SECURITY AGREEMENT AND
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AGREEMENT NOT TO EXERCISE OPTIONS
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THIS SECURITY AGREEMENT AND AGREEMENT NOT TO EXERCISE OPTIONS (the
"Agreement") is made as of March 15, 2001 by and between Xxxx Xxxxxxx, an
individual, ("Debtor"), and IMPCO Technologies, Inc., a Delaware corporation
("Secured Party" or "IMPCO").
RECITALS
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WHEREAS, pursuant to that certain Promissory Note dated as of March 15,
2001, issued by the Debtor to the Secured Party in the principal amount of
$1,565,547 (as amended or modified from time to time, the "Note"), Secured Party
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extended a loan to the Debtor on the terms and subject to the conditions set
forth therein.
WHEREAS, this Agreement provides the terms and conditions upon which the
Note is secured by a pledge to the Secured Party of a security interest in and
lien upon the Collateral (defined below).
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees as follows:
AGREEMENT
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1. Grant of Security Interest; Covenant not to Exercise Options. Debtor
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hereby pledges and grants to the Secured Party a first priority security
interest in the property described in Paragraph 2 below (collectively and
severally, the "Collateral") to secure payment and performance of the
obligations described in Paragraph 3 below (collectively and severally, the
"Obligations"). So long as any Obligations are outstanding, Debtor hereby agrees
not to (i) exercise any of the incentive stock options held by Hussain listed on
Schedule C (the "Schedule C Options") issued to Hussain pursuant to various
IMPCO stock options plans or (ii) grant any third party any interest in the
Schedule C Options.
2. Collateral. The Collateral shall consist of the following, whether now
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owned or hereafter acquired:
(a) Investment Securities. Shares of common stock of IMPCO (the "IMPCO
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Shares") listed on Schedule A and the stock options held by Xxxx Xxxxxxx
("Xxxxxxx") listed on Schedule B issued to Xxxxxxxxx pursuant to various IMPCO
stock option plans. Notwithstanding anything to the contrary contained herein,
during the term of this Agreement until such time as there exists a default in
the payment of principal or interest on the Note or any other default under the
Note or this Agreement, Debtor will be entitled to (i) all voting rights with
respect to the IMPCO Shares and the Secured Party will be entitled to receive,
(ii) all cash dividends paid in respect of the Collateral, which dividends will
offset accrued interest due under the Note and (iii) all new substituted and
additional documents, instruments and general intangibles issued with respect
thereto including, without limitation, all cash and noncash dividends or
distributions and all other property now or hereafter distributable on account
of or receivable with respect to any of the foregoing.
(b) General Intangibles, Etc. All now existing or hereafter acquired
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general intangibles of every nature, including, but not limited to, the Secured
Party's rights to payment under any
type of derivative or hedging transaction ("Intangible Collateral") the Debtor
may enter into with respect to the IMPCO Stock; and
(c) Proceeds. All proceeds of the foregoing Collateral. For
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purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary.
3. Obligations. The Obligations secured by this Agreement shall
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consist of any and all debts, obligations and liabilities of Debtor to the
Secured Party arising out of, connected with or related to the Note and this
Agreement as amended or modified from time to time. The Obligations secured by
this Agreement shall include, without limitation, all such debts, obligations
and liabilities, whether now existing or hereafter arising, voluntary or
involuntary, whether due or not due, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, or
whether incurred directly or acquired by the Secured Party by assignment or
otherwise and whether or not from time to time decreased or extinguished and
later increased, created or incurred.
4. Representations and Warranties. In addition to any
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representations and warranties of Debtor set forth in any other agreement with
or for the benefit of the Secured Party, which are incorporated herein by this
reference, Debtor hereby represents and warrants that:
(a) Ownership. Debtor is the sole owner of and has good and
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marketable title to the IMPCO Stock (or, in the case of Intangible Collateral
referred to in Section 2(b), at the time Debtor acquires rights in such
Intangible Collateral, will be the sole owner thereof) and to the Schedule B
Options and the Schedule C Options;
(b) Priority. Except for security interests in favor of Secured
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Party no person other than the Debtor has (except, in the case of Intangible
Collateral which the Secured Party expressly agrees may be pledged pursuant to
certain derivative or hedging transactions consented to in writing by Secured
Party, at the time Debtor acquires rights therein, will have) any right, title,
claim or interest (by way of security interest or other lien or charge) in,
against or to the Collateral, and no person other than the Debtor has any right,
title, claim or interest (by way of security interest or other lien or charge)
in, against or to the Schedule C Options.
(c) Accuracy of Information. All information heretofore, herein
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or hereafter supplied to the Secured Party by or on behalf of Debtor with
respect to the Collateral and the Schedule C Options is true and correct; and
(d) Delivery of Documents, Etc. To the extent required by
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Secured Party, Debtor has duly executed and delivered to Secured Party: (i) all
agreements, documents, and other items of Collateral in which a security
interest is or may be perfected by possession; and (ii) such additional
writings, including, without limitation, assignments and stock powers, with
respect thereto as the Secured Party shall request.
5. Covenants and Agreements of Debtor. In addition to all
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covenants and agreements of Debtor set forth in any other agreement with the
Secured Party, which are incorporated herein by this reference, Debtor hereby
agrees:
(a) Preservation of Collateral. To do all acts that may be
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necessary to maintain, preserve and protect the Collateral and the Schedule C
Options;
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(b) Use of Collateral. Not to use or permit any Collateral or
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the Schedule C Options to be used unlawfully or in violation of any provision of
this Agreement, any other agreement with the Secured Party related hereto or any
applicable statute, regulation or ordinance;
(c) Defense of Litigation. To appear in and defend any action or
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proceeding which may affect its title to or the Secured Party's interest in the
Collateral or in the Schedule C Options;
(d) Possession of Collateral. Not to surrender or lose
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possession of (other than to the Secured Party), sell, assign, encumber, use or
otherwise dispose of or transfer any Collateral or any Schedule C Options or
right or interest therein except as otherwise provided for in this Agreement,
and to keep the Collateral and the Schedule C Options free of all levies and
security interests or other liens or charges except those approved in writing by
the Secured Party and pursuant to this Agreement;
(e) Compliance With Law. To comply with all laws, regulations
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and ordinances relating to the possession, operation, maintenance and control of
the Collateral and the Schedule C Options;
(f) Standard of Care by the Secured Party. That such care as the
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Secured Party gives to the safekeeping of its own property of like kind shall
constitute reasonable care of the Collateral when in the Secured Party's
possession;
(g) Delivery of Intangible Collateral. To account fully for and
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promptly deliver to the Secured Party, in the form received, all documents and
agreements constituting Collateral hereunder and all proceeds of the Collateral
received, all endorsed to the Secured Party or in blank, as requested by the
Secured Party, and accompanied by such stock powers as appropriate and until so
delivered all such documents, agreements and proceeds shall be held by Debtor in
trust for the Secured Party, separate from all other property of Debtor and
identified as the property of the Secured Party;
(h) Further Assurances. To procure, execute and deliver from
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time to time any endorsements, notifications, registrations, assignments,
financing statements, certificates of title, and other writings deemed necessary
or appropriate by the Secured Party to perfect, maintain and protect its
security interest in the Collateral hereunder and the priority thereof; and to
take such other actions as the Secured Party may request to protect the value of
the Collateral and of the Schedule C Options and of the Secured Party's security
interest in the Collateral, including, without limitation, provision of
assurances from third parties regarding the Secured Party's right to foreclose
on or sell, Collateral and right to realize the practical benefits of such
foreclosure or sale; and
(i) Payment of the Secured Party's Costs and Expenses. To
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reimburse the Secured Party upon demand for any reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees, that the Secured
Party may incur while exercising any right, power or remedy provided by this
Agreement or by law, all of which costs and expenses are included in the
Obligations secured hereby.
6. Authorized Action by the Secured Party. At any time, Debtor
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hereby agrees that from time to time, without presentment, notice or demand, and
without affecting or impairing in any way the rights of the Secured Party with
respect to the Collateral, the obligations of the Debtor hereunder or the
Obligations, the Secured Party may, but shall not be obligated to and shall
incur no liability to Debtor or any third party for failure to take any act
which Debtor is obligated by this Agreement to do and to exercise such rights
and powers as Debtor might exercise with respect to the Collateral, and Debtor
hereby irrevocably appoints the Secured Party as its attorney-in-fact, so long
as an Event of Default has occurred and is continuing, to exercise such rights
and powers, including without limitation: (i) collect by
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legal proceedings or otherwise and endorse, receive and receipt for all
dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (ii) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (iii) insure, process and preserve the Collateral;
(iv) transfer the Collateral to its own or its nominee's name; (v) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; and (vi) to notify any account debtor on any Collateral to
make payment directly to the Secured Party.
7. Default. An Event of Default shall occur hereunder if (i) an
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Event of Default (as defined in the Note) shall occur or (ii) any representation
or warranty made by Debtor hereunder shall be untrue when made in any material
respect or (iii) Debtor shall fail to perform or observe any material term,
covenant or condition in this Agreement.
8. Remedies. So long as any Event of Default has occurred and is
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continuing, the Secured Party may, at its option, and without notice to or
demand on Debtor and in addition to all rights and remedies available to the
Secured Party under law or any other agreement do any one or more of the
following:
(a) General Enforcement. Foreclose or otherwise enforce the
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Secured Party's security interest in any manner permitted by law, or provided
for in this Agreement;
(b) Sale, Etc. Sell or otherwise dispose of any Collateral at
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one or more public or private sales at the Secured Party's place of business or
any other place or places, on such terms and in such manner as the Secured Party
may reasonably determine;
(c) Costs of Remedies. Recover from Debtor all reasonable costs
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and expenses, including, without limitation, reasonable attorneys' fees,
incurred or paid by the Secured Party in exercising any right, power or remedy
provided by this Agreement or by law; and
(d) Delivery to and Rights of Purchaser. Upon any sale or other
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disposition pursuant to this Agreement, the Secured Party shall have the right
to deliver, assign and transfer to the purchaser thereof the Collateral or
portion thereof so sold or disposed of. Each purchaser at any such sale or other
disposition (including the Secured Party) shall hold the Collateral free from
any claim or right of whatever kind, including any equity or right of redemption
of Debtor and Debtor specifically waives (to the extent permitted by law) all
rights of redemption, stay or appraisal which it has or may have under any rule
of law or statute now existing or hereafter adopted.
9. Cumulative Rights. The rights, powers and remedies of the Secured
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Party under this Agreement shall be in addition to all rights, powers and
remedies given to the Secured Party by virtue of any statute or rule of law, the
Note or any other agreement, all of which rights, powers and remedies shall be
cumulative and may be exercised successively or concurrently without impairing
the Secured Party's security interest in the Collateral.
10. Waiver. Any waiver, forbearance or failure or delay by the
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Secured Party in exercising any right, power or remedy shall not preclude the
further exercise thereof, and every right, power or remedy of the Secured Party
shall continue in full force and effect until such right, power or remedy is
specifically waived in a writing executed by the Secured Party. Debtor waives
any right to require the Secured Party to proceed against any person or to
exhaust any Collateral or to pursue any remedy in the Secured Party's power.
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11. Setoff. Debtor agrees that the Secured Party may exercise its
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rights of setoff with respect to the Obligations in the same manner as if the
Obligations were unsecured.
12. Binding Upon Successors. All rights of the Secured Party under
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this Agreement shall inure to the benefit of its successors and assigns, and all
obligations of Debtor shall bind its heirs, executors, administrators,
successors and assigns.
13. Entire Agreement; Severability. This Agreement contains the
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entire agreement between the Secured Party and Debtor. If any of the provisions
of this Agreement shall be held invalid or unenforceable, this Agreement shall
be construed as if not containing those provisions and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.
14. References. The singular includes the plural. If more than one
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party executes this Agreement, the term Debtor shall be deemed to refer to each
of the undersigned Debtors as well as to all of them, and their obligations and
agreements hereunder shall be joint and several. If any of the undersigned is a
married person, recourse may be had against his or her separate property for the
Obligations.
15. Choice of Law. This Agreement shall be construed in accordance
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with and governed by the laws of the State of California, and, where applicable
and except as otherwise defined herein, terms used herein shall have the
meanings given them in the Uniform Commercial Code of such state.
16. Amendment. This Agreement may not be amended or modified except
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by a writing signed by each of the parties hereto.
17. Addresses for Notices. All demands, notices and other
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communications to Debtor or the Secured Party provided for hereunder shall be
made or given as set forth in the Agreement.
18. Waiver of Jury Trial. DEBTOR AND THE SECURED PARTY EACH WAIVE
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THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT. DEBTOR AND THE
SECURED PARTY EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
[NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on and as of the day and year first above written.
DEBTOR:
/s/ S R Hussain
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Xxxx Xxxxxxx, an individual
Address: 00000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
SECURED PARTY:
IMPCO TECHNOLOGIES, inc.,
a Delaware corporation
By:
_____________________________
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on and as of the day and year first above written.
DEBTOR:
______________________________________
Xxxx Xxxxxxx, an individual
Address: 00000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
SECURED PARTY:
IMPCO TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Chief Financial Officer
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Schedule A
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113,858 Shares of common stock of Impco Technologies, Inc. to be received upon
the exercise of options previously granted by Questor Partners Fund, L.P. and
Questor Side-by-Side Partners, L.P. to Xxxx Xxxxxxx pursuant to an Option
Agreement dated June 5, 1998.
Schedule B
Xxxx Xxxxxxx'x Impco Technologies, Inc. Non-Qualified Stock Options
Options
Granted or Options
Expiration Transferred Option Transferred Options Options
Grant Date Date Plan ID Grant Type To Price Out Outstanding Vested
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5/22/1997 5/22/2007 1997ISOP Non-Qualified 11,557 $7.6300 1,038 519
5/22/1997 5/22/2007 1997ISOP Non-Qualified 46,894 $7.6300 48,894 30,000
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Total 30,519
Schedule C
Xxxx Xxxxxxx'x Impco Technologies, Inc. Incentive Stock Options
Options
Granted or Options
Expiration Transferred Option Transferred Options Options
Grant Date Date Plan ID Grant Type To Price Out Outstanding Vested
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1/11/1996 1/11/2006 1996 Incentive 3,000 $8.3800 1,200 1,200
11/7/1996 11/7/2006 1996 Incentive 12,000 $6.2500 4,800 2,400
11/22/1996 11/22/2006 1996 Incentive 5,000 $7.6300 2,000 1,000
5/22/1997 5/22/2007 1997ISOP Incentive 38,443 $7.6300 28,962 9,481
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Total 14,081
