SECURITY AGREEMENT AND
----------------------
AGREEMENT NOT TO EXERCISE OPTIONS
---------------------------------
THIS SECURITY AGREEMENT AND AGREEMENT NOT TO EXERCISE OPTIONS (the
"Agreement") is made as of March 15, 2001 by and between Xxxx Xxxxxxxxx, an
individual, ("Debtor"), and IMPCO Technologies, Inc., a Delaware corporation
("Secured Party" or "IMPCO").
RECITALS
--------
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
$782,760 (as amended or modified from time to time, the "Note"), Secured Party
----
extended a loan to the Debtor on the terms and subject to the conditions set
forth therein.
WHEREAS, pursuant to that certain Promissory Note dated as of March 15,
2001, issued by Xxxx Xxxxxxx ("Borrower") to the Secured Party (as amended or
modified from time to time, the "Borrower's Note"), the Secured Party extended a
loan to Xxxx Xxxxxxx in the principal amount of $1,565,548 subject to the terms
and conditions set forth in the Borrower's Note, and secured by collateral
pledged by Borrower;
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
---------
1. Grant of Security Interest; Covenant not to Exercise Options. Debtor
------------------------------------------------------------
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 Xxxxxxxxx listed
on Schedule C (the "Schedule C Options") issued to Xxxxxxxxx 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
----------
owned or hereafter acquired:
(a) Investment Securities. Shares of common stock of IMPCO (the
---------------------
"IMPCO Shares") listed on Schedule A and stock options held by Xxxx Xxxxxxxxx
("Xxxxxxxxx") 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 Security 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 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
--------
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
-----------
consist of any and all debts, obligations and liabilities of Debtor to the
Secured Party (i) arising out of, connected with or related to the Note and this
Agreement as amended or modified from time to time or (ii) obligations due and
owing to Secured Party under the Borrower's Note and under any security
agreement executed by the Borrower in connection with the Borrower's Note (the
"Borrower's Obligations"). 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
------------------------------
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
---------
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
--------
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
-----------------------
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
---------------------------
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.
2
5. Covenants and Agreements of Debtor. In addition to all 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
--------------------------
necessary to maintain, preserve and protect the Collateral and the Schedule C
Options;
(b) Use of Collateral. Not to use or permit any Collateral or
-----------------
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
---------------------
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
------------------------
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
-------------------
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
-------------------------------------
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
---------------------------------
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
------------------
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
--------------------------------------------------
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.
3
6. Authorized Action by the Secured Party. At any time, Debtor
--------------------------------------
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 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
-------
Event of Default (as defined in the Note or in the Borrower's Note) shall occur
or (ii) any representation or warranty made by Debtor hereunder or by Borrower
in the Borrower's Note (or in any security agreement executed by Borrower in
connection with Borrower's Note) 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
--------
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
-------------------
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
---------
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
-----------------
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
-----------------------------------
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 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.
4
10. Waiver. Any waiver, forbearance or failure or delay by the
------
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.
11. Setoff. Debtor agrees that the Secured Party may exercise its
------
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
-----------------------
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
------------------------------
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
----------
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
-------------
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
---------
by a writing signed by each of the parties hereto.
17. Addresses for Notices. All demands, notices and other
---------------------
communications to Debtor or the Secured Party provided for hereunder shall be
made or given as set forth in the Agreement.
5
18. Waiver of Jury Trial. DEBTOR AND THE SECURED PARTY EACH WAIVE
--------------------
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.
19. Third Party Waivers.
-------------------
(a) Debtor authorizes Secured Party without notice or demand and
without affecting its liability hereunder, from time to time to:
(i) renew, compromise, extend, accelerate, or otherwise
change the time for payment, or otherwise change the terms, of the
Borrower's Obligations or any part thereof, including increase or decrease
of the rate of interest thereon, or otherwise change the terms of any
documents relating to the Borrower's Obligations;
(ii) receive and hold security for the payment of the
Borrower's Obligations and exchange, enforce, waive, release, fail to
perfect, sell, or otherwise dispose of any such security;
(iii) apply such security and direct the order or manner of
sale thereof as Secured Party in its discretion may determine; and
(iv) release or substitute the Borrower or any guarantor
or any one or more of the endorsers or other guarantor of any of the
Borrower's Obligations.
(b) Debtor waives:
(i) any right to require Secured Party to proceed against
Borrower, proceed against or exhaust any security for the Borrower's
Obligations, or pursue any other remedy in Secured Party's power
whatsoever;
(ii) any defense arising by reason of any disability or
other defense of Borrower, or the cessation from any cause whatsoever of
the liability of Borrower;
(iii) any defense based on any claim that Debtor's
obligations exceed or are more burdensome that those of Borrower; and
(iv) the benefit of any statute of limitations affecting
Debtor's liability hereunder;
(v) any rights and defenses that are or may become
available to Debtor by reason of Sections 2787 to 2855, inclusive, of the
California Civil Code;
6
(vi) all rights and defenses that Debtor may have because
any of the obligations of Debtor are secured by real property. This means,
among other things: (i) Secured Party may collect from Collateral without
first foreclosing on any real or personal property collateral pledged by
Borrower or any other party; and (ii) if Secured Party forecloses on any
real property collateral pledged by Borrower: (1) the amount of the
obligations secured thereby may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price, and (2) Secured Party may collect from other
collateral even if Secured Party by foreclosing on the real property
collateral, has destroyed any right Debtor may have to collect from
Borrower. This is an unconditional and irrevocable waiver of any rights and
defenses Debtor may have because any of the Borrower's Obligations is
secured by real property. These rights and defenses include, but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d, or
726 of the California Code of Civil Procedure.
(vii) Debtor waives any right or defense it may have at law
or equity, including California Code of Civil Procedure Section 580a, to a
fair market value hearing or action to determine a deficiency judgment
after a foreclosure.
[NEXT PAGE IS THE SIGNATURE PAGE]
7
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed on and as of the day and year first above written.
DEBTOR:
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxxx, an individual
Address: 00000 000/xx/ Xxx., XX
Xxxxx Xxxxxxx, XX 00000
SECURED PARTY:
IMPCO TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
8
Schedule B
Xxxx Xxxxxxxxx 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
------------------------------------------------------------------------------------------------------------
5/22/1997 5/22/2007 1997ISOP Non-Qualified 3,675 $7.6300 3,675 3,675
5/22/1997 5/22/2007 1997ISOP Non-Qualified 11,156 $7.6300 11,156 9,578
------------------------------------------------------------------------------------------------------------
Totals 13,253
Schedule C
Xxxx Xxxxxxxxx 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
------------------------------------------------------------------------------------------------------------
1/11 1996 1/11/2006 1996 Incentive 12,000 $6.2500 12,000 9,600
5/22/1997 5/22/2007 1997ISOP Incentive 16,325 $7.6300 16,325 8,325
5/22/1997 5/22/2007 1997ISOP Incentive 8.844 $7.6300 8,844 2,422
6/30/1997 6/30/2007 1989ISOP Incentive 10,000 $8.0000 10,000 7,500
6/30/1997 6/30/2007 1996 Incentive 10,000 $8.0000 10,000 6,000
------------------------------------------------------------------------------------------------------------
Totals 33,847
