Exhibit 10.1.1

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER OF EVENT OF DEFAULT

This First Amendment to Credit Agreement and Waiver of Event of Default (this
“Amendment”), dated as of November 28, 2012, is entered into by and between
COMMUNICATIONS SYSTEMS, INC., a Minnesota corporation (“Communications
Systems”), JDL TECHNOLOGIES, INCORPORATED, a Minnesota corporation (“JDL”),
TRANSITION NETWORKS, INC., a Minnesota corporation (“Transition Networks”,
together with Communications Systems and JDL, “Borrowers” and each a
“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

Recitals

Borrowers and Lender are parties to a Credit Agreement dated as of October 28,
2011 (as amended, restated, supplemented 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 certain amendments to the Credit
Agreement and to the waiver of an event of default under the Credit Agreement,
and the Lender has agreed to make such amendments and waiver on the terms and
conditions set forth herein.

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

1.                   Definitions. Capitalized terms used in this Amendment
(including in the Recitals) have the meanings given to them in the Credit
Agreement unless otherwise expressly defined in this Amendment.

2.                   Amendments to Section 1.1(a).

(a)                 The date “November 1, 2013” contained in the first sentence
of Section 1.1(a) is hereby amended in its entirety to read as follows:
“November 1, 2014”.

(b)                 The phrase “a promissory note of even date herewith”
contained in the second sentence of Section 1.1(a) is hereby amended in its
entirety to read as follows: “a promissory note dated as of November 28, 2012”.

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

4.                    Waiver of Existing Default. As a result of the failure of
Borrowers to maintain a minimum Net Profit of $3,000,000 as of the quarter
ending September 30, 2012, an Event of Default has arisen under Section 6.1(c)
of the Credit Agreement (the “Known Event of Default”). Upon the terms and
subject to the conditions set forth in this Amendment, Lender hereby waives the
Known Event of Default. This waiver shall be effective only in this specific
instance and for the specific purpose for which it is given, and this waiver
shall not entitle Borrowers to any other or further waiver in any similar or
other circumstances.

 

 

 

5.                   Conditions Precedent. This Amendment shall be effective
when Lender shall have received an executed original of this Amendment, together
with each of the following, each in form and substance acceptable to Lender:

(a)                 the Amended and Restated Revolving Note (the “Amended
Note”), duly executed by the Borrowers;

(b)                 a certificate of the secretary of each Borrower:
(a) attaching resolutions of the Board of Directors of such Borrower authorizing
the execution, delivery and performance by such Borrower of the Loan Documents,
including this Amendment and the Amended Note, (b) certifying that the articles
of incorporation of such Borrower delivered by such Borrower to Lender on
October 28, 2011 have not been amended or changed in any respect (or if there
has been any amendment or change, certifying that attached to such certificate
is a current copy of such articles of incorporation (certified by the Secretary
of State of formation)), (c) certifying that the bylaws of such Borrower
delivered by such Borrower to Lender on October 28, 2011 have not been amended
or changed in any respect (or if there has been any amendment or change,
certifying that attached to such certificate is a current copy of such bylaws of
such Borrower), and (d) containing the names of the officer or officers of such
Borrower authorized to sign the Loan Documents, including this Amendment and the
Amended Note, together with a sample of the true signature of each such officer,
or affirming that the officer or officers certified to Lender on October 28,
2011 remain so authorized; together with current good standing certificate for
such Borrower; and

(c)                 such other matters as Lender may reasonably require.

6.                    Representations and Warranties. Borrowers hereby represent
and warrant to Lender as follows:

(a)                 Each Borrower has all requisite power and authority to
execute this Amendment, the Amended Note and any other agreements or instruments
required hereunder and to perform all of its obligations hereunder, and the
Credit Agreement, as amended by this Amendment, and the other Loan Documents to
which such Borrower is a party have been duly executed and delivered by such
Borrower and constitute the legal, valid and binding obligations of such
Borrower, enforceable in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally.

(b)                 The execution, delivery and performance by such Borrower of
Credit Agreement, as amended by this Amendment, and the other Loan Documents to
which such Borrower is a party have been duly authorized by all necessary
corporate action and do not (i) violate any material provision of federal,
state, or local law or regulation applicable to such Borrower, the governing
documents of such Borrower, or any order, judgment, or decree of any court or
other governmental authority binding on such Borrower, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any contract, obligation, indenture or other instrument to which
any Borrower is a party or by which any Borrower may be bound, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any assets of any Borrower, or (iv) require any approval of such Borrower’s
shareholders or any approval or consent of any other person or entity.

 

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

7.                   References. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended by this
Amendment; and any and all references in the other Loan Documents to the Credit
Agreement shall be deemed to refer to the Credit Agreement as amended by this
Amendment. All references in the Credit Agreement and each other Loan Document
to “the Revolving Note” shall be deemed to refer to the Amended Note.

8.                   No Other Waiver. Except as expressly set forth therein, the
execution of this Amendment and the acceptance of all other agreements and
instruments related hereto shall not be deemed to be a waiver of any default or
Event of Default under the Credit Agreement or a waiver of any breach, default
or event of default under any other Loan Document, whether or not known to
Lender and whether or not existing on the date of this Amendment.

9.                   Release. Each Borrower 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 arising under, in connection with or related to
any of the debts, liabilities or obligations of Borrowers and/or any Borrower
under any of the Loan Documents or any of the Loan Documents, whether arising in
law or equity or upon contract or tort or under any state or federal law or
otherwise, which Borrowers and/or any Borrower 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 this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

10.                 Costs and Expenses. Borrowers hereby reaffirm their
agreement under Section 7.3 of the Credit Agreement to pay or reimburse Lender
with respect to its costs, expenses and fees, including, without limitation, all
reasonable fees and disbursements of legal counsel incurred by the Lender in
connection with this Amendment.

11.                  Miscellaneous. 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.

 

Signature page follows

  

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.

  BORROWERS:             COMMUNICATIONS SYSTEMS, INC.                     By:  
    Name:        Title:                       JDL TECHNOLOGIES, INCORPORATED    
                By:       Name:       Title:                       TRANSITION
NETWORKS, INC.                     By:       Name:       Title:            

 

 

 

 

 

Signature Page to First Amendment to Credit and Security Agreement

and Waiver of Event of Default

 

 

  LENDER:

WELLS FARGO BANK, NATIONAL
   ASSOCIATION                     By:       Name:  Michael M. Lebens     Title:
Vice President  

 

 

 

 

 

 

 

 

Signature Page to First Amendment to Credit and Security Agreement

and Waiver of Event of Default