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 Xxxxxx Xxxxxxxx, 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
$1,565,548 (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, 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
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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 Xxxxxxxx listed
on Schedule C (the "Schedule C Options") issued to Xxxxxxxx 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
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"IMPCO Shares") listed on Schedule A and stock options held by Xxxxxx Xxxxxxxx
("Xxxxxxxx") listed on Schedule B issued to Xxxxxxxx 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
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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
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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 (i) 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 from time to time and (ii) any and all 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
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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 Party
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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
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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
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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.
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5. Covenants and Agreements of Debtor. In addition to all covenants and
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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
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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
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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 possession of
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(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
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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 time to
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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
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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.
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6. Authorized Action by the Secured Party. At any time, Debtor hereby
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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
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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
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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 and
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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.
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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.
11. Setoff. or agrees that the Secured Party may exercise its rights
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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.
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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.
19. Third Party Waivers.
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(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;
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(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]
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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/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, an individual
Address: 00000 000/xx/ Xxx., XX
Xxxxx Xxxxxxx, 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 Xxxxxx Xxxxxxxx pursuant to an Option
Agreement dated June 5, 1998.
6,800 Shares of common stock of Impco Technologies, Inc. held in the name of
Xxxxxx Xxxxxxxx.
Schedule B
Xxxxxx Xxxxxxxx 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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11/19/l993 11/19/2003 1989ISOP Non-Qualified 12,540 $10.8800 12,540 12,540
6/2/l994 6/2/2004 1989ISOP Non-Qualified 41,112 $11.2500 41,112 41,112
1/11/1996 1/11/2006 1989ISOP Non-Qualified 9,998 $ 8.3800 9,998 9,998
11/7/1996 11/7/2006 1996 Non-Qualified 9,400 $ 6.2500 9,400 9,400 t
11/22/l996 11/22/2006 1996 Non-Qualified 20,472 $ 7.6300 20,472 20,472
1/2/l997 1/2/2007 1996 Non-Qualified 21 $ 8.7500 21 21
5/22/l997 5/22/2007 1997ISOP Non-Qualified 134,736 $ 7.6300 134,736 90,000
5/22/l997 5/22/2007 1997ISOP Non-Qualified 50,000 $ 7.6300 50,000 30,000
1/2/1998 1/2/2008 1996 Non-Qualified 55 $11.0000 55 55
1/4/1999 1/4/2009 1989ISOP Non-Qualified 357 $13.1250 357 238
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Totals 213,836
Schedule C
Xxxxxx Xxxxxxxx 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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5/26/l993 5/26/2003 1989ISOP Incentive 40,000 $ 5.25 36,428 36,428
11/19/1993 11/19/2003 1989ISOP Incentive 17,460 $10.88 17,460 17,460
6/2/l994 6/2/2004 1989ISOP Incentive 8,888 $11.25 8,888 8,888
1/11/1996 1/11/2006 1998ISOP Incentive 10,002 $ 8.38 10,002 10,002
11/7/l996 11/7/2006 1996 Incentive 14,100 $ 6.25 10,300 5,600
11/22/1996 11/22/2006 1996 Incentive 14,528 $ 7.63 14,528 7,528
1/2/l997 1/2/2007 1996 Incentive 14 $ 8.75 14 7
1/2/1998 l/2/2008 1996 Incentive 84 $11.00 84 28
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Totals 85,941
