AGREEMENT
THIS AGREEMENT is made as of this 17th day of April, 2007, among XXXXX
XXXXXXXXX, an individual, XXXXX XXXXXXXXX, an individual, XXXXXXXXX XXXXXXXXX,
an individual, CALOYERAS FAMILY PARTNERSHIP, a Nevada limited liability company
("Caloyeras Family Partnership") and TOROTEL, INC., a Missouri corporation
("Torotel"). Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxxxxxxx Xxxxxxxxx are
sometimes hereinafter referred to as the "Caloyeras Shareholders."
WHEREAS, the Caloyeras Shareholders and the Caloyeras Family Partnership
are the owners of 2,537,505 shares of the common stock of Torotel; and
WHEREAS, the Caloyeras Shareholders and the Caloyeras Family Partnership
desire to grant to Torotel an option for Torotel to purchase shares of common
stock of Torotel owned by the Caloyeras Shareholders and the Caloyeras Family
Partnership, as set forth herein; and
WHEREAS, Xxxxx Xxxxxxxxx is willing to dismiss without prejudice the action
captioned XXXXX XXXXXXXXX V. TOROTEL, INC., No. 06-2485-KHV (United States
District Court, District of Kansas) (the "Pending Action"), obtain mutual
releases of all claims in the event the shares are purchased pursuant to this
option, and covenant not to xxx xxxxx to July 31, 2007, in consideration for
Torotel agreeing to certain terms and conditions as specifically set forth
herein.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. OPTION TO PURCHASE. The Caloyeras Shareholders and the Caloyeras
Family Partnership do hereby grant, until July 31, 2007, to Torotel the option
for Torotel to purchase all, but not less than all, of the 2,537,505 shares of
common stock of Torotel owned by such parties, for a cash purchase price of
Seventy Cents ($.70) per share, subject to the provisions of this Agreement.
2. TOROTEL'S FORBEARANCE. Subject to Section 5 hereof or unless the
Caloyeras Family Partnership consents in advance in writing, Torotel agrees
that, effective immediately, neither it, nor any subsidiary or affiliate
controlled by it will, prior to July 31, 2007: (i) issue any shares, restricted
or otherwise, of capital stock of Torotel; (ii) grant any options to purchase
any shares of capital stock of Torotel; (iii) enter in any new employment
agreements to which Torotel will be a party; (iv) modify, amend or alter any
employment agreements to which Torotel is a party as of the date hereof; or (v)
effect a merger, recapitalization, reorganization or other corporate transaction
which would have the effect of diluting the percentage interest of the Caloyeras
Family Partnership and the Caloyeras Shareholders in Torotel.
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3. FUNDS. Torotel agrees to use its commercially reasonable efforts to
pursue financing sources in order for it to acquire the funds with acceptable
terms to allow it to purchase the shares of Torotel common stock owned by the
Caloyeras Family Partnership and the Caloyeras Shareholders for a purchase price
of Seventy Cents ($.70) per share on or before July 31, 2007.
4. NO REVIVAL OR EXTINGUISHMENT OF CLAIMS; NO RESTRICTION. Except as set
forth herein, this Agreement does not affect any claims or defenses of either
party which existed and were enforceable prior to the date of this Agreement.
This Agreement does not affect the right or ability of the Caloyeras Family
Partnership, the Caloyeras Shareholders, or any other holder of shares of common
stock of Torotel, to duly exercise any of their rights, privileges or
responsibilities as such holder of shares of common stock, including, but not
limited to, presenting proposals or resolutions for consideration by the
shareholders of Torotel at its annual meeting of shareholders, nominating
individuals to serve as members of the Torotel Board of Directors, or taking any
other action permitted and in compliance with applicable law or regulation.
5. OTHER STATUTORY OR REGULATORY OBLIGATIONS. This Agreement is subject,
in all respects, to the duties, responsibilities and obligations of Torotel and
its Board of Directors pursuant to applicable law and regulation. Should Torotel
or its Board of Directors determine, prior to July 31, 2007, that any such law
or regulation prohibits Torotel from observing the provisions of this Agreement,
then Torotel shall promptly give notice of such fact to the Caloyeras
Shareholders. In such event, this Agreement and the duties and obligations of
the parties hereunder shall terminate and be of no further force or effect.
6. RESERVATION OF RIGHTS AND DEFENSES. The parties to this Agreement
hereby explicitly retain and reserve each and every right or defense which may
be available with respect to any claims any party may have as of the date
hereof. The parties agree that oral and written communications during the
pendency of the Agreement shall not waive the rights and defenses of any party.
7. INADMISSIBILITY OF AGREEMENT FOR OTHER PURPOSES. This Agreement shall
only be admissible in any proceeding involving the parties to prove the terms
hereof, and shall be inadmissible for all other purposes and in any other
proceeding.
8. ENTIRE AGREEMENT; NO ORAL MODIFICATION. This document represents the
entire agreement of the parties with respect to the subject matter of this
Agreement and may not be modified except in writing signed by all parties.
9. AUTHORITY. The undersigned represent that they have the authority to
execute this Agreement on behalf of the respective parties and to bind their
respective parties to the terms of this Agreement by their execution hereof.
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts constituting one and the same agreement.
11. EFFECTIVE DATE; ADDITIONAL PARTIES. This Agreement shall become
effective and binding as of the day and year first above written.
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12. GOVERNING LAW AND FORUM. This Agreement shall be governed by the laws
of the State of Missouri.
13. PENDING ACTION. Promptly after the execution of this Agreement and
pursuant to Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure, Xxxxx
Xxxxxxxxx shall and Torotel shall cause all of the defendants in the Pending
Action to jointly file a dismissal without prejudice of the Pending Action. The
Caloyeras Shareholders and Caloyeras Family Partnership covenant not to xxx
Torotel and/or its Board members or officers, and Torotel and its Board members
and officers covenant not to xxx any of the Caloyeras Shareholders or the
Caloyeras Family Partnership prior to July 31, 2007, or the earlier termination
of this Agreement. The Caloyeras Shareholders and the Caloyeras Family
Partnership, Torotel and Torotel's Board members and officers will agree to
release any and all claims against each other in the event the shares are
purchased pursuant to this option.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in multiple counterpart copies, each of which shall be deemed an
original but constitute one and the same instrument as of the day and year first
above written.
CALOYERAS SHAREHOLDERS:
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxxx
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Xxxxxxxxx Xxxxxxxxx
CALOYERAS FAMILY PARTNERSHIP:
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, Member
TOROTEL, INC.:
By: /s/ Xxxx X. Xxxxxxxx, Xx.
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Name: Xxxx X. Xxxxxxxx, Xx.
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Title: President and CEO
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