Exhibit 10.1

 

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This First Amendment to Amended and Restated Credit Agreement (this
“Amendment”), dated as of September 30, 2016, is entered into by and among
Communications Systems, Inc., a Minnesota corporation (“Communications
Systems”), JDL Technologies, Incorporated, a Minnesota corporation (“JDL”),
Transition Networks, Inc., a Minnesota corporation (“Transition Networks”),
Suttle, Inc., a Minnesota corporation (“Suttle”; together with Communications
Systems, Transition Networks and JDL, “Borrowers” and each a “Borrower”), and
Wells Fargo Bank, National Association, a national banking association
(“Lender”).

 

RECITALS

 

Borrowers and Lender are parties to an Amended and Restated Credit Agreement
dated as of August 12, 2016 (as amended, supplemented, restated or otherwise
modified from time to time, the “Credit Agreement”). Capitalized terms used in
these Recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.

 

Borrowers have requested that Lender agree to amend the Credit Agreement, and
Lender is willing to grant Borrowers’ request pursuant to the terms and
conditions set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

 

1.         Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings set forth therein,
unless otherwise defined herein.

 

2.         Amendments to Credit Agreement.

 

(a)         Section 1.1(b)(x) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

(x)          (i) that portion of any Account owing from an Account Debtor (other
than KGP Telecommunications and Tech Data Corporation) or its Affiliates which
represents the amount by which Borrowers’ Accounts owing from said Account
Debtor (other than KGP Telecommunications and Tech Data Corporation) and its
Affiliates exceeds 15% of Borrowers’ total Accounts, (ii) that portion of any
Account owing from KGP Telecommunications or its Affiliates which represents the
amount by which Borrowers’ Accounts owing from KGP Telecommunications and its
Affiliates exceeds 35% of Borrowers’ total Accounts and (iii) that portion of
any Account owing from Tech Data Corporation or its Affiliates which represents
the amount by which Borrowers’ Accounts owing from Tech Data Corporation and its
Affiliates exceeds 25% of Borrowers’ total Accounts;

 

 

 

 

(b)         Section 4.10 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

 

SECTION 4.10.          DEPOSITORY RELATIONSHIP; DEPOSIT ACCOUNTS. Maintain all
of its cash management, collection, and operating accounts with Lender, and
maintain only such deposit accounts as are described in, and subject to the
terms and conditions of, the applicable Security Agreement. Nothing in this
Section 4.10 shall prevent Borrowers from maintaining the UBS Securities
Account, which Borrowers may close in their sole discretion from time to
time. To the extent Lender provides its written consent to the maintenance of a
deposit account by a Loan Party with a financial institution other than Lender,
Loan Party will maintain a deposit account control agreement acceptable to
Lender (a “Control Agreement”) with each such financial institution (each, a
“Controlled Account Bank”) with respect to each such deposit account (each, a
“Controlled Account”) at such Controlled Account Bank. Unless otherwise agreed
by Lender, each such Control Agreement will provide that the applicable
Controlled Account Bank will forward, by daily standing wire transfer, all
amounts in such Controlled Account directly to a deposit account as directed by
Lender. Notwithstanding the foregoing requirements or any other requirement set
forth in the Security Agreements, so long as (a) no Event of Default has
occurred and is continuing and the (b) the aggregate average amount deposited in
each account designated in this sentence dose not exceed $100,000, the Loan
Parties may maintain each of the following accounts without delivering a Control
Agreement with respect thereto: (i) deposit account number 1110197016 maintained
by Suttle with Frandsen Bank & Trust, and (ii) deposit account number
2000005145583308 maintained by Twisted Technologies, Inc. with Branch Banking
and Trust Company.

 

3.         No Other Changes. Except as explicitly amended by this Amendment, all
of the terms and conditions of the Credit Agreement and the other Loan Documents
remain in full force and effect.

 

4.         Conditions Precedent. This Amendment shall be effective when Lender
has received this Amendment, duly executed by Borrowers, together with each of
the following, each in form and substance acceptable to Lender in its sole
discretion:

 

(a)         the Acknowledgment and Agreement of Guarantor, duly executed by
Guarantor; and

 

(b)         Such other matters as Lender may require.

 

5.         Representations and Warranties. Each Borrower hereby represents and
warrants to Lender as follows:

 

(a)         Each Borrower has all requisite power and authority to execute this
Amendment and the other documents and agreements contemplated by this Amendment
and to perform all of its obligations thereunder, and this Amendment and the
other documents and agreements contemplated by this Amendment have been duly
executed and delivered by each Borrower and constitute the legal, valid and
binding obligations of each Borrower, enforceable in accordance with their
respective terms.

 

(b)         The execution, delivery and performance by each Borrower of this
Amendment and the other documents and agreements contemplated by this Amendment
have been duly authorized by all necessary corporate action and do not (i)
require any authorization, consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
violate any provision of any law, rule or regulation or of any order, writ,
injunction or decree presently in effect, having applicability to any Borrower,
or the articles of incorporation or bylaws of any Borrower, or (iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any Borrower is a
party or by which it or its properties may be bound or affected.

 

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(c)         All of the representations and warranties contained in Article II of
the Credit Agreement, and each other representation and warranty contained in
each other Loan Document, are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date.

 

6.         References. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby,
and any and all references in the Loan Documents to the “Credit Agreement” shall
be deemed to refer to the Credit Agreement as amended hereby.

 

7.         No Waiver. The execution of this Amendment and any documents related
hereto shall not be deemed to be a waiver of any Default or Event of Default
under the Credit Agreement or breach, default or event of default under any
other Loan Document or other document held by Lender, whether or not known to
Lender and whether or not existing on the date of this Amendment.

 

8.         Release. Borrowers hereby absolutely and unconditionally releases and
forever discharges Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which any Borrower or any other Loan Party has had,
now have or have made claim to have against any such Person for or by reason of
any act, omission, matter, cause or thing whatsoever arising from the beginning
of time to and including the date of this Amendment, whether such claims,
demands and causes of action are matured or unmatured or known or unknown.

 

9.         Costs and Expenses. Borrowers hereby reaffirm their agreement under
the Loan Documents, including Section 7.4 of the Credit Agreement, to pay or
reimburse Lender for all Lender Expenses, including, without limitation, all
costs and expenses in connection with this Amendment.

 

10.       Miscellaneous. This Amendment constitutes a Loan Document under the
Credit Agreement. This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and all
of which counterparts, taken together, shall constitute one and the same
instrument. Delivery of an executed signature page of this Amendment by
facsimile transmission or in a .pdf or similar electronic file shall be
effective as delivery of a manually executed counterpart thereof. Any provision
of this Amendment which is prohibited or unenforceable shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Article, Section, subsection, paragraph and
subparagraph headings in this Amendment are included herein for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose. No amendment, modification, termination of waiver of any provision of
this Amendment shall be effective unless the same shall be in writing and signed
by Lender. The validity of this Amendment and the construction, interpretation,
and enforcement of this Amendment, and the rights of the parties, as well as all
claims, controversies or disputes arising under or related to this Amendment
will be determined under, governed by and construed in accordance with the laws
of the State of Minnesota without regard conflicts of laws principles.

 

Signature page follows

 

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

 

  COMMUNICATIONS SYSTEMS, INC.         By:     Name: Mark Fandrich  

Title:   Chief Financial Officer 

      JDL TECHNOLOGIES, INCORPORATED         By:     Name: Mark Fandrich  

Title:   Chief Financial Officer

      TRANSITION NETWORKS, INC.         By:   Name: Mark Fandrich  

Title:   Chief Financial Officer 

      SUTTLE, INC.         By:     Name: Mark Fandrich  

Title:   Chief Financial Officer 

 

First Amendment to Amended and Restated Credit Agreement

 

 

 

 

        WELLS FARGO BANK, NATIONAL ASSOCIATION       By:     Name: Chris Markham
  Title: Assistant Vice President

 

First Amendment to Amended and Restated Credit Agreement

 

 

 

 

ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR

 

The undersigned is a guarantor of the debts, liabilities and obligations of
Communications Systems, Inc., a Minnesota corporation (“Communications
Systems”), JDL Technologies, Incorporated, a Minnesota corporation (“JDL”),
Transition Networks, Inc., a Minnesota corporation (“Transition Networks”),
Suttle, Inc., a Minnesota corporation (“Suttle”; together with Communications
Systems, Transition Networks and JDL, “Borrowers” and each a “Borrower”), under
that certain Guaranty dated as of August 12, 2016 (as amended, restated,
supplemented or otherwise modified from time to time, together with all joinders
thereto, the “Guaranty”) in favor of Wells Fargo Bank, National Association, a
national banking association (“Lender”), pursuant to which the undersigned
guaranteed the full and prompt payment and performance of the Obligations (as
defined in therein). The undersigned hereby: (i) acknowledges receipt of the
foregoing First Amendment to Amended and Restated Credit Agreement between
Borrowers and Lender (the “Amendment”); (ii)consents to the terms and execution
of the Amendment; (iii)reaffirms its obligations to Lender and the guaranty of
the Obligations pursuant to the terms of the Guaranty; (iv) hereby absolutely
and unconditionally releases and forever discharges Lender and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
undersigned has had, now has or has made claim to have against any such person
or entity for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of the
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown; and (v) acknowledges that Lender may amend,
restate, extend, renew or otherwise modify the Credit Agreement (as defined in
the Amendment) or any of the other Loan Documents (as defined in the Credit
Agreement referenced in the Amendment) and any indebtedness, liabilities,
obligations or agreements of Borrowers or any other person or entity, or enter
into any agreement or extend additional or other credit accommodations, without
notifying or obtaining the consent of the undersigned and without impairing the
obligations of the undersigned under the Guaranty or otherwise.

 

IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment and Agreement
of Guarantor to be duly executed as of September 30, 2016.

        TWISTED TECHNOLOGIES, INC.       By:     Name: Mark Fandrich   Title:
  Chief Financial Officer

 

Acknowledgment and Agreement of Guarantor to First Amendment to Amended and
Restated Credit Agreement