Exhibit 10.5

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) is entered into as of August 12,
2016, by and between TWISTED TECHNOLOGIES, INC., a Georgia corporation
(“Grantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (together with its successors and assigns, “Lender”).

 

Pursuant to an Amended and Restated Credit Agreement of even date herewith among
Communications Systems, Inc., a Minnesota corporation (“Communications
Systems”), JDL Technologies, Incorporated, a Minnesota corporation (“JDL”),
Transition Networks, Inc., a Minnesota corporation (“Transition Networks”), and
Suttle, Inc., a Minnesota corporation (“Suttle”, together with Communications
Systems, JDL and Transition Networks, “Borrowers” and each a “Borrower”), and
Lender (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), Lender has agreed to make certain advances and
other extensions of credit to Borrowers.

 

Pursuant to a Guaranty of even date herewith (as amended, restated, supplemented
or otherwise modified from time to time, the “Guaranty”), Grantor has guaranteed
the payment and performance of the Obligations (as defined in the Credit
Agreement) to Lender.

 

As a condition to making advances and offering other credit accommodations under
the Credit Agreement to Borrowers, Lender has required, among other things, the
execution and delivery of this Agreement by Grantor.

 

1.             DEFINITIONS.

 

(a)          All capitalized terms not otherwise defined in this Agreement shall
have the meanings given them in the Credit Agreement.

 

(b)          The following terms, when used in this Agreement (whether or not
capitalized and whether or not singular or plural), shall have the meanings
given them in the Code, except that (i) for purposes of this Agreement, the
meaning of such terms will not be limited by reason of any limitation on the
scope of the Code, and (ii) to the extent the definition of any category or type
of Collateral is expanded by any amendment, modification or revision to the
Code, such expanded definition will apply automatically as of the date of such
amendment, modification or revision: “Accession”, “Account”, “Chattel Paper”,
“Commercial Tort Claim”, “Commodity Account”, “Deposit Account”, “Document”,
“Equipment”, “Fixtures”, “General Intangible”, “Goods”, “Instrument”,
“Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Letter of
Credit”, “Money”, “Securities Account” and “Supporting Obligation”.

 

2.             GRANT OF SECURITY INTEREST. Grantor grants and transfers to
Lender, for the benefit of Lender and each Bank Product Provider, a continuing
security interest (the “Security Interest”) in all of the following property of
Grantor or in which Grantor has rights, whether presently existing or acquired
after the date of this Agreement (collectively, together with all Proceeds, the
“Collateral”):

 

(a)Accounts;

 

(b)Chattel Paper;

 

(c)Commercial Tort Claims;

 

(d)Deposit Accounts, Securities Accounts and Commodities Accounts;

 

(e)Documents;

 

 

 

(f)General Intangibles;

 

(g)Goods, including Equipment and Fixtures;

 

(h)Instruments;

 

(i)Inventory;

 

(j)Investment Property;

 

(k)Letters of Credit and Letter-of-Credit Rights;

 

(l)Money and other assets of Grantor;

 

(m)all Accessions and Supporting Obligations; and

 

all books and records relating to the above property and all proceeds (as such
term is defined in the Code) and products, whether tangible or intangible of any
of the above property, all proceeds of any condemnation award relating to any of
the above property, all proceeds of insurance covering or relating to any or all
of the above property and all rebates and returns relating to any of the above
property (all such proceeds, collectively, “Proceeds”).

 

3.             OBLIGATIONS SECURED. The obligations secured by the Security
Interest are the payment and performance of:

 

(a)          all present and future Obligations; and

 

(b)          all now existing or subsequently arising debts, liabilities and
obligations of Grantor and any other Loan Party and obligors, or any of them,
owing to Lender or any Bank Product Provider and rights of Lender under this
Agreement.

 

4.             AUTHORIZATION TO FILE FINANCING STATEMENTS. Grantor authorizes
Lender to file financing statements describing the Collateral to perfect the
Security Interest in the Collateral, and Lender may describe the Collateral as
“all personal property” or “all assets” or describe specific items of
Collateral, including, without limitation, any Commercial Tort Claims. All
financing statements filed before the date of this Agreement to perfect the
Security Interest were authorized by Grantor and are ratified.

 

5.[RESERVED].

 

6.             REPRESENTATIONS AND WARRANTIES OF GRANTOR. Grantor represents and
warrants to Lender that:

 

(a)          Grantor’s legal name is exactly as set forth on the first page of
this Agreement, its chief executive office and principal place of business are
set forth on Schedule A, and all of Grantor’s organizational documents or
agreements delivered to Lender are complete and accurate in every respect;

 

(b)Grantor has legal title to and has possession or control of its Collateral;

 

(c)Grantor has the exclusive right to grant a security interest in the
Collateral;

 

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(d)          all Collateral is genuine, free from Liens, adverse claims,
setoffs, default, prepayment, defenses and conditions precedent of any kind or
character, except the Security Interest created by this Agreement and Permitted
Liens;

 

(e)          all statements contained in this Agreement and each other Loan
Document regarding the Collateral are true and complete in all material
respects;

 

(f)          no financing statement covering any of the Collateral, and naming
any secured party other than Lender and holders of Permitted Liens, is on file
in any public office;

 

(g)          all Persons appearing to be obligated on Collateral have authority
and capacity to contract and are bound as they appear to be;

 

(h)          all property subject to Chattel Paper has been properly registered
and filed in compliance with law and to perfect the interest of Grantor in such
property;

 

(i)           all Accounts and other rights to payment comply with all
applicable laws concerning form, content and manner of preparation and
execution, including where applicable Federal Reserve Regulation Z and any state
consumer credit laws;

 

  (j)           Schedule A lists all real property owned or leased by Grantor;

 

(k)          Schedule A provides a complete and correct list of: (i) all
registered copyrights and copyright applications owned by Grantor, (ii) all
intellectual property licenses entered into by Grantor; (iii) all registered
patents and patent applications owned by Grantor; and (iv) all registered
trademarks and trademark applications owned by Grantor;

 

(l)          Schedule A contains a listing of all of Deposit Accounts,
Securities Accounts and Commodity Accounts of Grantor, including, with respect
to each bank, securities intermediary or commodity intermediary: (i) the name
and address of such entity, and (ii) the account numbers of the Deposit
Accounts, Securities Accounts or Commodity Accounts maintained with such entity;
and

 

(m)        the Inventory and Equipment of Grantor are not stored with a bailee,
warehouseman, processor or similar party and are located only at, or in-transit
between or to, the locations identified on Schedule A.

 

7.COVENANTS OF GRANTOR.

 

(a)          Grantor covenants and agrees:

 

(i)          to permit Lender to exercise its rights, remedies, and powers under
the Credit Agreement, this Agreement, the other Loan Documents and under law;

 

(ii)         not to change its name, or, as applicable, its chief executive
office, its principal residence or the jurisdiction in which it is organized
without giving Lender 30 days’ prior written notice; and

 

(iii)        not to change the places where Grantor keeps any Collateral or
Grantor’s records concerning the Collateral without (A) giving Lender 30 days’
prior written notice of the address to which such Grantor is moving same, and
(B) delivering to Lender a fully executed Collateral Access Agreement with
respect to such location if not owned by Grantor; and

 

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(iv)        to cooperate with Lender in perfecting all security interests
granted by this Agreement and in obtaining such agreements from third parties as
Lender deems necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of its rights with regard to
Collateral or access to Collateral.

 

(b)Grantor agrees, unless Lender agrees otherwise in writing:

 

(i)          not to use any Collateral for any unlawful purpose or in any way
that would void any insurance required to be carried on such Collateral;

 

(ii)         to insure the Collateral, with Lender named as first lender loss
payee and additional insured, in form, substance and amounts, under agreements,
against risks and liabilities, and with insurance companies satisfactory to
Lender;

 

(iii)        to keep, in accordance with GAAP, complete and accurate records
regarding all Collateral, and to permit Lender to inspect the same and make
copies thereof at any reasonable time;

 

(iv)        not to sell, pledge or dispose of, nor permit the transfer by
operation of law of, any of the Collateral or any interest in the Collateral,
except sales of Inventory to buyers in the ordinary course of Grantor’s business
or as otherwise expressly permitted by the Credit Agreement;

 

(v)         not to permit any Lien on the Collateral, including, without
limitation, Liens arising from the storage of Inventory, except for Liens in
favor of Lender and Permitted Liens;

 

(vi)        if requested by Lender and required pursuant to the terms of the
Credit Agreement, to receive and use reasonable diligence to collect Accounts,
in trust and as the property of Lender, and to immediately endorse as
appropriate and deliver collections or payments on such Accounts or proceeds
thereof to Lender daily in the exact form in which they are received;

 

  (vii)        not to commingle Accounts, Proceeds or collections with other
property of any other Person;

 

(viii)      to give only normal allowances and credits consistent with past
practices and in the ordinary course of business and to advise Lender thereof
immediately in writing if they affect any Accounts in any material respect;

 

(ix)       on Lender’s demand, (A) to deliver to Lender returned property
resulting from, or payment equal to, such allowances or credits on any Accounts
as required by the Credit Agreement or upon the occurrence and during the
continuance of an Event of Default and (B) to execute such documents and do such
other things as Lender may reasonably request for the purpose of perfecting,
preserving and enforcing its security interest in such returned property;

 

(x)        from time to time when requested by Lender, to prepare and deliver a
schedule of all Collateral subject to this Agreement and to, subject to the
terms of this Agreement and each other Loan Document assign in writing and
deliver to Lender all Accounts, contracts, leases and other Chattel Paper,
Instruments, Documents and other evidences thereof;

 

(xi)       to deliver to Lender (A) notice of any Commercial Tort Claim it may
have against any Person, including a detailed description of such Commercial
Tort Claim and, upon receipt of such description by Lender the description of
Collateral set forth in Section 1 of this Agreement shall be deemed to be
amended to include such description of each such Commercial Tort Claim, and

 

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(B) such documents as Lender may require to grant Lender a security interest in
Grantor’s rights in such Commercial Tort Claim;

 

(xii)      to deliver to Lender any Instrument, Document or Chattel Paper
constituting Collateral with a value greater than $25,000, duly endorsed or
assigned by Grantor to Lender;

 

(xiii)     to provide any service and do any other acts which may be necessary
to maintain, preserve and protect all Collateral and, as appropriate and
applicable, to keep all Collateral in good and saleable condition, to deal with
the Collateral in accordance with the standards and practices adhered to
generally by users and manufacturers of like property, and to keep all
Collateral free and clear of all defenses, rights of offset and counterclaims
(other than Permitted Liens);

 

(xiv)     not to withdraw any funds from any Deposit Account pledged to Lender
pursuant to this Agreement, except as expressly permitted under the Credit
Agreement or except for Grantor’s principal operating account and any Deposit
Accounts which are specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for employees of Grantor
(“Excluded Deposit Accounts”);

 

(xv)      not to open or establish any Deposit Account, Securities Account, or
Commodities Account unless Lender has control of such account as contemplated in
the Code (but excluding Excluded Deposit Accounts); and

 

(xvi)     not to consign any of its Inventory or sell any of its Inventory on
bill and hold, sale or return, sale on approval, or other conditional terms of
sale.

 

(c)          Grantor covenants and agrees to deliver to Lender a completed
Schedule A no later than the date required by the Credit Agreement, and for
purposes hereof all representations and warranties related to such Schedule A
shall be deemed to take effect as of the date on which Schedule is required to
be delivered to Lender in under the Credit Agreement (or, if earlier, the date a
completed Schedule A is actually delivered).

 

8.POWERS OF LENDER.

 

(a)          Grantor appoints Lender its attorney in fact to perform any of the
following powers, which are coupled with an interest, are irrevocable until
termination of this Agreement, payment in full of all Obligations and
termination of all commitments of Lender under the Credit Agreement, and may be
exercised from time to time by Lender’s officers and employees, or any of them,
whether or not an Event of Default has occurred: (i) to perform any obligation
of Grantor hereunder in Grantor’s name or otherwise; (ii) to give notice to
Account Debtors or others of Lender’s rights in the Collateral; (iii) to release
or substitute security; (iv) to prepare, execute, file, record or deliver notes,
assignments, schedules, designation statements, initial financing statements and
amendments, continuation statements, termination statements, statements of
assignment, applications for registration or like papers to perfect, preserve or
release Lender’s interest in the Collateral; (v) to take cash, instruments for
the payment of money and other property to which Lender is entitled; (vi) to
verify facts concerning the Collateral by inquiry of obligors thereon, or
otherwise, in its own name or a fictitious name; (vii) to prepare, adjust,
execute, deliver and receive payment under insurance claims, and to collect and
receive payment of and endorse any instrument in payment of loss or returned
premiums or any other insurance refund or return, and to apply such amounts
received by Lender, at Lender’s sole option, toward repayment of the Obligations
or replacement or restoration of the Collateral; (viii) to enter onto Grantor’s
premises to inspect the Collateral; (ix) to make withdrawals from and to close
deposit accounts or other accounts with any financial institution, wherever
located, into which Proceeds may have been deposited, and to apply funds so
withdrawn to payment of the Obligations; (x) to preserve or release the interest
evidenced by chattel

 

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paper to which Lender is entitled hereunder and to endorse and deliver any
evidence of title to such interest; and (xi) to do all acts and things and
execute all documents in the name of Grantor or otherwise, deemed by Lender as
reasonably necessary, proper and convenient in connection with the preservation,
perfection, priority or enforcement of Lender’s rights.

 

(b)          Grantor appoints Lender its attorney in fact to perform any of the
following powers, which are coupled with an interest, are irrevocable until
termination of this Agreement, payment in full of all Obligations and
termination of all commitments of Lender under the Credit Agreement, and may be
exercised from time to time by Lender’s officers and employees, or any of them,
after the occurrence and during the continuation of an Event of Default: (i) to
enforce or forebear from enforcing the rights of Lender with respect to any
Account Debtor and to make extension or modification agreements with any Account
Debtor; (ii) to resort to security in any order; (iii) to receive, open and read
mail addressed to Grantor; (iv) to endorse, collect, deliver and receive payment
under instruments for the payment of money constituting or relating to
Collateral; (v) to release Persons liable on Collateral and to give receipts and
compromise disputes between Grantor and such Persons; and (vi) to exercise all
rights, powers and remedies which Grantor would have, but for this Agreement,
with respect to all Collateral.

 

9.             PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS.
Grantor agrees to pay, prior to delinquency, all insurance premiums, taxes,
charges, liens and assessments against the Collateral, and upon the failure of
Grantor to do so, Lender at its option may pay any of them and shall be the sole
judge of the legality or validity and the amount necessary to discharge the
same. Any such payments made by Lender shall be obligations under this Agreement
and shall be secured by the Security Interest. Any such payments made by Lender
shall be obligations of Grantor to Lender, due and payable immediately upon
demand, together with interest at the Default Rate, and shall be secured by the
Collateral, subject to all terms and conditions of this Agreement.

 

10.           EVENTS OF DEFAULT. The occurrence of an Event of Default (as
defined in the Credit Agreement) under the Credit Agreement shall constitute an
“Event of Default” under this Agreement.

 

11.           REMEDIES. Upon the occurrence of any Event of Default, Lender
shall have the right to declare immediately due and payable all or any
Obligations (other than Obligations arising under any Hedge Agreement, which may
be accelerated pursuant to the applicable Hedge Agreement) secured by this
Agreement and to terminate any commitments to make loans or otherwise extend
credit under the Credit Agreement. Lender shall have all other rights, powers,
privileges and remedies granted to a secured party upon default under the Code
or otherwise provided by law or agreement, including without limitation, the
right to:

 

(a)           contact all Persons obligated to Grantor on any Collateral and to
instruct such Persons to deliver all Collateral directly to Lender;

 

  (b)          sell, lease, license or otherwise dispose of any or all
Collateral;

 

(c)          notify the United States Postal Service to change the address for
delivery of mail of Grantor to any address designated by Lender;

 

(d)          without notice to or consent by Grantor and without the obligation
to pay rent or other compensation, to take exclusive possession of all locations
where Grantor conducts its business or has any rights of possession and use the
locations to store, process, manufacture, sell, use and liquidate or otherwise
dispose of Collateral;

 

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(e)          with regard to any Deposit Account, instruct the bank maintaining
such Deposit Account to pay the balance of such Deposit Account to Lender or
take such other action as Lender shall instruct; and 

 

(f)          with regard to any Securities Account or Commodity Account,
instruct the securities intermediary maintaining such Securities Account or the
commodity intermediary maintaining such Commodity Account, as applicable, to pay
the balance of such Securities Account or such Commodity Account, as applicable,
to Lender or take such other action as Lender shall instruct; and 

 

(g)          without regard to the occurrence of waste or the adequacy of
security, apply for the appointment of a receiver for Grantor or for the assets
of Grantor and Grantor waives any objection to the right to have a bond or
security posted by Lender. Grantor hereby waives any objection or defense to the
appointment of any such receiver and any right that Grantor has or may have to
seek the posting of a bond or other security by Lender. 

 

While an Event of Default exists: 

 

(1)Grantor will deliver to Lender from time to time, as requested by Lender,
current lists of all Collateral;

  

(2)Grantor will not dispose of any Collateral except on terms approved by Lender
or as otherwise agreed in writing by Lender;

  

(3)at Lender’s request, Grantor will assemble and deliver all Collateral, and
books and records pertaining thereto, to Lender at a reasonably convenient place
designated by Lender; and

  

(4)Lender may, without notice to Grantor, enter onto Grantor’s premises and take
possession of the Collateral.

 

12.       CUMULATIVE RIGHTS. All rights, powers, privileges and remedies of
Lender shall be cumulative. No delay, failure or discontinuance of Lender in
exercising any right, power, privilege or remedy hereunder shall affect or
operate as a waiver of such right, power, privilege or remedy; nor shall any
single or partial exercise of any such right, power, privilege or remedy
preclude, waive or otherwise affect any other or further exercise or the
exercise of any other right, power, privilege or remedy. 

 

13.       WAIVERS AND CONSENTS OF LENDER. Any waiver, permit, consent or
approval of any kind by Lender of any default, or any such waiver of any
provisions or conditions, must be in writing and shall be effective only to the
extent set forth in writing. 

 

14.       DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral, Lender may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral, may be applied by Lender to the payment of expenses incurred by
Lender, including reasonable attorneys’ fees, and the balance of such proceeds
may be applied by Lender toward the payment of the Obligations in such order of
application as Lender may from time to time elect. Upon the transfer of all or
any part of the Obligations, Lender may transfer all or any part of the
Collateral and shall be fully discharged from all liability and responsibility
with respect to such transferred Collateral, and the transferee shall be vested
with all rights and powers of Lender hereunder; but with respect to any
Collateral not so transferred, Lender shall retain all rights, powers,
privileges and remedies. It is agreed that public or private sales or other
dispositions, for cash or on credit, to a wholesaler or retailer or investor, or
user of property of the types subject to this Agreement, or public auctions, are
all commercially reasonable since differences in

 

 

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the prices generally realized in the different kinds of dispositions are
ordinarily offset by the differences in the costs and credit risks of such
dispositions. Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 days’ notice to Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification and such notice shall constitute a reasonable
“authenticated notification of disposition” within the meaning of Section 9-611
of the Code. Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Lender may adjourn any public or
private sale from time to time, and such sale may be made at the time and place
to which it was so adjourned. Grantor agrees that the internet shall constitute
a “place” for purposes of Section 9-610(b) of the Code. Grantor agrees that any
sale of Collateral to a licensor pursuant to the terms of a license agreement
between such licensor and such Grantor is sufficient to constitute a
commercially reasonable sale (including as to method, terms, manner, and time)
within the meaning of Section 9-610 of the Code. Grantor grants to Lender a
non-exclusive, worldwide and royalty-free license to use or otherwise exploit
all intellectual property rights of Grantor for the purpose of: (a) completing
the manufacture of any in-process materials following any Event of Default so
that such materials become saleable Inventory, all in accordance with the same
quality standards previously adopted by Grantor for its own manufacturing; and
(b) selling, leasing or otherwise disposing of any or all Collateral following
any Event of Default. 

 

15.       STATUTE OF LIMITATIONS. Until all Obligations shall have been paid in
full and all commitments by Lender to extend credit under the Credit Agreement
have been terminated, the power of sale or other disposition and all other
rights, powers, privileges and remedies granted to Lender shall continue to
exist and may be exercised by Lender at any time and from time to time
irrespective of the fact that the Obligations or any part thereof may have
become barred by any statute of limitations, or that the personal liability of
Grantor may have ceased, unless such liability shall have ceased due to the
payment in full of all Obligations and the other liabilities and indebtedness
secured by this Agreement. 

 

16.       WAIVERS OF GRANTOR. Grantor waives any right to require Lender to: (a)
proceed against Grantor or any other Person; (b) marshal assets or proceed
against or exhaust any security from Grantor or any other Person; (c) perform
any obligation of Grantor with respect to any Collateral; and (d) make any
presentment or demand, or give any notice of nonpayment or nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any Collateral or Proceeds. Grantor further waives any right to direct the
application of payments or security for any indebtedness of Grantor or
indebtedness of customers of Grantor. 

 

17.      [RESERVED]

 

18.      FURTHER ASSURANCES. At any time upon the request of Lender, Grantor
will execute or deliver to Lender any and all financing statements, fixture
filings, security agreements, pledges, assignments, endorsements, certificates
of title, mortgages, deeds of trust and all other documents (the “Additional
Documents”) that Lender may request and in form and substance satisfactory to
Lender, to create, perfect, and continue perfection or to better perfect
Lender’s Liens in all of the assets of Grantor (whether now owned or
subsequently arising of acquired, tangible or intangible, real or personal), and
in order to fully consummate all of the transactions contemplated under this
Agreement and under the other Loan Documents. If Grantor refuses or fails to
execute or deliver any requested Additional Documents, Grantor authorizes Lender
to execute such Additional Documents in Grantor’s name, and authorizes Lender to
file such executed Additional Documents in any appropriate filing office.
Grantor acknowledges that Grantor is not authorized to file any financing
statement or amendment with respect to any financing statement filed in
connection with this Agreement without the prior written consent of Lender,
subject to Grantor’s rights under Section 9-509(d) of the Code. 

 

19.       SUBROGATION RIGHTS. Until all Obligations shall have been paid in full
and all commitments by Lender to extend credit under the Credit Agreement have
been terminated, Grantor shall 

 

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not have any right of subrogation or contribution or similar right, and Grantor
waives any benefit of or right to participate in any of the Collateral or any
other security now or subsequently held by Lender. 

 

20.       NOTICES. All notices, requests and demands required under this
Agreement must be given, and shall be deemed received, as provided in Section
7.3 of the Credit Agreement at the address set forth below each party’s name on
the signature page of this Agreement or to such other address as any party may
designate by written notice to all other parties. 

 

21.       COSTS, EXPENSES AND ATTORNEYS’ FEES. Grantor shall pay to Lender
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and allocated costs of Lender’s in-house counsel), expended or
incurred by Lender in connection with or related to this Agreement, including,
without limitation, all Lender Expenses. Further, Grantor indemnifies Lender
against all losses, claims, demands, liabilities and expenses of every kind
caused by property subject to this Agreement, all in accordance with the Credit
Agreement. 

 

22.       SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement will be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided that Grantor
may not assign or transfer its interests, rights, or obligations under this
Agreement without Lender’s prior written consent. Lender may sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Lender’s rights and benefits under this Agreement and the other
Loan Documents. This Agreement may be amended or modified only in writing signed
by Lender and Grantor, except as provided in Section 7(b)(xi) and Section 18 of
this Agreement. 

 

23.       SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or any remaining provisions
of this Agreement. 

 

24.       GOVERNING LAW. The validity of this Agreement and the construction,
interpretation, and enforcement of this Agreement, and the rights of the
parties, as well as all claims, controversies or disputes arising under or
related to this Agreement will be determined under, governed by and construed in
accordance with the laws of the State of Minnesota without regard conflicts of
laws principles. 

 

25.       JURISDICTION. All actions or proceedings arising in connection with
this Agreement and the other Loan Documents to which Grantor are a party may be
tried and litigated in the State of Minnesota and, to the extent permitted by
applicable law, federal courts located in the County of Hennepin, State of
Minnesota; provided that any suit seeking enforcement against any Collateral or
other property may be brought, at Lender’s option, in the courts of any
jurisdiction where Lender elects to bring such action or where such Collateral
or other property may be found. Grantor and Lender each waive, to the extent
permitted under applicable law, any right they may have to assert the doctrine
of forum non conveniens or to object to venue to the extent any proceeding is
brought in accordance with this section. 

 

26.       WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, GRANTOR AND LENDER WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL
OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS
(EACH, A “CLAIM”). GRANTOR AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH

 

 -9-

 

 

 

KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 

 

Signature pages follow

 

 

 -10-

 

 

 

This Agreement has been duly executed as of the date set forth on page 1. 

 

  GRANTOR:       TWISTED TECHNOLOGIES, INC.       By: -s- Edwin C. Freeman
[a162853001_v1.jpg]    Name: Edwin C. Freeman   Title:   Chief Financial Officer
      Address:   c/o Communications Systems, Inc.
10900 Red Circle Drive
Minnetonka, MN 55343
Attention: Edwin C. Freeman   Fax No.: (763) 219-4669   Email:
efreeman@commsysinc.com

 

  Signature Page to Security Agreement 

 

 

 

 

  LENDER:        WELLS FARGO BANK, NATIONAL ASSOCIATION        By: -s- Roger
Pfiffiner [a162853002_v1.jpg]    Name: Roger Pfiffner   Title:  Authorized
Signatory       Address:       Wells Fargo Bank, National Association
MAC N93 l4-080   730 Second Avenue South, 3th Floor
Minneapolis, MN 55402   Attn: Chris Markham
Fax No.: (855) 881-3270   Email: chris.markham@wellsfargo.com 

 

Signature Page to Security Agreement

 

 

 

 

 

SCHEDULE A 

 

1. Chief Executive Office and Principal Place of Business:     2. Owned Real
Property:      3. Copyrights, Trademarks, Patents and Licensing Agreements:     
4. Deposit Accounts, Securities Accounts, Commodity Accounts and other
Investment Accounts:     5. Locations of Books and Records:

 

Schedule A-1