Document:

exv10w2

 

Exhibit 10.2

SECURITY AGREEMENT

     This SECURITY AGREEMENT (this “Agreement”), dated as of January 31, 2007, among
Grantors listed on the signature pages hereof and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex 1
(collectively, jointly and severally, the “Grantors” and each, individually, a
“Grantor”), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
Lender Group and the Bank Product Provider (together with its successors, the “Agent”).

W
I T N E S S E T H:

     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented, or otherwise modified from time to time, including all schedules thereto,
the “Credit Agreement”) among Bell Industries, Inc., a California corporation
(“Parent”), Bell Industries, Inc., a Minnesota corporation (“Bell Minnesota”) (each
of Parent and Bell Minnesota are referred to hereinafter each individually as a “Borrower”,
and individually and collectively, jointly and severally, as the “Borrowers”), the lenders
signatory thereto (the “Lenders”), and Agent, the Lender Group has agreed to make certain
financial accommodations available to Borrowers from time to time pursuant to the terms and
conditions thereof, and

     WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank
Product Provider in connection with the transactions contemplated by the Credit Agreement and this
Agreement, and

     WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make financial accommodations to Borrowers as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest
in and to the Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, the Secured Obligations, and

     NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Defined Terms. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the
Credit Agreement. Any terms used in this Agreement that are defined in the Code shall be construed
and defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement;
provided, however, that if the Code is used to define any term used herein and if
such term is defined differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in
this Agreement, as used in this Agreement, the following terms shall have the following meanings:

          (a) “Account” means an account (as that term is defined in the Code).

          (b) “Account Debtor” means an account debtor (as that term is defined in
the Code).

          (c) “Agent’s Lien” has the meaning specified therefor in the Credit
Agreement.

 

 

          (d) “Bank Product Obligations” has the meaning specified therefor in the
Credit Agreement.

          (e) “Bank Product Provider” has the meaning specified therefor in the
Credit Agreement.

          (f) “Books” means books and records (including each Grantor’s Records
indicating, summarizing, or evidencing such Grantor’s assets (including the Collateral) or
liabilities, each Grantor’s Records relating to such Grantor’s business operations or financial
condition, and each Grantor’s goods or General Intangibles related to such information).

          (g) “Borrower” or “Borrowers” has the meaning specified therefor
in the recitals to this Agreement.

          (h) “Cash Equivalents” has the meaning specified therefor in the Credit
Agreement.

          (i) “Chattel Paper” means chattel paper (as that term is defined in the
Code) and includes tangible chattel paper and electronic chattel paper.

          (j) “Code” means the California Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to
Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or remedies.

          (k) “Collateral” has the meaning specified therefor in Section 2.

          (l) “Commercial Tort Claims” means commercial tort claims (as that term is
defined in the Code), and includes those commercial tort claims listed on Schedule 1
attached hereto (“Commercial Tort Claims”).

          (m) “Copyrights” means copyrights and copyright registrations, and also
includes (i) the copyright registrations and recordings thereof and all applications in connection
therewith listed on Schedule 2 attached hereto and made a part hereof, (ii) all reissues,
continuations, extensions or renewals thereof, (iii) all income, royalties, damages and payments
now and hereafter due or payable under and with respect thereto, including payments under all
licenses entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (vi) all of each Grantor’s rights corresponding thereto
throughout the world.

          (n) “Copyright Security Agreement” means each Copyright Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit A attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Copyrights.

          (o) “Credit Agreement” has the meaning specified therefor in the recitals
to this Agreement.

          (p) “Deposit Account” means any deposit account (as that term is defined
in the Code).

          (q) “Equipment” means equipment (as that term is defined in the Code).

2

 

          (r) “Event of Default” has the meaning specified therefor in the Credit
Agreement.

          (s) “General Intangibles” means general intangibles (as that term is
defined in the Code) and, in any event, includes payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or things in action,
goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents,
Trademarks, Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual
Property or rights therein or applications therefor, whether under license or otherwise, programs,
programming materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, including Intellectual Property Licenses, infringement claims, computer
programs, information contained on computer disks or tapes, software, literature, reports,
catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds,
and tax refund claims, interests in a partnership or limited liability company which do not
constitute a security under Article 8 of the Code, and any other personal property other than
Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related
Property, Negotiable Collateral, and oil, gas, or other minerals before extraction.

          (t) “Grantor” and “Grantors” have the meanings specified therefor
in the recitals to this Agreement.

          (u) “Guaranty” has the meaning specified therefor in the Credit Agreement.

          (v) “Insolvency Proceeding” has the meaning specified therefor in the
Credit Agreement.

          (w) “Intellectual Property” means Patents, Copyrights, Trademarks, the
goodwill associated with such Trademarks, trade secrets and customer lists, and Intellectual
Property Licenses.

          (x) “Intellectual Property Licenses” means rights under or interests in
any patent, trademark, copyright or other intellectual property, including software license
agreements with any other party, whether the applicable Grantor is a licensee or licensor under any
such license agreement, including the license agreements listed on Schedule 3 attached
hereto and made a part hereof.

          (y) “Inventory” means inventory (as that term is defined in the Code).

          (z) “Investment Related Property” means (i) investment property (as that
term is defined in the Code), and (ii) all of the following (regardless of whether classified as
investment property under the Code): all Pledged Interests, Pledged Operating Agreements, and
Pledged Partnership Agreements.

          (aa) “Lender Group” has the meaning specified therefor in the Credit Agreement.

          (bb) “Loan Document” has the meaning specified therefor in the Credit Agreement.

          (cc) “Negotiable Collateral” means letters of credit, letter-of-credit
rights, instruments, promissory notes, drafts, and documents.

          (dd) “Obligations” has the meaning specified therefor in the Credit
Agreement.

          (ee) “Patents” means patents and patent applications, and also includes
(i) the patents and patent applications listed on Schedule 4 attached hereto and made a
part hereof, (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future infringements or
dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions
thereof, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

3

 

          (ff) “Patent Security Agreement” means each Patent Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Provider, in substantially the form of Exhibit B attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product Provider,
a security interest in all their respective Patents.

          (gg) “Permitted Liens” has the meaning specified therefor in the Credit Agreement.

          (hh) “Person” has the meaning specified therefor in the Credit Agreement.

          (ii) “Pledged Companies” means, each Person listed on Schedule 5
hereto as a “Pledged Company”, together with each other Person, all or a portion of whose Stock, is
acquired or otherwise owned by a Grantor after the Closing Date.

          (jj) “Pledged Interests” means all of each Grantor’s right, title and
interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or
designation, including all substitutions therefor and replacements thereof, all proceeds thereof
and all rights relating thereto, also including any certificates representing the Stock, the right
to receive any certificates representing any of the Stock, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right
to receive dividends, distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments, and other property
from time to time received, receivable, or otherwise distributed in respect of or in addition to,
in substitution of, on account of, or in exchange for any or all of the foregoing.

          (kk) “Pledged Interests Addendum” means a Pledged Interests Addendum
substantially in the form of Exhibit C to this Agreement.

          (ll) “Pledged Operating Agreements” means all of each Grantor’s rights,
powers, and remedies under the limited liability company operating agreements of each of the
Pledged Companies that are limited liability companies.

          (mm) “Pledged Partnership Agreements” means all of each Grantor’s rights,
powers, and remedies under the partnership agreements of each of the Pledged Companies that are
partnerships.

          (nn) “Proceeds” has the meaning specified therefor in Section 2.

          (oo) “Real Property” means any estates or interests in real property now
owned or hereafter acquired by any Grantor and the improvements thereto.

          (pp) “Records” means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in perceivable form.

          (qq) “Security Interest” has the meaning specified therefor in Section
2.

          (rr) “Secured Obligations” means each and all of the following: (a) all of
the present and future obligations of Grantors arising from this Agreement, the Credit Agreement,
or the other Loan Documents (including any Guaranty), (b) all Bank Product Obligations, and (c) all
Obligations of Borrowers, including, in the case of each of clauses (a), (b) and (c), reasonable
attorneys fees and expenses and any interest, fees, or expenses that accrue after the filing of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in
any Insolvency Proceeding.

          (ss) “Securities Account” means a securities account (as that term is
defined in the Code).

          (tt) “Stock” has the meaning specified therefor in the Credit Agreement

4

 

          (uu) “Supporting Obligations” means supporting obligations (as such term
is defined in the Code).

          (vv) “Trademarks” means trademarks, trade names, trademark applications,
service marks, service mark applications, and also includes (i) the trade names, trademarks,
trademark applications, service marks, and service mark applications listed on Schedule 6
attached hereto and made a part hereof, and (ii) all renewals thereof, (iii) all income, royalties,
damages and payments now and hereafter due or payable under and with respect thereto, including
payments under all licenses entered into in connection therewith and damages and payments for past
or future infringements or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (v) all of each Grantor’s rights corresponding thereto
throughout the world.

          (ww) “Trademark Security Agreement” means each Trademark Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group and the
Bank Product Provider, in substantially the form of Exhibit D attached hereto, pursuant to
which Grantors have granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a security interest in all their respective Trademarks.

          (xx) “URL” means “uniform resource locator,” an internet web address.

     2. Grant of Security. Each Grantor hereby unconditionally grants,
assigns, and pledges to Agent, for the benefit of the Lender Group and the Bank Product Provider, a
continuing security interest (herein referred to as the “Security Interest”) in all
personal property of such Grantor whether now owned or hereafter acquired or arising and wherever
located, including such Grantor’s right, title, and interest in and to the following, whether now
owned or hereafter acquired or arising and wherever located (the “Collateral”):

          (a) all of such Grantor’s Accounts;

          (b) all of such Grantor’s Books;

          (c) all of such Grantor’s Chattel Paper;

          (d) all of such Grantor’s Deposit Accounts;

          (e) all of such Grantor’s Equipment and fixtures;

          (f) all of such Grantor’s General Intangibles;

          (g) all of such Grantor’s Inventory;

          (h) all of such Grantor’s Investment Related Property;

          (i) all of such Grantor’s Negotiable Collateral;

          (j) all of such Grantor’s rights in respect of Supporting Obligations;

          (k) all of such Grantor’s Commercial Tort Claims;

          (l) all of such Grantor’s money, Cash Equivalents, or other assets of each such
Grantor that now or hereafter come into the possession, custody, or control of Agent or any other
member of the Lender Group;

5

 

          (m) all of the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance or Commercial Tort Claims covering or relating to
any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral,
Supporting Obligations, money, or other tangible or intangible property resulting from the sale,
lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of
any award in condemnation with respect to any of the foregoing, any rebates or refunds, whether for
taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest
therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of
the above, whether insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect
to any of the foregoing (the “Proceeds”). Without limiting the generality of the
foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable
to any Grantor or Agent from time to time with respect to any of the Investment Related Property.

     3. Security for Obligations. This Agreement and the Security Interest
created hereby secures the payment and performance of the Secured Obligations, whether now existing
or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and would be owed by
Grantors, or any of them, to Agent, the Lender Group, the Bank Product Provider or any of them, but
for the fact that they are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any Grantor.

     4. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the Pledged Partnership
Agreements, to perform all of the duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group
of any of the rights hereunder shall not release any Grantor from any of its duties or obligations
under such contracts and agreements included in the Collateral, and (c) none of the members of the
Lender Group shall have any obligation or liability under such contracts and agreements included in
the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be
obligated to perform any of the obligations or duties of any Grantors thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default
shall occur and be continuing, except as otherwise provided in this Agreement, the Credit
Agreement, or other Loan Documents, Grantors shall have the right to possession and enjoyment of
the Collateral for the purpose of conducting the ordinary course of their respective businesses,
subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, it is the intention of the parties hereto that
record and beneficial ownership of the Pledged Interests, including all voting, consensual, and
dividend rights, shall remain in the applicable Grantor until the occurrence of an Event of Default
and until Agent shall notify the applicable Grantor of Agent’s exercise of voting, consensual, or
dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.

     5. Representations and Warranties. Each Grantor hereby represents and
warrants as follows:

          (a) The exact legal name of each of the Grantors is set forth on the signature
pages of this Agreement or a written notice provided to Agent pursuant to Section 6.5 of
the Credit Agreement.

          (b) Schedule 7 attached hereto sets forth all Real Property owned by
Grantors as of the Closing Date.

          (c) As of the Closing Date, no Grantor has any interest in, or title to, any
Copyrights, Intellectual Property Licenses, Patents, or Trademarks except as set forth on
Schedules 2, 3, 4, and 6, respectively, attached hereto. This Agreement is effective to
create a valid and continuing Lien on such

6

 

Copyrights, Intellectual Property Licenses, Patents and Trademarks and, upon filing of the
Copyright Security Agreement with the United States Copyright Office and filing of the Patent
Security Agreement and the Trademark Security Agreement with the United State Patent and Trademark
Office, and the filing of appropriate financing statements in the jurisdictions listed on
Schedule 8 hereto, all action necessary or desirable to protect and perfect the Security
Interest in and to on each Grantor’s Patents, Trademarks, or Copyrights has been taken and such
perfected Security Interest is enforceable as such as against any and all creditors of and
purchasers from any Grantor. No Grantor has any interest in any Copyright that is necessary in
connection with the operation of such Grantor’s business, except for those Copyrights identified on
Schedule 2 attached hereto which have been registered with the United States Copyright
Office.

          (d) This Agreement creates a valid security interest in the Collateral of each of
Grantors, to the extent a security interest therein can be created under the Code, securing the
payment of the Secured Obligations. Except to the extent a security interest in the Collateral
cannot be perfected by the filing of a financing statement under the Code, all filings and other
actions necessary or desirable to perfect and protect such security interest have been duly taken
or will have been taken upon the filing of financing statements listing each applicable Grantor, as
a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on
Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first
priority perfected security interest in the Collateral of each Grantor to the extent such security
interest can be perfected by the filing of a financing statement. All action by any Grantor
necessary to protect and perfect such security interest on each item of Collateral has been duly
taken.

          (e) Except for the Security Interest created hereby, each Grantor is and will at
all times be the sole holder of record and the legal and beneficial owner, free and clear of all
Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 5 as being
owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the
Closing Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and
nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule 5
hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this
Agreement; (ii) such Grantor has the right and requisite authority to pledge, the Investment
Related Property pledged by such Grantor to Agent as provided herein; (iii) all actions necessary
or desirable to perfect, establish the first priority of, or otherwise protect, Agent’s Liens in
the Investment Related Collateral, and the proceeds thereof, have been duly taken, (A) upon the
execution and delivery of this Agreement; (B) upon the taking of possession by Agent of any
certificates constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by the applicable
Grantor; (C) upon the filing of financing statements in the applicable jurisdiction set forth on
Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such
Grantor that are not represented by certificates, and (D) with respect to any Securities Accounts,
upon the delivery of Control Agreements with respect thereto; and (iv) each Grantor has delivered
to and deposited with Agent (or, with respect to any Pledged Interests created or obtained after
the Closing Date, will deliver and deposit in accordance with Sections 6(a) and 8
hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent
such Pledged Interests are represented by certificates, and undated powers endorsed in blank with
respect to such certificates. None of the Pledged Interests owned or held by such Grantor has been
issued or transferred in violation of any securities registration, securities disclosure, or
similar laws of any jurisdiction to which such issuance or transfer may be subject.

          (f) No consent, approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is required (i) for the
grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or
for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the
exercise by Agent of the voting or other rights provided for in this Agreement with respect to the
Investment Related Property or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition of Investment Related
Property by laws affecting the offering and sale of securities generally.

7

 

          (g) Schedule 9 attached hereto sets forth all motor vehicles owned by Grantors as of
the Closing Date, by model, model year and vehicle identification number (“VIN”).

     6. Covenants. Each Grantor, jointly and severally, covenants and agrees
with Agent that from and after the date of this Agreement and until the date of termination of this
Agreement in accordance with Section 22 hereof:

          (a) Possession of Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, or
Chattel Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of
Agent, shall execute such other documents and instruments as shall be requested by Agent or, if
applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment
Related Property, or Chattel Paper to Agent, together with such undated powers endorsed in blank as
shall be requested by Agent;

          (b) Chattel Paper.

               (i) Each Grantor shall take all steps reasonably necessary to grant Agent control
of all electronic Chattel Paper in accordance with the Code and all “transferable records” as that
term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the
federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction;

               (ii) If any Grantor retains possession of any Chattel Paper or instruments (which
retention of possession shall be subject to the extent permitted hereby and by the Credit
Agreement), promptly upon the request of Agent, such Chattel Paper and instruments shall be marked
with the following legend: “This writing and the obligations evidenced or secured hereby are
subject to the Security Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the
Lender Group and the Bank Product Provider”;

          (c) Control Agreements.

               (i) Except to the extent otherwise permitted by the Credit Agreement, each Grantor
shall obtain an authenticated Control Agreement, from each bank maintaining a Deposit Account for
such Grantor;

               (ii) Except to the extent otherwise permitted by the Credit Agreement, each
Grantor shall obtain authenticated Control Agreements, from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for any Grantor;

          (d) Letter-of-Credit Rights. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 2 Business Days after
becoming a beneficiary), notify Agent thereof and, upon the request by Agent, enter into a
tri-party agreement with Agent and the issuer or confirmation bank with respect to letter-of-credit
rights assigning such letter-of-credit rights to Agent and directing all payments thereunder to
Agent’s Account, all in form and substance satisfactory to Agent;

          (e) Commercial Tort Claims. Each Grantor shall promptly (and in any event
within 2 Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise
obtaining a Commercial Tort Claim after the date hereof and, upon request of Agent, promptly amend
Schedule 1 to this Agreement to describe such after-acquired Commercial Tort Claim in a
manner that reasonably identifies such Commercial Tort Claim, and hereby authorizes the filing of
additional financing statements or amendments to existing financing statements describing such
Commercial Tort Claims, and agrees to do such other acts or things deemed necessary or desirable by
Agent to give Agent a first priority, perfected security interest in any such Commercial Tort
Claim;

8

 

          (f) Government Contracts. If any Account or Chattel Paper arises out of a
contract or contracts with the United States of America or any department, agency, or
instrumentality thereof, Grantors shall promptly (and in any event within 2 Business Days of the
creation thereof) notify Agent thereof in writing and execute any instruments or take any steps
reasonably required by Agent in order that all moneys due or to become due under such contract or
contracts shall be assigned to Agent, for the benefit of the Lender Group and the Bank Product
Provider, and shall provide written notice thereof under the Assignment of Claims Act or other
applicable law;

          (g) Intellectual Property.

               (i) Upon request of Agent, in order to facilitate filings with the United States
Patent and Trademark Office and the United States Copyright Office, each Grantor shall execute and
deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, or
Patent Security Agreements to further evidence Agent’s Lien on such Grantor’s Patents, Trademarks,
or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;

               (ii) Each Grantor shall have the duty, to the extent necessary or economically
desirable in the operation of such Grantor’s business, (A) to promptly sue for infringement,
misappropriation, or dilution and to recover any and all damages for such infringement,
misappropriation, or dilution, (B) to prosecute diligently any trademark application or service
mark application that is part of the Trademarks pending as of the date hereof or hereafter until
the termination of this Agreement, (C) to prosecute diligently any patent application that is part
of the Patents pending as of the date hereof or hereafter until the termination of this Agreement,
and (D) to take all reasonable and necessary action to preserve and maintain all of such Grantor’s
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights therein, including
the filing of applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings. Each Grantor shall promptly file an
application with the United States Copyright Office for any Copyright that has not been registered
with the United States Copyright Office if such Copyright is necessary in connection with the
operation of such Grantor’s business. Any expenses incurred in connection with the foregoing shall
be borne by the appropriate Grantor. Each Grantor further agrees not to abandon any Trademark,
Patent, Copyright, or Intellectual Property License that is necessary or economically desirable in
the operation of such Grantor’s business;

               (iii) Grantors acknowledge and agree that the Lender Group shall have no duties
with respect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without
limiting the generality of this Section 6(g), Grantors acknowledge and agree that no member
of the Lender Group shall be under any obligation to take any steps necessary to preserve rights in
the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any member of the Lender Group may do so at its option from and after the occurrence and during
the continuance of an Event of Default, and all expenses incurred in connection therewith
(including reasonable fees and expenses of attorneys and other professionals) shall be for the sole
account of Borrowers and shall be chargeable to the Loan Account;

               (iv) In no event shall any Grantor, either itself or through any agent, employee,
licensee, or designee, file an application for the registration of any Patent, Trademark, or
Copyright with the United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency without giving Agent prior written notice thereof. Promptly upon any
such filing, each Grantor shall comply with Section 6(g)(i) hereof;

          (h) Investment Related Property.

               (i) If any Grantor shall receive or become entitled to receive any Pledged
Interests after the Closing Date, it shall promptly (and in any event within 2 Business Days of
receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum identifying such
Pledged Interests;

9

 

               (ii) All sums of money and property paid or distributed in respect of the
Investment Related Property which are received by any Grantor shall be held by the Grantors in
trust for the benefit of Agent segregated from such Grantor’s other property, and such Grantor
shall deliver it forthwith to Agent’s in the exact form received;

               (iii) Each Grantor shall promptly deliver to Agent a copy of each notice or other
communication received by it in respect of any Pledged Interests;

               (iv) No Grantor shall make or consent to any amendment or other modification or
waiver with respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership
Agreement, or enter into any agreement or permit to exist any restriction with respect to any
Pledged Interests other than pursuant to the Loan Documents;

               (v) Each Grantor agrees that it will cooperate with Agent in obtaining all
necessary approvals and making all necessary filings under federal, state, local, or foreign law in
connection with the Security Interest on the Investment Related Property or any sale or transfer
thereof;

               (vi) As to all limited liability company or partnership interests, issued under
any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents,
warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not and
shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and
will not constitute investment company securities, and (C) are not and will not be held by such
Grantor in a securities account. In addition, none of the Pledged Operating Agreements, the
Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests
issued under any Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall
provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial
Code as in effect in any relevant jurisdiction;

          (i) Real Property; Fixtures. Each Grantor covenants and agrees that upon
the acquisition of any fee interest in Real Property it will promptly (and in any event within 2
Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant
to Agent, for the benefit of the Lender Group and the Bank Product Provider, a first priority
Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor and shall
deliver such other documentation and opinions, in form and substance satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion,
including title insurance policies, financing statements, fixture filings and environmental audits
and such Grantor shall pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys fees and expenses) incurred in connection therewith. Each Grantor
acknowledges and agrees that, to the extent permitted by applicable law, all of the Collateral
shall remain personal property regardless of the manner of its attachment or affixation to real
property.

          (j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Collateral, except expressly permitted by the Credit Agreement, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral of any of Grantors, except for
Permitted Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute
Agent’s consent to any sale or other disposition of any of the Collateral except as expressly
permitted in this Agreement or the other Loan Documents; and

          (k) Other Actions as to Any and All Collateral. Each Grantor shall
promptly (and in any event within 2 Business Days of acquiring or obtaining such Collateral) notify
Agent in writing upon (i) acquiring or otherwise obtaining any Collateral after the date hereof
consisting of Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment Related
Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of
the Code), promissory notes (as defined in the Code, or instruments (as defined in the Code) or
(ii) any amount payable under or in connection with any of the Collateral being or becoming
evidenced after the date hereof by any Chattel Paper, documents, promissory

10

 

notes, or instruments and, in each such case upon the request of Agent, promptly execute such
other documents, or if applicable, deliver such Chattel Paper, other documents or certificates
evidencing any Investment Related Property and do such other acts or things deemed necessary or
desirable by Agent to protect Agent’s Security Interest therein; and

          (l) Motor Vehicles. Upon request of Agent, with respect to all motor vehicles
owned by any Grantor, Grantor shall deliver to Agent, a certificate of title for all such motor
vehicles and shall cause those title certificates to be filed (with the Agent’s Lien noted thereon)
in the appropriate state motor vehicle filing office.

     7. Relation to Other Security Documents. The provisions of this Agreement
shall be read and construed with the other Loan Documents referred to below in the manner so
indicated.

          (a) Credit Agreement. In the event of any conflict between any provision
in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement
shall control.

          (b) Patent, Trademark, Copyright Security Agreements. The provisions of
the Copyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements
are supplemental to the provisions of this Agreement, and nothing contained in the Copyright
Security Agreements, Trademark Security Agreements, or the Patent Security Agreements shall limit
any of the rights or remedies of Agent hereunder.

     8. Further Assurances.

          (a) Each Grantor agrees that from time to time, at its own expense, such Grantor
will promptly execute and deliver all further instruments and documents, and take all further
action, that may be necessary or that Agent may reasonably request, in order to perfect and protect
the Security Interest granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.

          (b) Each Grantor authorizes the filing by Agent financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver to Agent such other
instruments or notices, as may be necessary or as Agent may reasonably request, in order to perfect
and preserve the Security Interest granted or purported to be granted hereby.

          (c) Each Grantor authorizes Agent at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments (i) describing the
Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar
effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code for the sufficiency
or filing office acceptance. Each Grantor also hereby ratifies any and all financing statements or
amendments previously filed by Agent in any jurisdiction.

          (d) Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing statement filed in
connection with this Agreement without the prior written consent of Agent, subject to such
Grantor’s rights under Section 9-509(d)(2) of the Code.

     9. Agent’s Right to Perform Contracts, Exercise Rights, etc. Upon the
occurrence and during the continuance of an Event of Default, Agent (or its designee) (a) may
proceed to perform any and all of the obligations of any Grantor contained in any contract, lease,
or other agreement and exercise any and all rights of any Grantor therein contained as fully as
such Grantor itself could, (b) shall have the right to use any Grantor’s rights under Intellectual
Property Licenses in connection with the enforcement of the Agent’s rights hereunder, including the
right to prepare for sale and sell any and all Inventory and Equipment now or

11

 

hereafter owned by any Grantor and now or hereafter covered by such licenses, and (c) shall
have the right to request that any Stock that is pledged hereunder be registered in the name of
Agent or any of its nominees.

     10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is
continuing under the Credit Agreement, to take any action and to execute any instrument which Agent
may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including:

          (a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection with the Accounts
or any other Collateral of such Grantor;

          (b) to receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor to that of Agent;

          (c) to receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

          (d) to file any claims or take any action or institute any proceedings which Agent
may deem necessary or desirable for the collection of any of the Collateral of such Grantor or
otherwise to enforce the rights of Agent with respect to any of the Collateral;

          (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in
part the purchase order of any Person obligated to such Grantor in respect of any Account of such
Grantor;

          (f) to use any labels, Patents, Trademarks, trade names, URLs, domain names,
industrial designs, Copyrights, advertising matter or other industrial or intellectual property
rights, in advertising for sale and selling Inventory and other Collateral and to collect any
amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

          (g) Agent on behalf of the Lender Group shall have the right, but shall not be
obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and
Intellectual Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor
shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by Agent in aid of such enforcement.

     To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.

     11. Agent May Perform. If any of Grantors fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such agreement, and the
reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and
severally, by Grantors.

     12. Agent’s Duties. The powers conferred on Agent hereunder are solely to
protect Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank
Product Provider, and shall not impose any duty upon Agent to exercise any such powers. Except for
the safe custody of any Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights pertaining to any
Collateral. Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.

12

 

     13. Collection of Accounts, General Intangibles and Negotiable Collateral.
At any time upon the occurrence and during the continuation of an Event of Default, Agent or
Agent’s designee may (a) notify Account Debtors of any Grantor that the Accounts, General
Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of
the Lender Group and the Bank Product Provider, or that Agent has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of such Grantor’s Secured Obligations under the
Loan Documents.

     14. Disposition of Pledged Interests by Agent. None of the Pledged
Interests existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or qualified under the
various federal or state securities laws of the United States and disposition thereof after an
Event of Default may be restricted to one or more private (instead of public) sales in view of the
lack of such registration. Each Grantor understands that in connection with such disposition,
Agent may approach only a restricted number of potential purchasers and further understands that a
sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged
Interests were registered and qualified pursuant to federal and state securities laws and sold on
the open market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms
of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a
private sale, Agent shall have the right to rely upon the advice and opinion of any nationally
recognized brokerage or investment firm (but shall not be obligated to seek such advice and the
failure to do so shall not be considered in determining the commercial reasonableness of such
action) as to the best manner in which to offer the Pledged Interest or any portion thereof for
sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such
reliance shall be conclusive evidence that Agent has handled the disposition in a commercially
reasonable manner.

     15. Voting Rights.

          (a) Upon the occurrence and during the continuation of an Event of Default, (i)
Agent may, at its option, and with 2 Business Days prior notice to any Grantor, and in addition to
all rights and remedies available to Agent under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of
the Pledged Interests owned by such Grantor, but under no circumstances is Agent obligated by the
terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote
any of such Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful
attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems
advisable for or against all matters submitted or which may be submitted to a vote of shareholders,
partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an
interest and shall be irrevocable.

          (b) For so long as any Grantor shall have the right to vote the Pledged Interests
owned by it, such Grantor covenants and agrees that it will not, without the prior written consent
of Agent, vote or take any consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of Agent and the other members of the Lender Group or the
value of the Pledged Interests.

     16. Remedies. Upon the occurrence and during the continuance of an Event
of Default:

          (a) Agent may exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all
the rights and remedies of a secured party on default under the Code or any other applicable law.
Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such
event, Agent without demand of performance or other demand, advertisement or notice of any kind
(except a notice specified below of time and place of public or private sale) to or upon any of
Grantors or any other Person (all and each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code or any other applicable law), may take
immediate possession of all or any portion of the Collateral and (i) require Grantors to, and each
Grantor hereby agrees that it will at its own expense and upon request of Agent

13

 

forthwith, assemble all or part of the Collateral as directed by Agent and make it available
to Agent at one or more locations where such Grantor regularly maintains Inventory, and (ii)
without notice except as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Agent’s offices or elsewhere, for cash, on credit, and
upon such other terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least 10 days notice to any of Grantors 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 specifically such notice shall constitute a reasonable
“authenticated notification of disposition” within the meaning of Section 9-611 of the Code. Agent
shall not be obligated to make any sale of Collateral regardless of notice of sale having been
given. Agent may adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned.

          (b) Agent is hereby granted a license or other right to use, without liability for
royalties or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any
name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain
names, industrial designs, other industrial or intellectual property or any property of a similar
nature, whether owned by any of Grantors or with respect to which any of Grantors have rights under
license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and
all franchise agreements shall inure to the benefit of Agent.

          (c) Any cash held by Agent as Collateral and all cash proceeds received by Agent
in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied against the Secured Obligations in the order set forth in the Credit
Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, each Grantor shall remain jointly and severally liable for any such
deficiency.

          (d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur and be continuing Agent
shall have the right to an immediate writ of possession without notice of a hearing. Agent shall
have the right to the appointment of a receiver for the properties and assets of each of Grantors,
and each Grantor hereby consents to such rights and such appointment and hereby waives any
objection such Grantors may have thereto or the right to have a bond or other security posted by
Agent.

     17. Remedies Cumulative. Each right, power, and remedy of Agent as
provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law
or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in the other Loan
Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Agent, of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by Agent of any or all such other
rights, powers, or remedies.

     18. Marshaling.
Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or other assurances
of payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

14

 

     19. Indemnity and Expenses.

          (a) Each Grantor agrees to indemnify Agent and the other members of the Lender
Group from and against all claims, lawsuits and liabilities (including reasonable attorneys fees)
growing out of or resulting from this Agreement (including enforcement of this Agreement) or any
other Loan Document to which such Grantor is a party, except claims, losses or liabilities
resulting from the gross negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction. This provision
shall survive the termination of this Agreement and the Credit Agreement and the repayment of the
Secured Obligations.

          (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent,
may charge to the Loan Account) all the Lender Group Expenses which Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of,
or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to
perform or observe any of the provisions hereof.

     20. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no
consent to any departure by any of Grantors herefrom, shall in any event be effective unless the
same shall be in writing and signed by Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No amendment of any
provision of this Agreement shall be effective unless the same shall be in writing and signed by
Agent and each of Grantors to which such amendment applies.

     21. Addresses for Notices. All notices and other communications provided
for hereunder shall be given in the form and manner and delivered to Agent at its address specified
in the Credit Agreement, and to any of the Grantors at their respective addresses specified in the
Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.

     22. Continuing Security Interest: Assignments under Credit Agreement.
This Agreement shall create a continuing security interest in the Collateral and shall (a) remain
in full force and effect until the Obligations have been paid in full in cash in accordance with
the provisions of the Credit Agreement and the Commitments have expired or have been terminated,
(b) be binding upon each of Grantors, and their respective successors and assigns, and (c) inure to
the benefit of, and be enforceable by, Agent, and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any the Lender may, in accordance with the
provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such the Lender herein
or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of
the Credit Agreement and the expiration or termination of the Commitments, the Security Interest
granted hereby shall terminate and all rights to the Collateral shall revert to Grantors or any
other Person entitled thereto. At such time, Agent will authorize the filing of appropriate
termination statements to terminate such Security Interests. No transfer or renewal, extension,
assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document,
or any other instrument or document executed and delivered by any Grantor to Agent nor any
additional Advances or other loans made by any Lender to Borrowers, nor the taking of further
security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent,
nor any other act of the Lender Group or the Bank Product Provider, or any of them, shall release
any of Grantors from any obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay,
omission or otherwise, be deemed to have waived any of

15

 

its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. A waiver by Agent of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or remedy which Agent
would otherwise have had on any other occasion.

     23. Governing Law.

          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES
HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.

          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA;PROVIDED ,  HOWEVER ,THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
AGENT AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE
TO ASSERT THE DOCTRINE OFFORUM NON CONVENIENSOR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).

          (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH GRANTOR
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT
AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH 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.

     24. New Subsidiaries. Pursuant to Section 5.16 of the Credit
Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Grantor is
required to enter into this Agreement by executing and delivering in favor of Agent a supplement to
this Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of
Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The execution and delivery of
any instrument adding an additional Grantor as a party to this Agreement shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

     25. Agent. Each reference herein to any right granted to, benefit
conferred upon or power exercisable by the “Agent” shall be a reference to Agent, for the benefit
of the Lender Group and the Bank Product Provider.

16

 

     26. Miscellaneous.

          (a) This Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall
apply to each other Loan Document mutatis mutandis.

          (b) Any provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of
such provision in any other jurisdiction.

          (c) Headings used in this Agreement are for convenience only and shall not be used
in connection with the interpretation of any provision hereof.

          (d) The pronouns used herein shall include, when appropriate, either gender and
both singular and plural, and the grammatical construction of sentences shall conform thereto.

          (e) Unless the context of this Agreement or any other Loan Document clearly
requires otherwise, references to the plural include the singular, references to the singular
include the plural, the terms “includes” and “including” are not limiting, and the term “or” has,
except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The
words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other
Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular provision of this Agreement or such other Loan Document, as the case may
be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement
unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set
forth herein). Any reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by
the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and assigns. Any requirement
of a writing contained herein or in any other Loan Document shall be satisfied by the transmission
of a Record and any Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.

17

 

          IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through
their duly authorized officers, as of the day and year first above written.

	 	 	 	 	 	 	 
	GRANTORS:
	 	 	 	 	 	 
	 	 	BELL INDUSTRIES, INC., 

a California corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Kevin Thimjon	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Kevin Thimjon	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BELL INDUSTRIES, INC.,

a Minnesota corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Kevin Thimjon	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Kevin Thimjon	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 

18

 

	 	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Anna M. Bellinghausen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Anna M. Bellinghausen	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Wells Fargo Foothill –
Business Finance	 	 
	 

	 	 	 	 	 	 

19exv10w3

 

Exhibit 10.3

EXECUTION COPY

AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT

     AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT (this “Amendment”), dated as of
January 31, 2007, between SKYTEL CORP., a Delaware corporation (“Seller”), and BELL
INDUSTRIES, INC., a California corporation (“Purchaser”).

W I T N
E S S E T H:

          WHEREAS, the parties hereto have entered into that certain Asset Purchase Agreement, dated as
of November 10, 2006, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated as of
November 16, 2006 (the “Asset Purchase Agreement”); and

          WHEREAS, the parties desire to amend the Asset Purchase Agreement as set forth herein;

          NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

     1. Definitions. Capitalized terms used in this Amendment and not otherwise defined in
this Amendment shall have the meanings set forth in the Asset Purchase Agreement.

     2. Amendments to the Asset Purchase Agreement.

          (a) Section 4.1 of the Asset Purchase Agreement is hereby amended by adding, after the
existing paragraph, the following new paragraph:

          “Notwithstanding anything to the contrary in the preceding paragraph, the Closing will be
deemed to have occurred at 11:59 p.m. (New York City time) on the Closing Date.”

          (b) Schedule 5.11(g) to the Asset Purchase Agreement is hereby amended and restated in
its entirety as set forth on Exhibit A hereto.

          (c) Article VII of the Asset Purchase Agreement is hereby amended by adding, after
Section 7.13, the following new Section 7.14:

          “7.14 Third Party Software. Purchaser hereby acknowledges that (i) computer hardware
transferred as Purchased Assets, including laptops, may contain Third Party Software and (ii)
Purchaser is not receiving any license to use any such Third Party Software by virtue of the Asset
Purchase Agreement or any transaction document contemplated thereby. Purchaser hereby agrees not
to use any such Third Party Software which Purchaser does not have a license to use. Within 30
days following the Closing Date, Purchaser shall (a) remove from
any computer hardware that constitutes a

 

 

Purchased Asset any copy of Third Party Software which Purchaser does not have a license to
use and (b) deliver to Seller a certificate duly signed by an officer of Purchaser certifying that
Purchaser has complied with its obligations under clause (a) of this sentence.”

          (d) The form of Intellectual Property Agreement, attached to the Asset Purchase Agreement as
Exhibit C thereto, is hereby amended and restated in its entirety as set forth on
Exhibit B hereto.

          (e) The form of Telecommunication Services Agreement, attached to the Asset Purchase Agreement
as Exhibit D thereto, is hereby amended and restated in its entirety as set forth on
Exhibit C hereto.

          (f) The form of Reseller Agreement, attached to the Asset Purchase Agreement as Exhibit
E thereto, is hereby amended and restated in its entirety as set forth on Exhibit D
hereto.

          (g) The form of Colocation Agreement, attached to the Asset Purchase Agreement as Exhibit
G thereto, is hereby amended and restated in its entirety as set forth on Exhibit E
hereto.

          (h) The form of Corporate Account Agreement, attached to the Asset Purchase Agreement as
Exhibit H thereto, is hereby amended and restated in its entirety as set forth on
Exhibit F hereto.

     3. Effect on the Asset Purchase Agreement.

          (a) On and after the date hereof, each reference in the Asset Purchase Agreement to “this
Agreement”, “herein”, “hereof”, “hereunder” or words of similar import shall mean and be a
reference to the Asset Purchase Agreement as amended hereby.

          (b) Except as specifically amended by this Amendment, the Asset Purchase Agreement shall
remain in full force and effect and the Asset Purchase Agreement, as amended by this Amendment, is
hereby ratified and confirmed in all respects.

2

 

     4. Governing Law. This Amendment and the legal relations between the parties hereto
arising hereunder shall be governed by, construed and enforced in accordance with the laws of the
State of New York (without regard to the internal conflict of laws provisions of such State).

     5. Headings. The headings and captions in this Amendment are for convenience of
reference only and shall not define, limit or otherwise affect any of the terms or provisions
hereof.

     6. Counterparts. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same amendment, and all signatures need not
appear on any one counterpart.

[Signature page follows.]

3

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective authorized officers as of the date first written above.

	 	 	 	 	 
	 	SKYTEL CORP.

 	 
	 	By:  	/s/
Francis Shammo	 
	 	 	Name:  	Francis Shammo	 
	 	 	Title:  	SVP and Chief Financial Officer	 
	 
	 	BELL INDUSTRIES, INC.

 	 
	 	By:  	/s/
John A. Fellows	 
	 	 	Name:  	John A. Fellows	 
	 	 	Title:  	Chief Executive Officer	 
	 

	 	 	 	 	 
	 	The undersigned hereby joins as a party to this

Amendment for the limited purposes provided in

Section 11.9 of the Asset Purchase Agreement:

MCI LLC

 	 
	 	By:  	/s/
Francis Shammo	 
	 	 	Name:  	Francis Shammo	 
	 	 	Title:  	SVP and Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]