Guarantor's death until terminated by a legal
representative of Guarantor in accordance with paragraph 11.
21. Sole Agreement. This writing is intended by the parties as
a final and complete expression of this Guaranty Agreement. No prior course of
dealing between the parties, no usage of trade, and no oral or extrinsic
evidence of any nature shall be used to supplement or modify any term.
22. Governing Law and Jurisdiction. This Guaranty shall be
construed and enforced according to the laws of the State of Oregon without
regard to the principle of conflicts of laws. Any suit or action in regard to or
arising out of the terms or conditions of this Guaranty shall be litigated in
the state or federal courts situated in the State of Oregon and Guarantor hereby
submits to the jurisdiction of these courts.
23. FINANCIAL REPORTING. Guarantor hereby agrees to deliver to
Bank, promptly upon receipt thereof and within one hundred twenty (120) days
after close of the fiscal year of Guarantor the report of an independent public
accountant satisfactory to the Bank representing the financial condition of
Guarantor at the close of such fiscal year and the operations of Guarantor
during such year prepared in accordance with generally accepted audit standards.
24. Arbitration Program
(a) Binding Arbitration. Upon the demand of any party
("Party/Parties"), to a Document (as defined below), whether made before or
after the institution of any judicial proceeding, but limited to not more than
sixty (60) days after service of a complaint, third party complaint, cross-claim
or counterclaim or any answer thereto or any amendment to any of these
pleadings, any Dispute (as defined below) shall be resolved by binding
arbitration in accordance with the terms of the Arbitration Program defined in
this paragraph 24. A "Dispute" shall include but is not limited to any action,
dispute, claim or controversy of any kind, whether founded in contract, tort,
Federal or State statutory or common law, equity, or otherwise, now existing or
hereafter arising between any of the Parties arising out of, under, pertaining
to or
Page 6 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
in connection with any agreement, document or instrument to which this
Arbitration Program is attached or in which it appears or is referenced or any
related agreements, documents, or instruments ("Documents"). Any Party who fails
to submit to binding arbitration following a demand made under this paragraph by
another Party shall bear all costs and expenses, including reasonable attorneys'
fees (including those incurred in any trial, bankruptcy proceeding, or on
appeal), incurred by the other Party in obtaining a stay of any pending judicial
proceeding or in obtaining an order compelling arbitration of any Dispute. The
parties agree that any agreement, document or instrument which includes,
attaches to or incorporates this Arbitration Program represents a transaction
involving "commerce" as that term is used in the Federal Arbitration Act,
("FAA") Title 9 United States Code.
(b) Governing Rules. Arbitrations conducted pursuant
to this Arbitration Program shall be administered by the American Arbitration
Association ("AAA"), or other mutually agreeable administrator ("Administrator")
in accordance with the Commercial Arbitration Rules of the AAA. The FAA shall
govern any judicial proceedings, resolve any issue of arbitrability, and
procedurally govern any arbitration related to this Arbitration Program. The
arbitrator(s) shall resolve all Disputes in accordance with the applicable
substantive law designated in the Documents. The Parties agree not to assert any
claim for punitive damages or prejudgment interest except to the extent such
remedies or provisions of law are specifically authorized by statute. Judgment
upon any award rendered hereunder may be entered in any court of competent
jurisdiction.
(c) Preservation of Remedies. No provision of, nor
the exercise of any rights under, this arbitration clause shall limit any right
any Party may have to: (1) foreclose against any real or personal property
collateral or other security, or obtain a personal or deficiency award; (2)
exercise self-help remedies (including repossession and setoff rights); or (3)
obtain provisional or ancillary remedies such as injunctive relief,
sequestration, attachment, replevin, garnishment, or the appointment of a
receiver from a court having jurisdiction. Such rights can be exercised at any
time except to the extent such action is contrary to a final arbitration award
or decision where any such relief, or remedy could have been requested. The
institution and maintenance of an action as described above shall not constitute
a waiver of the right of any Party to submit the Dispute to arbitration, nor
render inapplicable the compulsory arbitration provisions hereof. Any claim or
Dispute related to exercise of any self-help, auxiliary or other rights under
this subparagraph shall be a Dispute hereunder.
(d) Arbitrator Powers and Qualifications; Awards.
Page 7 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
Notwithstanding any contrary provisions of the Commercial Arbitration Rules of
the AAA, the Parties agree to select a neutral "qualified" arbitrator or a panel
of three "qualified" arbitrators to resolve any Dispute hereunder. "Qualified"
means a practicing attorney, with not less than ten (10) years practice in
commercial law, licensed to practice in the state of the applicable substantive
law designated in the Documents. A Dispute in which the claims or amounts in
controversy do not exceed One Million and No/100 Dollars ($1,000,000.00), shall
be decided by a single arbitrator. A single arbitrator shall have authority to
render an award up to but not to exceed One Million and No/100 Dollars
($1,000,000.00) including all damages of any kind whatsoever (including, without
limitation, any statutory or punitive damages authorized by this Arbitration
Program), interest, costs, fees, attorneys' fees and expenses. Submission to a
single arbitrator shall be a waiver of all Parties' claims to recover more than
One Million and No/100 Dollars ($1,000,000.00). A Dispute involving claims or
amounts in controversy exceeding One Million and No/100 Dollars ($1,000,000.00)
shall be decided by a majority vote of a panel of three qualified arbitrators.
If the Parties dispute the amount of the claim(s) and the resolution would
impact the number of arbitrators, a single arbitrator shall be selected under
this subparagraph and decide the amount of the claim(s) as a preliminary matter.
The arbitrator(s) shall not have the power to award punitive or exemplary
damages except where such damages are specifically provided for by statute upon
which the award is based. The arbitrator(s) shall be empowered to, at the
written request of any Party in any Dispute, (1) consolidate in a single
proceeding any multiple party claims that are substantially identical; (2)
consolidate any claims and Disputes between other Parties which arise out of or
relate to the subject matter hereof; and (3) administer multiple arbitration
claims as class actions in accordance with Rule 23 of the Federal Rules of Civil
Procedure. The arbitrator(s) shall be empowered to resolve any disputed issues
of arbitrability, and other disputes regarding the terms of this Arbitration
Program but shall have no power to change or alter the terms of this Arbitration
Program. The prevailing Party in any Dispute shall be entitled to recover its
reasonable attorneys' fees in any arbitration, and the arbitrator(s) shall have
the power to award such fees.
(e) Miscellaneous. All statutes of limitation
applicable to any Dispute shall apply to any proceeding in accordance with this
Arbitration Program. The Parties agree, to the maximum extent practicable, to
take any action necessary to conclude an arbitration hereunder within 180 days
of the filing of a Dispute with the Administrator. The arbitrator(s) shall be
empowered to impose sanctions for any Party's failure to proceed within the
times established herein. Arbitrations shall be conducted in the state of
Oregon, County of Multnomah. The
Page 8 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
provisions of this Arbitration Program shall survive any termination, amendment,
or expiration hereof or of the Documents unless the Parties otherwise expressly
agree in writing. Each Party agrees to keep all Disputes and arbitration
proceedings strictly confidential, except for disclosures of information
required in the ordinary course of business of the Parties or as required by
applicable law or regulation. If any provision of this Arbitration Program is
declared invalid by any court, the remaining provisions shall not be affected
thereby and shall remain fully enforceable. The Parties understand they have
decided that upon demand of any of them, their Disputes may be resolved by
arbitration rather than in a court and once so decided cannot later be brought,
filed, or pursued in court.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
THE BANK TO BE ENFORCEABLE. GUARANTOR ACKNOWLEDGES RECEIPT OF A COPY OF THIS
GUARANTY.
I HAVE READ THIS GUARANTY. I UNDERSTAND THAT THIS GUARANTY IS
EFFECTIVE UNTIL TERMINATED IN THE MANNER SET FORTH IN PARAGRAPH 11.
__________________________
Thomas W. Itin, Guarantor
Page 9 - Guaranty
DGE\WCI\WCI2ITIN.GTY\EXH10.1(g)
<PAGE>
EXHIBIT 10.2
GUARANTY
THIS GUARANTY is dated and delivered effective as of October 3, 1994,
by Thomas W. Itin ("Itin"), for the benefit of Williams Controls, Inc.
("Williams") and Williams Controls Industries, Inc. ("WCII"), both Delaware
corporations and their successors. Williams and WCII collectively are referred
to herein as the "Company."
A. Ajay Leisure Products, Inc. (the "Ajay subsidiary"), a wholly-owned
subsidiary of Ajay Sports, Inc. ("Ajay") has executed and delivered to WCII a
promissory note in the principal amount of $7,000,000 (the "Note") of even date
herewith in connection with the loan made by WCII to the Ajay subsidiary under a
Loan and Security Agreement dated May 5, 1994, as amended (the "Loan
Agreement"). Unless the context requires otherwise, Ajay shall be deemed herein
to refer to both the Ajay subsidiary and Ajay.
B. In connection with a $7,000,000 line of credit provided by WCII to
the Ajay subsidiary in May 1994, among other rights, Ajay granted to Williams
certain options to purchase common stock under the Williams/Ajay Loan and Joint
Venture Implementation
Agreement dated May 6, 1994 (the "JV Agreement").
C. Itin is a director, executive officer and significant stockholder of
Ajay.
D. Williams is a party to an Amended and Restated Loan Agreement with
First Interstate Bank of Oregon, N.A. (the "Bank") under which the Company
borrowed a portion of the funds to loan to the Ajay subsidiary.
E. The Company has assigned the Note to the Bank.
F. Itin has unconditionally guaranteed the Company's obligations to the
Bank which it incurred in connection with its loan to the Ajay subsidiary (the
"Bank Guaranty"), and the Ajay subsidiary's obligations to WCII (the "WCII
Guaranty"). Under the Bank Guaranty and the WCII Guaranty, the maximum amount
for which Itin is to be liable is not to exceed $7,000,000 in the aggregate.
G. Itin is delivering this Guaranty in connection with Williams'
exercise of stock options to purchase 4,111,647 shares (the "Shares") of Ajay
common stock for an aggregate purchase price of $1,400,000, and in reliance on
that certain letter dated March 2, 1995, a copy of which is attached.
H. This Guaranty, when delivered, shall supersede the WCII Guaranty in
all respects. Under the Bank Guaranty and this Guaranty, the maximum amount for
which Itin is to be liable is not to exceed $8,400,000 in the aggregate.
1002AE64/EXH10.2
<PAGE>
NOW, THEREFORE, in consideration of the extension of credit by the
Company to Ajay and for other good and valuable consideration the adequacy and
receipt of which hereby is acknowledged, and intending to be legally bound, Itin
hereby covenants and agrees with the Company as follows:
1. The Guaranty. Except as otherwise provided in paragraph 2 below,
Itin hereby absolutely and unconditionally guarantees to the Company the
collection when due of all of Ajay's monetary obligations under the Note
(including, without limitation, principal, interest and reasonable collection
costs due to the Company under the Note) and the Market Value (as hereinafter
defined) of the Shares at not less than $1,400,000 on the date, if any, that
Itin first becomes obligated to perform under this Guaranty, all of the
foregoing being hereinafter referred to as the "Guaranteed Obligations." For
purposes of this Guaranty, "Market Value" shall mean the average closing bid
price per share of the Ajay common stock as reported on the NASDAQ SmallCap
Market or the OTC Bulletin Board, or if none, the National Quotation Bureau's
"Pink Sheets."
2. Limitation of Guaranty. The maximum amount of Guaranteed Obligations
for which Itin shall be liable under this Guaranty and Itin's Bank Guaranty
shall not exceed $8,400,000 in the aggregate.
3. Continuing Guaranty. Except as otherwise provided herein, this
Guaranty shall continue to be in force and be binding upon Itin until the
Guaranteed Obligations have been paid in full. Itin shall be entitled to copies
of all notices and demands of every kind and nature to which Ajay is entitled
under the Note or other loan documents. If Ajay shall fail to pay any or all of
the Guaranteed Obligations and an Event of Default (as such term is defined in
the Note) shall occur, the Company shall give Itin written notice of such Event
of Default and proceed to enforce this Guaranty.
4. Application of Payments. Any payment made by Itin under this
Guaranty shall be effective to reduce or discharge the liability of Itin
hereunder without further notice of any kind.
5. Termination. This Guaranty shall terminate (a) if the Company,
without Itin's consent, amends, modifies or extends the Note, waives compliance
by Ajay with any of the terms thereof or settles or compromises any of the
Guaranteed Obligations whether or not any such action increases Itin's liability
hereunder or (b) when all of the Guaranteed Obligations are paid in full and 95
days has elapsed since the date of full payment and no bankruptcy, insolvency or
similar filing has occurred with respect to Ajay or Itin. Upon the occurrence of
any such events, Williams will furnish Itin written cancellation of this
Guaranty and will return the original of this Guaranty to Itin.
1002AE64/EXH10.2
-2-
<PAGE>
6. General Provisions.
(a) No delay on the part of Williams in the exercise of any power
or right shall operate as a waiver thereof, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof or the
exercise of any other power or right.
(b) This Guaranty may not be assigned.
(c) This Guaranty is made under and shall be governed by the laws
of the State of Delaware.
7. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given only if and when (a) personally
delivered, or (b) three business days after mailing, postage prepaid, by
certified mail, or (c) when delivered (and receipted for) by an overnight
delivery service, addressed in each case as follows:
(i) If to Williams or WCII to:
Thomas W. Itin, President
Williams Controls, Inc.
14100 SW 72nd Avenue
Portland, OR 97224
FAX NO (503) 684-9675
with a copy to:
Mary M. Maikoetter, Esq.
Friedlob Sanderson Raskin Paulson & Tourtillott
1400 Glenarm Place, Suite 300
Denver, CO 80202
FAX NO. (303) 595-3159
(ii) If to Itin, to:
Thomas W. Itin
7001 Orchard Lake Road, Suite 424
West Bloomfield, MI 48322-3608
FAX NO. (810) 851-5651
with a copy to:
Thomas K. Ziegler, Esq.
7001 Orchard Lake Road, Suite 424
West Bloomfield, MI 48322-3608
FAX NO. (810) 851-5651
Persons entitled to notice hereunder may change the address for the giving of
notices and communications to it or him, and/or copies
1002AE64/EXH10.2
-3-
<PAGE>
thereof, by written notice to the other parties in conformity with
the foregoing.
IN WITNESS WHEREOF, Itin has caused this Guaranty to be executed as of
the date first above written.
"ITIN"
-----------------------------
Thomas W. Itin
1002AE64/EXH10.2
-4-
<PAGE>
March 2, 1995
Thomas W. Itin
7001 Orchard Lake Road
Suite 424
West Bloomfield, MI 48322-3608
Dear Tom:
In consideration of you ("Itin") agreeing to deliver the attached
Guaranty ("Guaranty") dated as of October 3, 1994 in favor of Williams Controls,
Inc. and Williams Controls Industries, Inc. (collectively, the "Company"),
guaranteeing the indebtedness of Ajay Leisure Products, Inc. (the "Ajay
subsidiary") to the Company in the maximum amount of up to $7,000,000 (the
"Loan") and the Company's equity investment of $1,400,000 (the "Ajay Stock") in
Ajay Sports, Inc. ("Ajay"), the Company hereby agrees as follows:
1. Notwithstanding any provision in the Guaranty to the contrary, if
the Ajay subsidiary defaults under the Loans, the Company first will proceed
against the Ajay subsidiary and/or the collateral securing the Loan.
2. If the Company seeks to enforce the Guaranty against Itin, it will
assign to Itin any collateral under the Loan which has not been sold or
otherwise disposed of in order to satisfy the Guaranteed Obligations (as defined
in the Guaranty).
3. To the extent Itin is required to make up any deficiency in the
value of the Ajay Stock as provided under the Guaranty, the Company will assign
and transfer to Itin a proportionate interest in the Ajay Stock.
It is the intention of the Company that Itin will be called upon to
satisfy the Guaranty only as a last resort after the Company has exhausted all
other remedies available to it.
WILLIAMS CONTROLS, INC.
WILLIAMS CONTROLS INDUSTRIES, INC.
By
-------------------------------
Dale J. Nelson, Chief Financial
Officer
1002AE64/EXH10.2
<PAGE>
EXHIBIT 10.3
WILLIAMS CONTROLS, INC.
1995 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
1. Purpose; Restrictions on Amount Available Under the Plan. This 1995
Formula Stock Option Plan (the "Plan") is intended to encourage stock ownership
by directors of WILLIAMS CONTROLS, INC. (the "Corporation") who are not
employees of the Corporation and thereby to induce qualified persons to be
willing to serve in such capacity. It is intended that options granted under
this Plan shall constitute "non-statutory stock options" ("Options").
2. Definitions. As used in this Plan, the following words and phrases
shall have the meanings indicated:
(a) "Disability" shall mean a Recipient's inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
12 months.
(b) "Market Value" per share as of a particular date shall mean
the last sale price of the Corporation's Common Stock as reported on a national
securities exchange or on the NASDAQ National Market System or, if a last sale
reporting quotation is not available for the Corporation's Common Stock, the
average of the bid and asked prices of the Corporation's Common Stock as
reported by NASDAQ or on the electronic bulletin board, or if not so reported,
as listed in the National Quotation Bureau, Inc.'s "Pink Sheets" or, if such
quotations are unavailable, the value determined by the Board in accordance with
their discretion in making a bona fide, good faith determination of fair market
value. Market Value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.
(c) "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as amended from time to time (codified at Title 26 of the
United States Code) (the "Internal Revenue Code"), and any successor
legislation.
3. Administration.
(a) The Plan shall be administered by the Board of Directors (the
"Board"), but this Plan is intended to be a "formula plan" as that term is
defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"1934 Act"). It is intended, therefore, that Options granted hereunder qualify
as exempt purchases under Rule 16b-3 of the 1934 Act.
1002A75A/EXH10.3
<PAGE>
(b) The Board shall have the authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan, to administer
the Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the administration of
the Plan, including (without limitation) the authority to: determine who
qualifies for the receipt of Options; to determine the purchase price of the
shares of Common Stock covered by each Option pursuant to the formula (the
"Option Price"); to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan provided such actions are consistent with
this Plan; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(c) Because this Plan is intended to be a formula plan, Options
granted under the Plan need not be evidenced by duly adopted resolutions of the
Board.
(d) The Board shall endeavor to administer the Plan and grant
Options hereunder in a manner that is compatible with the obligations of persons
subject to Section 16 of the 1934 Act, although compliance with Section 16 is
the obligation of the Recipient, not the Corporation. Neither the Board nor the
Corporation assumes any responsibility for a Recipient's compliance with his
obligations under Section 16 of the 1934 Act.
(e) No member of the Board shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
4. Eligibility. Only directors of the Corporation who are not employees
of the Corporation are eligible to receive Options granted pursuant hereto. A
Recipient shall be eligible to receive more than one grant of an Option during
the term of the Plan, on the terms and subject to the restrictions herein set
forth.
5. Stock Reserved.
(a) The stock subject to Options hereunder shall be shares of the
Corporation's Common Stock, $.01 par value per share ("Common Stock"). Such
shares may, in whole or in part, be authorized but unissued shares or shares
that shall have been or that may be reacquired by the Corporation. The aggregate
number of shares of Common Stock as to which Options may be granted from time to
time under the Plan shall not exceed 200,000. The limitation established by the
preceding sentences shall be subject to adjustment as provided in Section 6(g)
hereof.
(b) If any outstanding Option under the Plan for any reason
expires or is terminated without having been exercised in full the shares of
Common Stock allocable to the unexercised
-2-
1002A75A/EXH10.3
<PAGE>
portion of such Option shall become available for subsequent grants of Options
under the Plan, unless the Plan shall have been terminated.
6. Terms and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by a written Option Agreement between the Corporation
and the Recipient, which agreement shall be substantially in the form of Exhibit
"A" attached hereto as modified from time to time by the Board in its
discretion, and which shall comply with and be subject to the following terms
and conditions:
(a) Grant. Each Recipient who is a director and not an employee of
the Corporation on the date of the Corporation's annual (or special in lieu of
annual) meeting of stockholders (the "Date of Grant") shall be automatically
granted an Option to acquire 10,000 shares of Common Stock exercisable at the
Option Price described in paragraph 6(c), exercisable for ten years from the
Date of Grant, subject to the other terms and conditions hereof.
(b) Vesting. Subject to earlier termination or acceleration as
provided herein, each Option granted under this Plan is subject to the following
vesting schedule: (i) 25% of the Option shall be exercisable on the Date of
Grant; (ii) cumulatively an additional 25% of the Option shall become
exercisable on the first anniversary of the Date of Grant; (ii) cumulatively an
additional 25% of the Option shall become exercisable on the second anniversary
of the Date of Grant; and (iii) cumulatively the remaining 25% of the Option
shall become exercisable on the third anniversary of the Date of Grant.
(c) Option Price. Options granted under this Plan will have an
Option Price equal to 100% of the Market Price on the Date of Grant. The Option
Price shall be subject to adjustment as provided in Section 6(g) hereof.
(d) Method of Exercise and Medium and Time of Payment.
(i) An Option may be exercised, as to any or all whole shares
of Common Stock as to which the Option has become exercisable.
(ii) Each exercise of an Option granted hereunder, whether in
whole or in part, shall be by written notice to the Secretary of the Corporation
designating the number of shares as to which the Option is exercised, and shall
be accompanied by payment in full of the Option Price for the number of shares
so designated, together with any written statements reasonably required by the
Corporation in order to fulfill its obligations under any applicable securities
laws.
-3-
1002A75A/EXH10.3
<PAGE>
(iii) The Option Price shall be paid in cash, in shares of
Common Stock having a market value equal to such Option Price or in property or
in a combination of cash, shares and property, and (subject to approval of the
Board of Directors) may be effected in whole or in part (A) with monies received
from the Corporation at the time of exercise as a compensatory cash payment, or
(B) with monies borrowed from the Corporation pursuant to repayment terms and
conditions as shall be determined from time to time by the Board, in its
discretion, separately with respect to each exercise of Options and each
Recipient; provided, however, that each such method and time for payment and
each such borrowing and terms and conditions of repayment shall be permitted by
and be in compliance with applicable law.
(iv) The Board of Directors shall have the sole and absolute
discretion to determine whether or not property other than cash or Common Stock
may be used to satisfy the Option Price and, if so, to determine the value of
the property received.
(e) Termination. Except as provided in this Section 6(d) and in
Section 6(e) hereof, an Option may not be exercised unless the Recipient is then
a director of the Corporation, and unless the Recipient has remained
continuously as a director of the Corporation since the Date of Grant of the
Option.
(i) If the Recipient ceases to be director of the Corporation
because the Recipient resigned or declined to stand for reelection as a
director, all Options of such Recipient that are exercisable at the time of such
cessation shall terminate three months after the date of such cessation.
(ii) If the Recipient ceases to be a director of the
Corporation because the Recipient is removed for cause, all Options granted to
such Recipient but not thereto exercised shall terminate on the effective date
of the Recipient's removal.
(iii) Nothing in the Plan or in any Option granted pursuant
hereto shall confer upon an individual any right to continue as a director of
the Corporation.
(f) Death, Disability or Retirement of Recipient. If a Recipient
shall die while a director of the Corporation or if the Recipient's directorship
shall terminate by reason of Disability, all Options theretofore granted to such
Recipient (whether or not otherwise exercisable; unless earlier terminated in
accordance with their terms), may be exercised by the Recipient or by the
Recipient's estate or by a person who acquired the right to exercise such Option
by bequest or inheritance or otherwise by reason of the death or Disability of
the Recipient, at any time within one year after the date of death or Disability
of the Recipient.
-4-
1002A75A/EXH10.3
<PAGE>
(g) Transferability Restriction. (i) Options granted under the
Plan shall not be transferable other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder. Options may be exercised, during the lifetime of
the Recipient, only by the Recipient and thereafter only by his legal
representative.
(ii) Any attempted sale, pledge, assignment, hypothecation or
other transfer of an Option contrary to the provisions hereof and the levy of
any execution, attachment or similar process upon an Option shall be null and
void and without force or effect and shall result in termination of the Option.
(iii) (A) As a condition to the transfer of any shares of
Common Stock issued upon exercise of an Option granted under this Plan, the
Corporation may require an opinion of counsel, satisfactory to the Corporation,
to the effect that such transfer will not be in violation of the Securities Act
of 1933 or any other applicable securities laws or that such transfer has been
registered under federal and all applicable state securities laws. (B) Further,
the Corporation shall be authorized to refrain from delivering or transferring
shares of Common Stock issued under this Plan until the Board of Directors
determines that such delivery or transfer will not violate applicable securities
laws and the Recipient has tendered to the Corporation any federal, state or
local tax owed by the Recipient as a result of exercising the Option, or
disposing of any Common Stock, when the Corporation has a legal liability to
satisfy such tax. (C) The Corporation shall not be liable for damages due to
delay in the delivery or issuance of any stock certificate for any reason
whatsoever, including, but not limited to, a delay caused by listing
requirements of any securities exchange or the National Association of
Securities Dealers, or any registration requirements under the Securities Act of
1933, the 1934 Act, or under any other state or federal law, rule or regulation.
(D) The Corporation is under no obligation to take any action or incur any
expense in order to register or qualify the delivery or transfer of shares of
Common Stock under applicable securities laws or to perfect any exemption from
such registration or qualification. (E) The Corporation will have no liability
to any Recipient for refusing to deliver or transfer shares of Common Stock if
such refusal is based upon the foregoing provisions of this Paragraph.
(h) Effect of Certain Changes.
(i) If there is any change in the number of outstanding
shares of Common Stock through the declaration of stock dividends, or through
recapitalization resulting in stock splits, or combinations or exchanges of such
shares, the number of shares
-5-
1002A75A/EXH10.3
<PAGE>
of Common Stock available for Options, the number of such shares covered by
outstanding Options, and the price per share of such Options, shall be
proportionately adjusted by the Board to reflect any increase or decrease in the
number of issued shares of Common Stock; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.
(ii) In the event of the proposed dissolution or liquidation
of the Corporation, in the event of any corporate separation or division,
including, but not limited to, split-up or spin-off, or in the event of a merger
or consolidation of the Corporation with another corporation, the Board may
provide that the holder of each Option then exercisable shall have the right to
exercise such Option (at its then Option Price) solely for the kind and amount
of shares of stock and other securities, property, cash or any combination
thereof which would be receivable upon such dissolution, liquidation, or
corporate separation or division, or merger or consolidation by a holder of the
number of shares of Common Stock for which such Option might have been exercised
immediately prior to such event; or the Board may provide, in the alternative,
that each Option granted under the Plan shall terminate as of a date to be fixed
by the Board; provided, however, that not less than 30 days' written notice of
the date so fixed shall be given to each Recipient, who shall have the right,
during the period of 30 days preceding such termination, to exercise the Options
as to all or any part of the shares of Common Stock covered thereby, including
shares as to which such Options would not otherwise be exercisable.
(iii) Paragraph (ii) of this Section 6(g) shall not apply to
a merger or consolidation in which the Corporation is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or merger
of another corporation into the Corporation in which the Corporation is the
surviving corporation and in which there is a reclassification or change
(including a change which results in the right to receive cash or other
property) of the shares of Common Stock (other than a change in par value, or
from par value to no par value, or as a result of a subdivision or combination,
but including any change in such shares into two or more classes or series of
shares), the Board may provide that the holder of each Option then exercisable
shall have the right to exercise such Option solely for the kind and amount of
shares of stock and other securities (including those of any new direct or
indirect parent of the Corporation), property, cash or any combination thereof
receivable upon such reclassification, change, consolidation or merger by the
holder of the number of shares of Common Stock for which such Option might have
been exercised.
-6-
1002A75A/EXH10.3
<PAGE>
(iv) Notwithstanding paragraph (ii) of this Section 6(g), in
the event of any merger or consolidation in which the Corporation is not the
surviving corporation or any sale or transfer by the Corporation of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Corporation, all Options
granted under the Plan shall become exercisable in full, notwithstanding any
other provision of the Plan or of any outstanding Options granted thereunder,
including provisions providing for staggered vesting of options, on and after
(i) the fifteenth day prior to the effective date of such merger, consolidation,
sale, transfer or acquisition or (ii) the date of commencement of such tender
offer or exchange offer, as the case may be. Notwithstanding the foregoing, in
no event shall any Option be exercisable after the date of termination of the
exercise period of such Option specified in Sections 6(d) or 6(e), as
applicable.
(v) In the event of a change in the Common Stock of the
Corporation as presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a different
par value or without par value, the shares resulting from any such change shall
be deemed to be the Common Stock within the meaning of the Plan.
(vi) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive.
(vi) Except as expressly provided in this Section 6(g), the
Recipient shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, consolidation or split-up or spin-off
of assets or stock of another corporation; and any issue by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to the
Option. The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets.
(i) Rights as Shareholder - Non-Distributive Intent.
-7-
1002A75A/EXH10.3
<PAGE>
(i) Neither a person to whom an Option is granted, nor such
person's legal representative, heir, legatee or distributee, shall be deemed to
be the holder of, or to have any rights of a holder with respect to, any shares
of Common Stock subject to such Option, until after the Option is exercised and
the shares are issued to the person exercising such Option.
(ii) Upon exercise of an Option at a time when there is no
registration statement in effect under the Securities Act of 1933 relating to
the shares issuable upon exercise, shares may be issued to the Recipient only if
the Recipient represents and warrants in writing to the Corporation that the
shares purchased are being acquired for investment and not with a view to the
distribution thereof. A form of subscription agreement is attached hereto as
Exhibit B.
(iii) No shares shall be issued upon the exercise of an
Option unless and until there shall have been compliance with any then
applicable requirements of the Securities and Exchange Commission, or any other
regulatory agency having jurisdiction over the Corporation.
(iv) No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distribution or
other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 6(g) hereof.
(j) Other Provisions. Option Agreements authorized under the Plan
shall contain such other provisions, including, without limitation, the
imposition of restrictions upon the exercise of an Option, as the Board shall
deem advisable.
7. Agreement by Recipient Regarding Taxes.
(a) Each Recipient agrees that the Corporation, to the extent
permitted or required by law, shall deduct a sufficient number of shares due to
the Recipient upon exercise of the Option to allow the Corporation to pay
federal, state and local taxes of any kind required by law to be withheld upon
the exercise of such Option from any payment of any kind otherwise due to the
Recipient. The Corporation shall not be obligated to advise any Recipient of the
existence of any tax or the amount which the Corporation will be so required to
withhold.
(b) Each Option Recipient must acknowledge the possible
availability of an election under Section 83(b) of the Code, or any successor
provision.
-8-
1002A75A/EXH10.3
<PAGE>
8. Term of Plan. Options may be granted pursuant to the Plan from time
to time within a period of ten years from the date the Plan is adopted by the
Board.
9. Amendment and Termination of the Plan.
(a) (i) The Board at any time and from time to time may terminate,
modify or amend the Plan;
(ii) provided, however, that any amendment that would: (A)
materially increase the number of securities issuable under the Plan to persons
who are subject to Section 16(a) of the 1934 Act; or (B) grant eligibility to a
class of persons who are subject to Section 16(a) of the 1934 Act not included
within the terms of the Plan prior to the amendment; (C) materially increase the
benefits accruing under the Plan to persons who are subject to Section 16(a) of
the 1934 Act; or (D) require shareholder approval under applicable state law,
the rules and regulations of any national securities exchange on which the
Corporation's securities then may be listed, the Internal Revenue Code or any
other applicable law, shall be subject to the approval of the shareholders of
the Corporation as provided in Section 10 hereof;
(iii) provided further that any such increase or modification
that may result from adjustments authorized by Section 6(g) hereof or which are
required for compliance with the 1934 Act, the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, their rules or other laws or
judicial order, shall not require approval of shareholders.
(b) Except as provided in Section 6 hereof, no termination,
modification or amendment of the Plan may adversely affect any Option previously
granted, unless the written consent of the Recipient is obtained.
10. Approval of Shareholders. The Plan shall take effect upon its
adoption by the Board but shall be subject to approval at a duly called and held
meeting of shareholders in conformance with the vote required by the
Corporation's charter documents, resolution of the Board, any other applicable
law and the rules and regulations thereunder, or the rules and regulations of
any national securities exchange upon which the Corporation's Common Stock is
listed and traded, each to the extent applicable. No Option granted prior to the
approval of this Plan by the shareholders of the Corporation shall be effective
until after such approval has been obtained.
11. Assumption. The terms and conditions of any outstanding Options
granted pursuant to this Plan shall be assumed by, be binding upon and inure to
the benefit of any successor corporation to the Corporation and shall continue
to be governed, to the extent
-9-
1002A75A/EXH10.3
<PAGE>
applicable, by the terms and conditions of this Plan. Such successor corporation
shall not otherwise be obligated to assume this Plan.
12. Termination of Right of Action. Every right of action arising out
of or in connection with the Plan by or on behalf of the Corporation, or by any
shareholder of the Corporation against any past, present or future member of the
Board, or against any employee, or by an employee (past, present or future)
against the Corporation, will, irrespective of the place where an action may be
brought and irrespective of the place of residence of any such shareholder,
director or employee, cease and be barred by the expiration of three years from
the date of the act or omission in respect of which such right of action is
alleged to have risen.
13. Adoption.
(a) This Plan was approved by the Board of Directors of the
Corporation on , 1995.
-------- ---
(b) This Plan was approved by the shareholders of the Corporation
at a meeting on , 1995.
------- ---
WILLIAMS CONTROLS, INC.
(the Corporation)
By
Thomas W. Itin, President
-10-
1002A75A/EXH10.3
<PAGE>
EXHIBIT "A"
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made as of this --- day of -----, 199-, between
WILLIAMS CONTROLS, INC., a Delaware corporation (the "Corporation"), and
- - - - ------------- (the "Recipient").
In accordance with its 1995 Stock Option Plan for Non-Employee
Directors (the "Plan") as adopted by the Board of Directors of the Corporation
on ------- ---, 1995, the Corporation desires, in connection with the services
of the Recipient, to provide the Recipient with an opportunity to acquire $.01
par value common stock (the "Common Stock") of the Corporation on favorable
terms and thereby increase the Recipient's proprietary interest in the continued
progress and success of the business of the Corporation.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein set forth and other good and valuable consideration, the Corporation and
the Recipient agree as follows:
1. Confirmation of Grant of Option. Pursuant to the requirements of the
Plan (but subject to shareholder approval of the Plan as required by Securities
and Exchange Commission Rule 16b-3), and effective ____________ ___, 199__ (the
"Date of Grant"), the Corporation, subject to the terms of the Plan and of this
Agreement, confirms that the Recipient has been irrevocably granted on the Date
of Grant, as a matter of separate inducement and agreement, and in addition to
and not in lieu of salary or other compensation for services, a Non-Statutory
Stock Option (the "Option") to purchase an aggregate of ______ shares of Common
Stock on the terms and conditions herein set forth, subject to adjustment as
provided in Section 8 hereof.
2. Purchase Price. The purchase price of shares of Common Stock covered
by the Option will be $_____ per share (the "Option Price") subject to
adjustment as provided in Section 8 hereof.
3. Exercise of Option. Except as otherwise provided in Section 6 of the
Plan, the Option may be exercised in whole or part at any time during the term
of the Option, provided, however, no Option shall be exercisable after the
expiration of the term thereof, and no Option shall be exercisable unless the
holder shall at the time of exercise have been an employee or director of or a
consultant to the Corporation or of any subsidiary of the Corporation for a
period of at least three months.
The Option may be exercised, as provided in this Paragraph 3, by notice
and payment to the Corporation as provided in Paragraph 10 hereof and Section
6(c) of the Plan.
1002A75A/EXH10.3
<PAGE>
4. Term of Option. The term of the Option will be through ________ ___,
199__, subject to earlier termination or cancellation as provided in this
Agreement. Except as otherwise provided in Paragraph 7 hereof, the Option will
not be exercisable unless the Recipient shall, at the time of exercise, be a
director of the Corporation.
The holder of the Option will not have any rights to dividends or any
other rights of a shareholder with respect to any shares of Common Stock subject
to the Option until such shares shall have been issued to him (as evidenced by
the appropriate transfer agent of the Corporation) upon purchase of such shares
through exercise of the Option.
5. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated in any way
(whether by operation of law or otherwise) otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder, and shall not be subject to
execution, attachment, or other process. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt to make any such
levy of execution, attachment or other process will cause the Option to
terminate immediately upon the happening of any such event, provided, however,
that any such termination of the Option under the foregoing provisions of this
Paragraph 5 will not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
6. Exercise Upon Termination. The Recipient's rights to exercise this
Option upon cessation as a director of the Corporation shall be as set forth in
Section 6(d) of the Plan.
7. Death or Disability of Recipient. The Recipient's rights to exercise
this Option upon death or Disability shall be as set forth in Section 6(e) of
the Plan.
8. Adjustments. The Option shall be subject to adjustment upon the
occurrence of certain events as set forth in Section 6(g) of the Plan.
9. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as amended (the
"Act") and that the Corporation has no obligation to register the shares of
Common Stock subject thereto and issuable upon the exercise thereof under the
Act. The Recipient represents that the Option is being acquired by him and that
such shares of Common Stock will be acquired by him for investment and all
certificates for the shares issued upon exercise of the Option will
-2-
1002A75A/EXH10.3
<PAGE>
bear the following legend unless such shares are registered under the Act prior
to their issuance.
The shares represented by this Certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
the availability of which is to be established to the satisfaction of
the Corporation.
The Recipient further understands and agrees that the Option may only
be exercised if, at the time of such exercise, the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Act and applicable state laws, and both the Recipient and the Corporation agree
to use their best efforts to attempt to establish such exemption.
10. Notices. Each notice relating to this Agreement will be in writing
and delivered in person or by certified mail to the proper address. All notices
to the Corporation shall be addressed to it at its office at 14100 SW 72nd
Avenue, Portland, Oregon 97224, Attn: Corporate Secretary. All notices to the
Recipient or other person or persons then entitled to exercise the Option shall
be addressed to the Recipient or such other person or Persons at the Recipient's
address below specified. Anyone to whom a notice may be given under this
Agreement may designate a new address by notice to that effect.
11. Agreement by Recipient Regarding Taxes. The Recipient acknowledges
the possible availability of an election under Section 83(b) of the Code and
agrees to give the Corporation prompt written notice of any election made by
such person under Section 83(b) of the Code, or any similar provision thereof.
12. Section 16 Compliance. The Recipient acknowledges that it is solely
responsible for filing all reports that may be required under Section 16 of the
Securities Exchange Act of 1934, and that the filing of such reports is not the
responsibility of the Corporation or the Committee, or any person thereof.
13. Approval of Counsel. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of the Act, the Securities
Exchange Act of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any stock exchange upon
which the Common Stock may then be listed.
-3-
1002A75A/EXH10.3
<PAGE>
14. Benefits of Agreement. This Agreement will inure to the benefit of
and be binding upon each successor and assign of the Corporation. All
obligations imposed upon the Recipient and all rights granted to the Corporation
under this Agreement will be binding upon the Recipient's heirs, legal
representatives and successors.
15. Governmental and Other Regulations. The exercise of the Option and
the Corporation's obligation to sell and deliver shares upon the exercise of
rights to purchase shares is subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or governmental
agency which may, in the opinion of counsel for the Corporation, be required.
16. Incorporation of the Plan. The Plan is attached hereto and
incorporated herein by reference. In the event that any provision in this
Agreement conflicts with a provision in the Plan, the Plan shall govern.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed in its name by its President or a Vice President and the Recipient has
executed this Agreement all as of the date first above written.
WILLIAMS CONTROLS, INC.
By___________________________
Thomas W. Itin, President
The undersigned Recipient understands the terms of this Option
Agreement and the attached Plan and hereby agrees to comply therewith.
Date_________ ___, 199__ ____________________________
Recipient: _________________
Tax ID Number:______________
Address: __________________
-4-
1002A75A/EXH10.3
<PAGE>
FORM OF
SUBSCRIPTION AGREEMENT
THE SECURITIES OF WILLIAMS CONTROLS, INC. BEING SUBSCRIBED FOR HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND ARE RESTRICTED SECURITIES"
AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE CORPORATION.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
This Subscription Agreement is entered for the purpose of the
Undersigned acquiring _________ shares of the $.01 par value common stock (the
"Securities") of WILLIAMS CONTROLS, INC., a Delaware corporation (the
"Corporation") from the Corporation upon the exercise of an Option pursuant to
the Williams Controls, Inc. 1995 Stock Option Plan for Non-Employee Directors
(the "Plan"). It is understood that exercise of an Option at a time when no
registration statement relating thereto is effective under the Securities Act of
1933, as amended (the "Securities Act") can not be completed until the
Undersigned executes this Subscription Agreement and delivers it to the
Corporation, and then such exercise is effective only in accordance with the
terms of the Plan and this Subscription Agreement.
In connection with the Undersigned's acquisition of the Securities, the
Undersigned represents and warrants to the Corporation as follows:
1. The Undersigned is a director of the Corporation and has access to
financial and other information which he may deem relevant to make an investment
decision regarding the acquisition of the Securities.
<PAGE>
2. The Securities are being acquired by the Undersigned for his own
account and not on behalf of any other person or entity. The Undersigned's
present financial condition is such that it is unlikely that it would be
necessary for the Undersigned to dispose of any portion of the Securities in the
foreseeable future.
3. The Undersigned understands that the Securities being acquired
hereby have not been registered under the Securities Act or any state or foreign
securities laws, and are and will continue to be restricted securities within
the meaning of Rule 144 of the General Rules and Regulations under the
Securities Act and applicable state statutes, and consents to the placement of
an appropriate restrictive legend or legends on any certificates evidencing the
Securities and any certificates issued in replacement or exchange therefor and
acknowledges that the Corporation will cause its stock transfer records to note
such restrictions.
4. By the Undersigned's execution below, it is acknowledged and
understood that the Corporation is relying upon the accuracy and completeness
hereof in complying with certain obligations under applicable securities laws.
5. This Agreement binds and inures to the benefit of the
representatives, successors and permitted assigns of the respective parties
hereto.
(Undersigned)
_____________ ___, 19__ ____________________________
Recipient: _________________
Tax ID Number:______________
Address: __________________
-2-
1002A75A/EXH10.3
<PAGE>
EXHIBIT 10.4
April 3, 1995
Robert R. Hebard
Ajay Sports, Inc.
7001 Orchard Lake Road, Suite 424
West Bloomfield, MI 48322-3608
RE: Williams/Ajay J.V. Agreement - Proposed Modifications
Dear Rick:
The Boards of Directors of Williams Controls, Inc. ("Williams") and
Williams Controls Industries, Inc. ("WCII") considered the March 21, 1995 letter
proposal (the "Letter Proposal") of Ajay Sports, Inc. ("Ajay") at a joint
meeting held on Friday, March 24, 1995. For purposes of this letter, Williams
and WCII are referred to collectively as the "Company." As previously conveyed
to Ajay, the Company would like to do whatever is prudent in order not to impede
Ajay from proceeding with its proposed public offering of preferred stock and
other alternative financing arrangements.
This letter confirms that the Company has agreed to the terms contained
in the Letter Proposal, a copy of which is attached hereto, provided that Ajay
agrees to the following additional terms:
1. The last sentence in Paragraph 6 of the Letter Proposal shall be
revised to reflect that the terms of the Williams/Ajay Loan and Joint Venture
Implementation Agreement, other than the terms related to the stock options,
shall be extended to August 1, 2002. The expiration date of the stock options
shall be as contemplated in the first sentence in Paragraph 6 of the Letter
Proposal.
2. The Company will extend the due date of the Loan from May 5, 1995 to
February 1, 1996; provided, however, commencing August 1, 1995, the maximum
amount which may be borrowed by Ajay under the line of credit shall be reduced
to $5,600,000 and the outstanding balance of the Loan at any time thereafter
shall not exceed $5,600,000.
1002B264/EXH10.4
<PAGE>
Robert R. Hebard
Ajay Sports, Inc.
April 3, 1995
Page 2
3. The Company's extension of the due date of the Loan as provided in
Section 2 hereof will not have the effect of extending the revised vesting
provisions of the stock options referenced in Paragraphs 3 - 5 of the Letter
Proposal beyond the August 1, 1995 date referenced therein.
If the Letter Proposal as revised hereby is acceptable to Ajay, please
sign below indicating concurrence and return one signed copy to my attention.
Sincerely,
Dale J. Nelson
Chief Financial Officer
As evidenced by the undersigned signature of its duly authorized
officer, Ajay hereby agrees to the terms of the Letter Proposal as revised by
this letter, all as of this ____ day of April, 1995.
AJAY SPORTS, INC.
By_____________________________
_____________________________
(Print Name Here)
_____________________________
(Title)
1002B264/EXH10.4
<PAGE>
March 21, 1995
Board of Directors
WILLIAMS CONTROLS, INC.
14100 SW 72nd Avenue
Portland, OR 97224
Re: Williams/Ajay J.V. Agreement
Proposed Modifications
Gentlemen:
Reference is made to my letter to Stanley V. Intihar dated February 9, 1995
regarding the proposal by Ajay Sports, Inc. ("Ajay") to amend in certain
respects the stock options granted to Williams Controls, Inc. ("Williams") under
the above-referenced agreement. It is Ajay's understanding that the Board of
Directors of Williams has considered this proposal and, although it desires not
to hinder the efforts of Ajay to complete its proposed underwriting or otherwise
refinance the loan (the "Loan") made by Williams Controls Industries, Inc.
("WCII") to Ajay Leisure Products, Inc. (the "Ajay subsidiary"), it has
determined that Ajay's initial proposal was not acceptable for reasons which
have been discussed with the management of Ajay.
In light of the position of the Williams Board of Directors and Ajay's desire to
proceed with its underwriting, Ajay hereby submits this revised proposal:
1. Williams shall waive its preemptive right to maintain its
proportionate share of Ajay common stock following any new issuances; however,
if Ajay does not close on its proposed publicly underwritten preferred stock
offering, substantially on the terms presented to Williams, by May 31, 1995,
Williams' preemptive right shall be reinstated automatically and without taking
any further action. Williams will not unreasonably withhold its written consent
for up to two 60-day extensions' provided that Ajay demonstrates that it
actively is pursuing the preferred stock offering.
2. Concurrently with Ajay's efforts to effect a preferred stock
offering as referenced above, Ajay shall use its best efforts to arrange for a
commitment for additional financing through an institutional lender or bank for
the purpose of repaying the outstanding balance under the Ajay subsidiary's line
of credit from WCII, and obtaining any additional working capital that may be
needed by Ajay and the Ajay subsidiary.
<PAGE>
Board of Directors
WILLIAMS CONTROLS, INC.
March 21, 1995
Page 2
3. Sections B1, B5 and B6 of the above referenced Joint Venture
Agreement make reference to the date of May 5, 1995 for (1) the repayment of the
Loan, and (2) the full vesting of stock options granted in the Agreement.
Williams agrees to extend such date, for the two purposes described in this
paragraph, to August 1, 1995.
4. If the Loan is repaid in full on or before August 1, 1995, Williams
will forfeit its right to purchase 1,394,979 shares of Ajay common stock for
$1.00 per share in consideration of Ajay granting Williams a new right to
purchase 348,745 shares of Ajay common stock for $.50 per share.
5. If the Loan is not fully repaid on or before August 1, 1995, the
options granted to Williams under the Williams/Ajay J.V. Agreement which would
originally vest on May 6, 1995, shall vest on August 2, 1995, and automatically
shall be repriced at $.50 per share, unless such options have a current exercise
price of less than $.50, in which case such options will retain their current
price; provided, however, that the exercisability of said options shall be
subject to an increase in the authorized capital of Ajay by the Ajay
shareholders. Ajay will use its best efforts to obtain shareholder approval of
an increase in authorized capital to fulfill Ajay's obligations under this
option.
6. The expiration date of all outstanding options granted to Williams
under the Agreement, whether or modified as contemplated herein, will be
extended from May 5, 1998 to the later of August 1, 1999 or two years from the
date of Ajay shareholder approval of an increase in authorized capital. The
remaining terms of the Agreement shall also be extended to expire August 1,
1999.
7. WCII will waive certain loan covenant violations by the Ajay
subsidiary and will review and amend the terms of the Loan and Security
Agreement dated May 5, 1994, as amended, on the basis of our prior discussions.
8. Ajay will provide to WCII, on a monthly basis and for as long as the
Loan has not been fully repaid, its internal Monthly Operations Reports so that
Williams can monitor Ajay's financial standing on a regular basis.
<PAGE>
Board of Directors
WILLIAMS CONTROLS, INC.
March 21, 1995
Page 3
If this proposal is acceptable to the Board of Directors of Williams, please
sign below indicating concurrence and return one of the original copies of this
document to me.
Sincerely,
AJAY SPORTS, INC.
Rick Hebard
Corporate Secretary
Accepted and agreed to this ____ day of ___________, 1995.
WILLIAMS CONTROLS, INC.
By__________________________________________
(name)
Title:______________________________________
r18bd09c.ajs/EXH10.4
<PAGE>
WILLIAMS/AJAY LOAN AND
JOINT VENTURE IMPLEMENTATION AGREEMENT
AGREEMENT made this 6th day of May 1994 by and between Williams
Controls, Inc. ("Williams"), a Delaware corporation, headquartered in Portland,
Oregon, Ajay Sports, Inc. ("Ajay"), and Ajay Leisure Products, Inc. ("AJL"),
both Delaware corporations, with principal offices in Delavan, Wisconsin.
WITNESSETH:
WHEREAS, Williams and Ajay have agreed to enter into a joint venture,
involving acquisition by Williams from Ajay of certain manufacturing rights in
AJL facilities, including those in Mexicali, Mexico, and an option to purchase
an equity position in Ajay, and
WHEREAS, part of the consideration from Williams is provision of
short-term financing to AJL, a wholly-owned subsidiary of Ajay, arranged by
Williams from First Interstate Bank ("FIB") for benefit of AJL (the
"FIB/Williams Loan"), which financing has been put in place and used to pay off
a loan, provided by Security Pacific Business Credit, Inc. (successor
BankAmerica Business Credit, Inc.), and later purchased by Roadmaster
Industries, Inc. ("RDM")
WHEREAS, the parties now wish to define more precisely conditions under
which the foregoing relationships are to be carried on and implemented,
WHEREAS, the parties hereto have carefully reviewed their relationship
and believe that their best interests and those of their stockholders will be
served under the provisions of this agreement.
q03jvaje.wci/EXH10.4
1
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
WHEREAS, the parties recognize that time within which AJL will repay
the loan made by Williams to AJL ("Williams/AJL loan") will depend on long-term
financing arranged by AJL and that an extension of the FIB/Williams loan
financing may be required, and
WHEREAS, it is believed to be in the best interest of Ajay, AJL and
Williams to have AJL repay the Williams/AJL loan as soon as is possible, and
WHEREAS, the right of Williams to purchase shares of Ajay has
constituted part of consideration in the Williams/AJL loan structure, which is
being implemented herein.
WHEREAS, both parties understand and agree with respect to financing
that the objective of AJL is to obtain permanent financing from a party other
than Williams, as soon as possible, regardless of dates and loan periods
mentioned in this agreement, and
WHEREAS, both parties recognize that the loan by Williams to AJL is not
a type of financing normally carried on by Williams, but has been effected in
subject case because Williams considers its own best interest will be served by
use of the AJL maquiladora, by effecting a closer working relationship with AJL,
and by the return occurring to Williams under the financing and options granted
herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
detailed, and the consideration previously exchanged,
q03jvaje.wci/EXH10.4
2
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
implementation of which represents the purpose of the covenants herein
contained.
IT IS AGREED, as follow:
A. LOAN IMPLEMENTATION
1. AJL will pay all fees associated with the FIB/Williams loan
2. AJL will pay the attorney fees of Williams associated with the
FIB/Williams loan.
3. AJL's repayment to Williams of the Williams/AJL loan will be
at an interest rate .25% higher than the rate paid by Williams
to FIB on the FIB/Williams loan, such payments being interest
only, payable on the 30th day of each calendar month that such
loan is outstanding.
4. AJL will pay all extension fees charged Williams by FIB should
subject loan be extended beyond the present loan tenor of 180
days.
B. PURCHASE OPTION
1. Williams is given an option to purchase up to 23,714,641
shares of the common stock of Ajay if the Williams/AJL loan to
AJL is not fully paid on or before May 5, 1995 and on the
following bases progressively:
a. 8,834,866 shares of Ajay common stock for $.34 per share
b. 6,974,894 shares of Ajay common stock for $.40 per share
q03jvaje.wci/EXH10.4
3
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
c. 5,114,923 shares of Ajay common stock for $.50 per share
d. 2,789,958 shares of Ajay common stock for $1.00 per
share,
but subject to the conditions hereafter stated.
2. The foregoing number of shares are to apply regardless of
volume of shares outstanding and issued at the time such
purchase option is exercised. There shall be a preemptive
right to purchase, by Williams, shares of new issues, of Ajay
common stock so as to maintain its proportionate share of Ajay
common stock after such new issues.
3. If the Williams/AJL loan is repaid by AJL on or before July 4,
1994 Williams will lose the right to purchase 100% of the
share amounts indicated in Section B.1.b., c. and d. above,
retaining the right to purchase 100% of the shares in Section
B.1.a of this agreement.
4. If the Williams/AJL loan is repaid in full between July 5,
1994 and November 1, 1994, inclusive,Williams will lose the
right to purchase 75% of each of the share amount mentioned in
Section B.1.b., c. and d. above, retaining the right to
purchase 25% of such shares and retaining the right to
purchase 100% of the shares in Section B.1.a.
q03jvaje.wci/EXH10.4
4
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
5. If the Williams/AJL loan is repaid in full between November 2,
1994 and May 5, 1995, inclusive, Williams will lose the right
to purchase 50% of each of the share amounts mentioned in
Section B.1.b., c. and d. above, retaining the right to
purchase 50% of such shares and retaining the right to
purchase 100% of the shares in Section B.1.a.
6. If the Williams/AJL loan is not fully repaid and remains with
an outstanding balance after May 5, 1995, Williams will lose
none of the rights in the purchase options granted in Section
1.b., c. and d. above, retaining the right to purchase 100% of
such shares and retaining the right to purchase 100% of the
shares in Section B.1.a.
7. Options granted under this agreement to Williams provide
Williams with the right to purchase one share of Ajay common
stock for each warrant owned, subject to the option time
period limitations stated herein.
8. Ajay shall grant to Williams the right to register the shares
obtained through the exercise of the options granted in this
agreement at any one time from the date of such exercise and
continuing for a period of four (4) years subsequent. Both
parties will, however, remain responsible for compliance with
SEC rules regarding registration. Additionally, Williams shall
have the right to piggy-back Ajay shares owned by Williams in
any
q03jvaje.wci/EXH10.4
5
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
Ajay public offering. The Ajay board of directors has approved
said piggy-back. Williams shall pay its proportionate shares
of costs incurred by Ajay in issuance and sale of said Ajay
stock.
C. MAQUILADORA MANUFACTURING
1. Williams is granted the right by Ajay to establish a
manufacturing operation in the Ajay facility in Mexicali,
Mexico, subject to available space in the Ajay facility.
2. Williams will pay all incremental expenses to modify the
maquiladora plant, obtain permits, hire personnel, and perform
other essentials to suit its requirements.
3. Williams will pay its pro rata share of the space occupied in
the plant.
4. Ajay will assist Williams in setting up the operation, working
with local authorities, and meeting other needs.
5. Williams will pay a pro rata share of fully loaded salary
costs to Ajay, such as compensation, services of Ajay
managers, supervisors and other employees, based on the
percent of their time that the Ajay personnel spend on
activities related to establishing and operating the Williams'
manufacturing operation.
D. BOARD SEAT
1. One seat on the Ajay and AJL Boards will be allocated to
a representative of Williams.
q03jvaje.wci/EXH10.4
6
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
E. DURATION OF AGREEMENT
Stock options granted under this contract and its other provisions
shall continue in effect until May 5, 1998 or until such lesser time as
they shall have been fully discharged. The parties agree to negotiate
in good faith, and in accordance with the terms of this agreement, a
sub-lease agreement for the space in the maquiladora to be occupied by
Williams.
F. GOVERNING LAW
This agreement shall be governed and controlled by the laws of the
state of Michigan as to interpretation enforcement, validity,
construction, and effect and in all other respects.
G. SEVERABILITY
If any provision in this agreement is held to be invalid or
unenforceable, it shall be ineffective only to the extent of the
invalidity, without affecting or impairing the validity and
enforceability of the remainder of the provision or the remaining
provisions of this agreement.
H. EFFECTIVE DATE
This agreement is effective as of the date first above written.
q03jvaje.wci/EXH10.4
7
<PAGE>
Williams/Ajay JV Implementation Agreement
May 6, 1994
In the presence of the undersigned witnesses, the parties have executed
this agreement on the date listed on the first page of this agreement.
WITNESS WILLIAMS CONTROLS, INC.
______________________ ___________________________
By:
Its:
AJAY SPORTS, INC.
______________________ ___________________________
By:
Its:
AJAY LEISURE PRODUCTS, INC.
___________________________
By:
Its:
q03jvaje.wci/EXH10.4
8
<PAGE>
EXHIBIT 10.5
May 1, 1995
Mr. James Bernatek
Dytek Plastics, Inc.
1400 S. Sixth Court, Suite BB
Pompano Beach, FL 33069
RE: Proposed Acquisition of Dytek Plastics, Inc. by Williams
Controls, Inc.
Dear Jim:
This will confirm our recent discussions with respect to the proposed
acquisition (the "Acquisition") by Williams Controls, Inc., a Delaware
corporation, either through one of its existing wholly owned subsidiaries or a
direct or indirect wholly owned subsidiary to be formed ("Williams"), of
substantially all of the assets, subject to certain liabilities thereto, of
Dytek Plastics, Inc. ("Dytek"), a Florida corporation, from Dytek and its
shareholders.
A. Enforceability. This Letter of Intent ("LOI") constitutes a binding
and enforceable agreement for the Acquisition contemplated herein, subject to
the limitations contained in Sections E and F below.
B. Confidentiality. Except as required by law or as the parties agree
in connection with ongoing due diligence, this LOI will be kept strictly
confidential, and neither party, nor any of their affiliates, shall disclose
Williams's interest in the Acquisition, or any of the terms and conditions
thereof. To the extent that disclosure becomes legally required and in view of
the fact that Williams is a company whose stock is publicly traded, Williams
will prepare a press release and will provide Dytek with a copy concurrently
with its release. Dytek and its shareholders confirm that they have been advised
by their legal counsel that as of the date hereof there is no need to publicly
disclose this LOI or the discussions referred to herein.
C. Exclusivity. Dytek and its shareholders agree not to solicit,
negotiate, act upon or entertain in any way an offer from any other person or
entity to purchase the securities, business or name of Dytek or any material
assets of Dytek (other than sales of
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 2
inventory in the normal and ordinary course of business of Dytek) (an "Alternate
Transaction"), or furnish any information to any other person in that regard;
and Dytek and its shareholders will promptly (within 24 hours) notify Williams
upon the receipt of an unsolicited competing offer in respect of an Alternate
Transaction and of the proposed terms of the offer.
Dytek and its shareholders represent and warrant that (i) other than
one Alternate Transaction as disclosed to Williams, negotiations with respect to
which were terminated more than 30 days ago, there are no existing discussions,
negotiations or other activities with any parties with respect to any Alternate
Transaction; and (ii) none of them nor any of their agents or representatives
has any agreement in principle, understanding or other obligation to proceed
with an Alternate Transaction. Dytek shall indemnify and hold Williams and its
affiliates harmless against any third party who claims that the Acquisition
wrongfully interferes with their right to acquire Dytek or any of its assets or
business.
D. Conduct of Business. Dytek shall conduct its business in the
ordinary course without extraordinary expenditures or other changes which would
diminish the value of the assets being acquired or the liabilities being assumed
in any material respect.
E. Limited Review; Approval. Williams has conducted only a limited
review of the assets, business and liabilities of Dytek to date, and the
enforceability of this LOI against Williams is subject to (x) Williams being
satisfied in its discretion with a full legal, accounting, and financial due
diligence investigation to be performed by it and its representatives, (y)
approval of the senior management and Board of Directors of Williams, and (z)
approval of the primary lender of Williams as required under Williams' existing
loan agreement.
F. Termination. This LOI shall terminate without liability to any party
hereto upon written notification from Williams to Dytek and its shareholders by
certified or registered mail of its abandonment of the Acquisition irrespective
of the reason therefor, including lack of a definitive acquisition agreement.
G. Agreement. As promptly as possible after the execution of this LOI,
the parties shall work towards the preparation and execution of a definitive
agreement (the "Agreement") covering the following terms, types of
representations, warranties, covenants, conditions and provisions, holdbacks or
escrows, if any, together with ancillary documents necessary to accomplish the
Acquisition
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 3
and appropriate exhibits and schedules disclosing requested information, all of
which must be as to form and substance, mutually satisfactory and acceptable to
the parties:
1. Form of Acquisition. Williams shall acquire, either
directly or through a wholly-owned subsidiary, substantially all of the
assets, including the lease, land and buildings, machinery and
equipment, trademarks and all other intellectual property, intangibles,
accounts receivable and inventory, free and clear of liens and
encumbrances, except for certain specified liabilities and obligations
which Williams will agree to assume, including accounts payable (the
"Assumed Liabilities") but excluding the liabilities listed on Schedule
A. Hereinafter, the assets to be acquired subject to the Assumed
Liabilities are referred to either as the "Purchased Assets" or the
"Business". The Acquisition shall be structured so as to result in the
most favorable tax results to Williams unless such structure shall
result in a material adverse tax effect on Dytek, but an asset
acquisition shall not be deemed to be an adverse tax effect for
purposes of this paragraph. The precise structure of the Acquisition
will be determined by the legal and tax advisors to the parties.
2. Purchase Price. The purchase price ("Purchase Price") for
the Purchased Assets shall be: (a) $125,000 in cash at closing of the
Acquisition; (b) by delivery at closing of 10,000 shares of Williams
Controls, Inc. common stock ("WCI Common Stock"), valued at $3.50 per
share; and (c) by delivery of a commitment at closing to issue up to an
additional 60,000 shares of WCI Common Stock, valued at $3.50 per share
which shall be paid to Jim Bernatek or his assignee ("Bernatek") over
three years provided that certain performance levels are achieved by
the Business during the three-year period, as specifically set forth in
Section 3 below.
The shares of WCI common stock to be issued in connection with
the Acquisition will be issued pursuant to one or more exemptions from
the registration requirements under the Securities Act of 1933 (the
"Securities Act") and state securities laws and, therefore, will be
"restricted" securities as that term is defined in Rule 144 under the
Securities Act. As a condition to Williams' issuance of the WCI common
stock, the person(s) to whom the WCI shares are to be issued will
deliver a standard investment letter to Williams to enable Williams to
determine the availability of exemptions available under the Securities
Act for the issuance thereof.
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 4
3. Performance Criteria for Earning Additional WCI Common
Stock. The additional 60,000 shares of WCI Common Stock which, at
closing, Williams shall commit to issue to Bernatek shall be earned and
issuable only upon achievement by the Business of the performance
thresholds set forth below.
a. Year One - 20,000 shares of WCI Common Stock if
the Business has $500,000 earnings before income taxes ("EBIT") and
$150,000 Net Earnings during the first 12 months following the closing.
b. Year Two - 20,000 shares of WCI Common Stock if
the Business has $600,000 EBIT and $250,000 Net Earnings during the
second 12 months following the closing, without giving effect to any
carry-over from the first 12 months.
c. Year Three - 20,000 shares of WCI Common Stock if
the Business has $750,000 EBIT and $300,000 Net Earnings during the
third 12 months following the closing, without giving effect to any
carry-over from the first 24 months.
For each period during which the Business meets the specified
performance threshold, Williams shall issue and deliver the designated
shares of WCI Common Stock to Bernatek within three business days of
the availability of financial statements reflecting achievement of the
threshold. For each period during which the Business does not meet the
specified performance threshold, upon receipt by Williams of financial
statements reflecting that the threshold was not met, Williams's
commitment to issue the designated shares for that period automatically
shall be terminated.
For purposes of this Section 3, "EBIT" and "Net Earnings"
shall be determined by Williams's independent public accountants using
generally accepted accounting principles consistently applied. In the
absence of manifest error, the determination by the accountants shall
be deemed correct and binding on the parties.
4. Representations and Warranties. Dytek and its shareholders,
jointly and severally, and Williams, shall make appropriate
representations and warranties of a similar type and nature entered
into by Williams for its previous acquisitions and which are customary
with respect to acquisitions of a nature similar to the one herein
contemplated, which shall survive the closing for a period of three
years, except for representations and warranties with
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 5
respect to taxes, which shall survive for the period of time which is
equal to the statute of limitations period any federal or state tax
statute applicable to any liability for assessment of taxes covered
thereby.
5. Conduct of Business. The Agreement shall include
representations and covenants by Dytek and its shareholders relating to
the operation of Dytek and the obligations of Dytek and its
shareholders during the period from the date of the Agreement to the
closing.
6. Closing Conditions. The obligations of the parties to
consummate the Agreement shall be subject to the following types of
conditions existing on the closing date:
a. Mutual Conditions. The mutual obligations of the
parties to consummate the Agreement on the closing date
thereunder shall be subject to:
(1) Continued Employment of Bernatek.
Williams and Bernatek shall enter into a four-year
employment agreement, under which Bernatek will agree
to continue to run the Business and be entitled to a
base salary of $65,000 per year plus a bonus to be
determined annually by Williams's Board of Directors.
It is contemplated that Bernatek's title will be Vice
President and General Manager of the Dytek division
of Williams, or of the Williams subsidiary which
acquires the Business. The employment agreement will
be an at-will agreement, containing provisions
similar to those included in other employment
agreements previously entered into by Williams,
specifically including a reasonable automobile
allowance, annual paid vacation of at least two weeks
for the first three years of the employment term and
three weeks thereafter, and an ability to participate
in all applicable (non-union) employee benefit plans
of Williams as appropriate.
(2) Allocations. The parties shall have
agreed on the allocation of the Purchase Price among
the Purchased Assets. No party will take a position
on any tax return or other financial statement
inconsistent with the agreed to allocation. If the
parties are unable to agree,
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 6
Williams's independent accountants shall make the
allocation which shall be binding on the parties.
(3) No Adverse Change; Representations;
Covenants. No material adverse change shall have
occurred in the Purchased Assets, or in the business,
affairs, prospects or financial condition of Dytek;
the representations and warranties in the Agreement
shall be true at and as of the closing date; and all
covenants to be performed at the closing shall have
been performed.
(4) No Material Litigation. There shall be
no material litigation, claims or proceedings pending
or threatened against or involving the business of
Dytek as of the closing date.
(5) Consents and Approvals. All requisite
filings shall have been made with, and all consents
and approvals shall have been obtained from, all
applicable, regulatory and other governmental
authorities and third parties, including any consents
deemed necessary or appropriate by Buyer from
landlords or parties to contracts to be assigned to
Buyer or otherwise requiring consent.
(6) Legal Opinions. There will be delivered
customary legal opinions (which shall be in the form
of accord opinions) covering such matters as the
parties may agree upon.
(7) Closing. It is the intention of the
parties that the closing of the Acquisition shall
take place as soon as practicable but no later than
June 30, 1995.
(8) Other. Such other conditions as the
parties may mutually agree upon.
b. Conditions to Williams's Obligation. The
obligation of Williams to consummate the Agreement on the
closing date thereunder shall be subject to:
(1) Indebtedness. Williams shall not be
obligated to assume any indebtedness of Dytek for
borrowed money or for other amounts payable by Dytek
to any shareholder of Dytek or any other
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 7
person controlling, controlled by or under common
control with Dytek, except for the agreed upon
Assumed Liabilities.
(2) Certain Agreements. There shall have
been executed such material leases, licenses,
distribution, and other agreements or required
amendments to existing agreements as may be necessary
in Williams's judgment to continue the Business, on
such terms and conditions as shall be agreeable to
Williams.
(3) Environmental Matters. Williams shall
have received reports satisfactory to Williams on
environmental matters relating to the Business, as
Williams reasonably may request, at the expense of
Dytek.
(4) OSHA Matters. Williams shall have
received reports satisfactory to Williams on OSHA
matters relating to the Business as Williams
reasonably shall request, at the expense of Dytek.
(5) Financing. Williams shall have obtained
financing for the Acquisition and for the operation
of the Business in amounts and on terms satisfactory
to Williams in its sole discretion.
c. Conditions to the Obligations of Dytek and its
Shareholders. The obligation of Dytek and its shareholders to
consummate the Agreement on the closing date thereunder shall
be subject to:
(1) Continued Employment of Bernatek. On an
at-will basis, Williams will employ Laura Bernatek at
a salary of $25,000 per year, plus annual
performance-related increases to the extent such
increases are available based on the Net Earnings of
the Business.
7. Indemnification. The Agreement shall provide for the
indemnification of Williams against taxes, royalties, and other
liabilities and obligations of Dytek or shareholders relating to
periods prior to the closing, and for certain other costs and expenses
as agreed by the parties.
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 8
H. Other Provisions. Nothing herein shall be construed to preclude
other provisions consistent with the financial terms of the Acquisition from
being negotiated between the parties and included in the Agreement.
I. Subordination of J.M. Family Indebtedness. It is contemplated that a
financial lender, as a condition to making a commitment to finance the
Acquisition, may require that the J.M. Family as holder of certain indebtedness
payable by Dytek in the approximate amount of $717,000 at December 31, 1994
subordinate this indebtedness to the indebtedness incurred to finance the
Acquisition and subordinate and/or release the security interest he has in
machinery and equipment collateralizing this indebtedness. To the extent this is
required, Dytek and the Dytek shareholders shall assist Williams in negotiating
this arrangement with Mr. Moran.
J. Mexican Assets. James Bernatek, a Dytek shareholder, is a partner in
a Mexican venture with two other partners. This Mexican venture owns certain
assets which Williams believes would be valuable to the Business. James Bernatek
hereby agrees to use his best efforts to assist Williams in obtaining an option
to purchase all or some of the assets free and clear of any encumbrances when
and if those assets become available for sale.
K. Due Diligence Investigation. From and after the execution of this
LOI, Dytek and its shareholders shall afford to Williams and its accountants,
counsel, lenders and other representatives reasonable access to the Business and
shall furnish to Williams all information concerning the business, assets and
properties of Dytek (and its shareholders to the extent relevant to Dytek) for
the purpose of making such accounting review, legal and audit investigation or
examination deemed necessary or desirable by Williams. Any information and
documentation treated as confidential by Dytek and so marked at the time of
delivery to Williams or its representatives except to the extent that it (i) was
already known to Williams or such representatives or available to Williams on a
non-confidential basis when received; (ii) hereafter becomes lawfully obtainable
from other sources; or (iii) is disclosed by Dytek or its shareholders in any
document filed with the government agency or authority and available for public
inspection.
L. Brokers Fees. Each party will be responsible for any fees or
expenses of any broker retained by them or on their behalf; provided, that, if
the Acquisition is consummated, the fees and
1002B680/EXH10.5
<PAGE>
Mr. James Bernatek
May 1, 1995
Page 9
expenses of Dytek and its shareholders will not be charged against
or paid out of the Purchased Assets.
M. Expenses. Each party shall bear its own costs and expenses
(including all legal, accounting, bank, investment banking and other costs) with
respect to the Acquisition, whether the Acquisition is consummated or not, and
the Agreement shall so provide. If the Acquisition is completed, the costs and
expenses incurred by Dytek or its shareholders shall not be charged against or
paid out of the Purchased Assets.
N. Reports. The parties agree to prepare and promptly file all reports
or other documents or notices with all applicable regulatory authorities and
other governmental authorities, as may be required.
If the terms and conditions set forth above correctly set forth the
status of our negotiations, please so indicate by signing one copy of this
letter below and returning it to me.
Very truly yours,
WILLIAMS CONTROLS, INC.
By_______________________
Thomas W. Itin, President
Chief Executive Officer
Accepted and Agreed to this ___ day of May, 1995 by Dytek Plastics,
Inc. through its duly authorized officer and the other undersigned persons,
being all of the shareholders of Dytek Plastics, Inc.
DYTEK PLASTICS, INC.
By_______________________
James Bernatek, President
_________________________
_________________________
1002B680/EXH10.5
<PAGE>
EXHIBIT 10.6
May 2, 1995
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
Highway 35, North
P.O. Box 49
Pendleton, NC 27862-0049
RE: Proposed Acquisition of Agrotec Inc. by Williams Controls,
Inc.
Gentlemen:
This will confirm our recent discussions with respect to the proposed
acquisition (the "Acquisition") by Williams Controls, Inc., a Delaware
corporation, either directly or through an entity controlled by it ("Williams"),
of the business of Agrotec Inc. ("Agrotec"), a Delaware corporation, from
Agrotec and its shareholders, Roger W. Cohill and Elizabeth P. Cohill, either
through an asset or stock transaction, at the sole option of Williams.
A. Enforceability. This Letter of Intent ("LOI") constitutes a binding
and enforceable agreement for the Acquisition contemplated herein, subject to
the limitations contained in Sections E, F and G below.
B. Confidentiality. Except as required by law or as the parties agree
in connection with ongoing due diligence, this LOI will be kept strictly
confidential, and neither party, nor any of their affiliates, shall disclose
Williams's interest in the Acquisition, or any of the terms and conditions
thereof. To the extent that disclosure becomes legally required and in view of
the fact that Williams is a company whose stock is publicly traded, Williams
will prepare a press release and will provide Agrotec with a copy concurrently
with its release. Agrotec and it shareholders confirm that they have been
advised by their legal counsel that as of the date hereof there is no need to
publicly disclose this LOI or the discussions referred to herein.
C. Exclusivity. Agrotec and its shareholders agree not to solicit,
negotiate, act upon or entertain in any way an offer from any other person or
entity to purchase the securities, business or
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 2
name of Agrotec or any material assets of Agrotec (other than sales of inventory
in the normal and ordinary course of business of Agrotec) (an "Alternate
Transaction"), or furnish any information to any other person in that regard;
and Agrotec and its shareholders will promptly (within 24 hours) notify Williams
upon the receipt of an unsolicited competing offer in respect of an Alternate
Transaction and of the proposed terms of the offer.
Agrotec and its shareholders represent and warrant that (i) there
are no existing discussions, negotiations or other activities with any parties
with respect to any Alternate Transaction; and (ii) none of them nor any of
their agents or representatives has any agreement in principle, understanding or
other obligation to proceed with an Alternate Transaction. Agrotec and its
shareholders shall indemnify and hold Williams and its affiliates harmless
against any third party who claims that the Acquisition wrongfully interferes
with their right to acquire Agrotec or any of its assets or business.
D. Conduct of Business. Agrotec shall conduct its business in the
ordinary course without extraordinary expenditures or other changes which would
diminish the value of Agrotec's business in any material respect.
E. Limited Review; Approval. Williams has conducted only a limited
review of the assets, business and liabilities of Agrotec to date, and the
enforceability of this LOI against Williams is subject to (i) Williams being
satisfied in its discretion with a full legal, accounting, and financial due
diligence investigation to be performed by it and its representatives, (ii)
approval of the senior management and Board of Directors of Williams, (iii)
approval of the primary lender of Williams as required under Williams' existing
loan agreement, and (iv) Williams being satisfied with the results of the
environmental studies provided for herein.
F. Termination. This LOI shall terminate without liability to any party
hereto upon written notification from Williams to Agrotec and its shareholders
by certified or registered mail of its abandonment of the Acquisition
irrespective of the reason therefor, including lack of a definitive acquisition
agreement.
G. Environmental Studies. Promptly after the execution of this LOI, a
Phase 1 environmental study shall be conducted by an environmental consulting
firm mutually acceptable to both parties,
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 3
followed by Phase 2 and 3 remedial studies, if warranted. All costs related to
these environmental studies shall be paid by Agrotec. If the costs of the
studies and required remediation would exceed $25,000, Williams may not require
Agrotec to proceed to complete the Acquisition.
H. Agreement. As promptly as possible after the execution of this LOI,
the parties shall work towards the preparation and execution of a definitive
agreement (the "Agreement") covering the following terms, types of
representations, warranties, covenants, conditions and provisions, holdbacks or
escrows, if any, together with ancillary documents necessary to accomplish the
Acquisition and appropriate exhibits and schedules disclosing requested
information, all of which must be as to form and substance, mutually
satisfactory and acceptable to the parties:
1. Form of Acquisition. Williams shall acquire, either
directly or through a direct or indirect wholly-owned subsidiary, at
Williams' sole option, either (a) all of the outstanding capital stock
of Agrotec, or (b) substantially all of the assets, including the
lease, land and buildings, machinery and equipment, the name "Agrotec,"
tradenames, trademarks and all other intellectual property,
intangibles, accounts receivable and inventory, but excluding the
assets listed on Schedule A under "Excluded Assets," free and clear of
liens and encumbrances, except for the liabilities and obligations
stated on Agrotec's financial statements as of the closing date,
prepared in accordance with generally accepted accounting prinicples
(the "Assumed Liabilities"), but excluding the liabilities set forth on
Schedule A under "Excluded Liabilities." Hereinafter, the term
"Business" refers to the business of Agrotec purchased by Williams
whether it is accomplished through a stock or asset transaction. The
Acquisition shall be structured so as to result in the most favorable
tax results to Williams unless such structure shall result in a
material adverse tax effect on Agrotec, but an asset acquisition shall
not be deemed to be an adverse tax effect for purposes of this
paragraph. The precise structure of the Acquisition will be determined
by the legal and tax advisors to the parties.
2. Purchase Price. The purchase price ("Purchase Price") for
the Business shall be as follows:
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 4
a. Payment at the closing of $28,000 representing the
equity in the Business as agreed to between the parties.
b. Transfer and delivery to Roger W. Cohill of the
existing life insurance policy covering Mr. Cohill which has a
cash value of $57,720, free and clear of any loans against it.
c. An aggregate of $240,000 payable over five years under
the non-compete agreement referenced in Paragraph 5.a.(2) in
this Section below.
d. Assumption of the Assumed Liabilities referenced in
Paragraph 1 of this Section above.
3. Representations and Warranties. Agrotec and its
shareholders, jointly and severally, and Williams, shall make
appropriate representations and warranties of a similar type and nature
entered into by Williams for its previous acquisitions and which are
customary with respect to acquisitions of a nature similar to the one
herein contemplated, which shall survive the closing for a period of
three years, except for representations and warranties with respect to
taxes, which shall survive for the period of time which is equal to the
statute of limitations period any federal or state tax statute
applicable to any liability for assessment of taxes covered thereby.
4. Covenants. The Agreement shall include covenants by Agrotec
and Cohill relating to the operation of Agrotec and the obligations of
Agrotec and its shareholders during the period from the date of the
Agreement to the closing.
5. Closing Conditions. The obligations of the parties to
consummate the Agreement shall be subject to the following types of
conditions existing on the closing date:
a. Mutual Conditions. The mutual obligations of the
parties to consummate the Agreement on the closing date
thereunder shall be subject to:
(1) Continued Services of Cohill. Cohill and
Williams shall enter into a short-term employment
agreement under which Cohill will continue to be
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 5
employed by the Business for two months following the
closing date of the Acquisition working at least
4/5's of each normal business week, and for which he
will receive a salary of $2,083.33 per month.
Thereafter, to the extent the services of Cohill are
requested by Williams, the services will be on a
consulting basis and Cohill will be paid $150 per
day, plus reasonable out-of-pocket expenses directly
related to the services requested and provided.
(2) Cohill Non-Compete Agreement. Cohill and
Williams shall enter into a five-year agreement under
which Cohill will agree not to compete directly or
indirectly on his own behalf or the behalf of any
party in the United States engage in, supervise,
assist or own any interest in any entity engaged in
the manufacture, production, sale, marketing,
promotion or distribution of items which are similar
to or in competition with items manufactured,
produced, sold, marketed, promoted or distributed by
the Business. As compensation for the non-compete
agreement, Williams will pay Cohill $4,000 per month,
on a monthly basis, for the five-year term of the
covenant.
(3) Allocations. The parties shall have
agreed on the allocation of the Purchase Price among
the assets included in the Business. No party will
take a position on any tax return or other financial
statement inconsistent with the agreed to allocation.
If the parties are unable to agree, Williams's
independent accountants shall make the allocation
which shall be binding on the parties.
(4) No Adverse Change; Representations;
Covenants. No material adverse change shall have
occurred in the Business, or in the business,
affairs, prospects or financial condition of Agrotec;
the representations and warranties in the Agreement
shall be true at and as of the closing date; and all
covenants to be performed at the closing shall have
been performed.
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 6
(5) No Material Litigation. There shall be
no material litigation, claims or proceedings pending
or threatened against or involving the business of
Agrotec as of the closing date.
(6) Consents and Approvals. All requisite
filings shall have been made with, and all consents
and approvals shall have been obtained from, all
applicable, regulatory and other governmental
authorities and third parties, including any consents
deemed necessary or appropriate by Williams from
landlords or parties to contracts to be assigned to
Williams or otherwise requiring consent.
(7) Legal Opinions. There will be delivered
customary legal opinions (which shall be in the form
of accord opinions) covering such matters as the
parties may agree upon.
(8) Closing. It is the intention of the
parties that the closing of the Acquisition shall
take place as soon as practicable but no later than
May 30, 1995; provided, however, if the parties are
proceeding diligently to close the transaction and
are unable to do so for any reason, the parties shall
agree to one 30-day extension and, thereafter, to one
additional 30-day extension if the parties are unable
to close by June 30, 1995 for reasons out of the
immediate control of the parties.
(9) Other. Such other conditions as the
parties may mutually agree upon.
b. Conditions to Williams's Obligation. The
obligation of Williams to consummate the Agreement on the
closing date thereunder shall be subject to:
(1) Indebtedness. If the Acquisition is
accomplished through an asset purchase, Williams
shall not be obligated to assume any indebtedness of
Agrotec for borrowed money or for other amounts
payable by Agrotec to any shareholder of Agrotec or
any other person controlling, controlled by or
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 7
under common control with Agrotec, except for the
agreed upon Assumed Liabilities.
(2) Modification and Assumption of Small
Business Administration Loan. The lender under
Agrotec's SBA loan (balance of approximately $300,000
on the date of this LOI) must agree to (i) permit
Williams to assume the loan on the current terms
except for the modifications hereinafter provided,
and (ii) modify the loan to release certain
collateral, including Agrotec's accounts receivable,
inventory and machinery and equipment, from the loan
so that the only remaining collateral for the loan
shall be the real property. The parties will use
their best efforts to have the lender release the
personal guaranty of Roger W.
Cohill.
(3) Title Insurance. An owner's title
insurance policy, issuable to and acceptable to
Williams, covering the real estate being acquired
shall be obtained at the expense of Roger W.
Cohill.
(4) Continued Employment of Clarence Bush
and Albert Byrd. Clarence Bush, Agrotec's plant
manager, and Albert Byrd, Agrotec's accounting
manager, shall have agreed in writing to continue
employment with the Business at the will of Williams
for at least one year following the closing of the
Acquisition.
(5) Bush Non-Compete Agreement. Clarence
Bush shall deliver to Williams a one-year agreement
from the closing date of the Acquisition under which
he will agree not to compete directly or indirectly
on his own behalf or the behalf of any party in the
United States engage in, supervise, assist or own any
interest in any entity engaged in the manufacture,
production, sale, marketing, promotion or
distribution of items which are similar to or in
competition with items manufactured, produced, sold,
marketed, promoted or distributed by the Business.
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 8
(6) Certain Agreements. There shall have
been executed such material leases, licenses,
distribution, and other agreements or required
amendments to existing agreements as may be necessary
in Williams's judgment to continue the Business, on
such terms and conditions as shall be agreeable to
Williams. This includes a lease on terms acceptable
to Williams for the continued use of the fax and
computer equipment owned by Roger Cohill and
currently leased to Agrotec.
(7) Environmental Matters. Williams shall
have received reports satisfactory to Williams on
environmental matters relating to the Business, as
Williams reasonably may request, at the expense of
Agrotec, and as more specifically described in
Section G above.
(8) OSHA Matters. Williams shall have
received reports satisfactory to Williams on OSHA
matters relating to the Business as Williams
reasonably shall request, at the expense of Agrotec.
(9) Financing. Williams shall have obtained
financing for the Acquisition and for the operation
of the Business in amounts and on terms satisfactory
to Williams in its sole discretion.
c. Conditions to the Obligations of Agrotec and its
Shareholders. The obligation of Agrotec and its shareholders
to consummate the Agreement on the closing date thereunder
shall be subject to:
(1) Maximum Cost of Environmental Studies
and Remediation. The costs of the environmental
studies and required remediation required to be paid
by Agrotec shall not exceed the amount provided in
Section G of this LOI.
(2) Transfer of Life Insurance Policy. At
the closing of the Acquisition, after Williams repays
the loan against the life insurance policy on Roger
W. Cohill reflecting Agrotec as the beneficiary, said
policy shall be transferred into
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 9
the name of Roger W. Cohill who will be responsible
for all future payments.
6. Indemnification. The Agreement shall provide for
the indemnification of Williams against taxes, royalties, and
other liabilities and obligations of Agrotec or its
shareholders relating to periods prior to the closing, and for
certain other costs and expenses as agreed by the parties.
I. Other Provisions. Nothing herein shall be construed to preclude
other provisions consistent with the financial terms of the Acquisition from
being negotiated between the parties and included in the Agreement.
J. Due Diligence Investigation. From and after the execution of this
LOI, Agrotec and its shareholders shall afford to Williams and its accountants,
counsel, lenders and other representatives reasonable access to the Business and
shall furnish to Williams all information concerning the business, assets and
properties of Agrotec (and its shareholders to the extent relevant to Agrotec)
for the purpose of making such accounting review, legal and audit investigation
or examination deemed necessary or desirable by Williams. Any information and
documentation treated as confidential by Agrotec and so marked at the time of
delivery to Williams or its representatives except to the extent that it (i) was
already known to Williams or such representatives or available to Williams on a
non-confidential basis when received; (ii) hereafter becomes lawfully obtainable
from other sources; or (iii) is disclosed by Agrotec or its shareholders in any
document filed with the government agency or authority and available for public
inspection.
K. Brokers Fees. Each party will be responsible for any fees or
expenses of any broker retained by them or on their behalf; provided, that, if
the Acquisition is consummated, the fees and expenses of Agrotec and its
shareholders will not be charged against or paid out of the Business.
L. Expenses. Each party shall bear its own costs and expenses
(including all legal, accounting, bank, investment banking and other costs) with
respect to the Acquisition, whether the Acquisition is consummated or not, and
the Agreement shall so provide. If the Acquisition is completed, the costs and
expenses incurred by Agrotec or its shareholders shall not be charged against or
paid out of the Business.
1002B7B0/EXH10.6
<PAGE>
Roger W. Cohill
Elizabeth P. Cohill
Agrotec Inc.
May 2, 1995
Page 10
M. Reports. The parties agree to prepare and promptly file all reports
or other documents or notices with all applicable regulatory authorities and
other governmental authorities, as may be required.
If the terms and conditions set forth above correctly set forth our
agreement, please so indicate by signing one copy of this letter below and
returning it to me.
Very truly yours,
WILLIAMS CONTROLS, INC.
By_____________________________
Thomas W. Itin, President
Chief Executive Officer
Accepted and Agreed to this ___ day of May, 1995 by Agrotec through its
duly authorized officer and the other undersigned persons, being all of the
shareholders of Agrotec.
AGROTEC INC.
By_____________________________
Roger W. Cohill, President
________________________________
Roger W. Cohill, Shareholder
________________________________
Elizabeth P. Cohill, Shareholder
1002B7B0/EXH10.6
<PAGE>
SCHEDULE A
Excluded Assets
Excluded Liabilities
1002B7B0/EXH10.6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 177
<SECURITIES> 0
<RECEIVABLES> 21,522
<ALLOWANCES> 0
<INVENTORY> 6,829
<CURRENT-ASSETS> 29,540
<PP&E> 15,125
<DEPRECIATION> 3,093
<TOTAL-ASSETS> 43,772
<CURRENT-LIABILITIES> 17,465
<BONDS> 0
<COMMON> 167
0
0
<OTHER-SE> 14,204
<TOTAL-LIABILITY-AND-EQUITY> 43,772
<SALES> 26,814
<TOTAL-REVENUES> 26,814
<CGS> 19,037
<TOTAL-COSTS> 22,190
<OTHER-EXPENSES> 799
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 909
<INCOME-PRETAX> 3,825
<INCOME-TAX> 1,405
<INCOME-CONTINUING> 2,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,403
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>