Exhibit 10.1

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) dated August 28, 2020, is by and
between COMMUNICATIONS SYSTEMS, INC., a Minnesota corporation (“Borrower”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1 LINE OF CREDIT.

 

(a)           Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including August 28, 2021, not to exceed at any time the aggregate
principal amount of $5,000,000 (“Line of Credit”), the proceeds of which shall
be used Borrower’s for working capital purposes and general corporate purposes
(including the issuance of letters of credit in accordance with the terms
hereof). Borrower’s obligation to repay advances under the Line of Credit shall
be evidenced by a promissory note, originally of even date herewith (as amended,
restated, supplemented, extended, renewed, replaced or otherwise modified from
time to time, “Line of Credit Note”).

 

(b)           Limitation on Borrowings. Outstanding borrowings under the Line of
Credit, to a maximum of the principal amount set forth in clause (a) above,
shall not at any time exceed an aggregate amount of (the following, the
“Borrowing Base”):

 

(i)the Margin Value of Eligible Pledged Securities, minus

 

(ii)the current Purchasing Card Commitment, minus

 

(iii)undrawn amount of all Subfeature Letters of Credit, minus

 

(iv)the aggregate amount of Reserves, if any, established by Bank from time to
time.

 

As used herein, the following terms have the meanings set forth below:

 

(A)          “Eligible Pledged Securities” means those marketable securities
owned by Borrower on deposit in the Pledged Securities Account and in which Bank
has a perfected first-priority security interest, and that are (i) designated as
eligible or otherwise of a type or types determined acceptable to Bank from time
to time in its Permitted Discretion, (ii) held in the Pledged Securities Account
and subject to a Securities Account Control Agreement in favor of Bank that is
in full force and effect, and (iii) not subject to a security interest or Lien
in favor of any other person or entity other than Bank.

 

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(B)          “Margin Value” has the meaning set forth in that certain Security
Agreement: Securities Account of even date herewith executed by Borrower in
favor of Bank (as the same may be amended, restated, supplemented or otherwise
modified from time to time).

 

(C)          “Permitted Discretion” means a determination made in the exercise
of the good faith judgment of Bank.

 

(D)          “Pledged Securities” means the marketable securities on deposit in
the Pledged Securities Account.

 

(E)          “Pledged Securities Account” means, collectively, that certain
securities account number [Account Number Redacted] maintained by Borrower with
Wells Fargo Securities,

LLC and that certain safekeeping account number [Account Number Redacted]
maintained by Borrower with Wells Fargo Bank, National Association, in each case
together with all subaccounts thereof and any duplicate, corollary or
replacement account thereof, as each of the foregoing may be renewed,
substituted, re-numbered or recaptioned from time to time.

 

(F)          “Purchasing Card Commitment” means Bank’s then-current commitment
in respect of purchase cards offered to Borrower (including so-called
“procurement cards” or “p-cards”), which as of the date of this Agreement is
$750,000.

 

(G)          “Reserves” means, as of any date of determination, an amount or
percentage of a specific category or item that Bank establishes in its Permitted
Discretion from time to time to reduce availability under the Line of Credit to
reflect events, conditions, contingencies, or risks which might affect the
assets, business or prospects of any of Borrower, any Guarantor, any other Third
Party Obligor or any of the Collateral or its value or the enforceability,
perfection or priority of Bank’s security interest or other Lien in any of
collateral pledged as security for the Obligations.

 

(H)          “Securities Account Control Agreement” means a securities account
control agreement of even date herewith, covering the Pledged Securities Account
and in form and substance satisfactory to Bank, executed and delivered by
Borrower, Wells Fargo Securities, LLC and Wells Fargo Bank, N.A to Bank, as the
same may be amended, restated, supplemented or otherwise modified in accordance
with the terms thereof.

 

(c)           Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
herein.

 

(d)           Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue or cause
a branch, a subsidiary or an affiliate to issue standby letters of credit and
sight commercial letters of credit for the account of Borrower (“Subfeature
Letters of Credit”); provided however, that the aggregate undrawn amount of all
outstanding Subfeature Letters of Credit shall not at any time exceed $500,000.
Bank shall have no obligation to issue a Subfeature Letter of Credit if (i) any
order, judgment, or decree of any governmental authority or arbitrator shall, by
its terms, purport to enjoin or restrain Bank from issuing such Subfeature
Letter of Credit, or any law applicable to Bank or any request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over Bank shall prohibit or request that Bank refrain from the
issuing of letters of credit generally or such Subfeature Letter of Credit in
particular, or (ii) such

 

 

 

 

Subfeature Letter of Credit would violate one or more policies of Bank
applicable to letters of credit generally, or (iii) if amounts demanded to be
paid under any Subfeature Letter of Credit will or may not be in United States
Dollars. The form and substance of each Subfeature Letter of Credit shall be
subject to approval by Bank, in its sole discretion. Each Subfeature Letter of
Credit shall be issued for a term not to exceed one year, as designated by
Borrower; provided however, that no Subfeature Letter of Credit shall have an
expiration date subsequent to the maturity date of the Line of Credit. The
undrawn amount of all Subfeature Letters of Credit shall be reserved under the
Line of Credit (including the Borrowing Base) and shall not be available for
borrowings thereunder. Each Subfeature Letter of Credit shall be subject to the
additional terms and conditions of Bank’s standard standby letter of credit
agreement or Bank’s standard commercial letter of credit agreement and all
applications and related documents required by Bank in connection with the
issuance thereof. Each drawing paid under a Subfeature Letter of Credit shall be
deemed an advance under the Line of Credit and shall be repaid by Borrower in
accordance with the terms and conditions of this Agreement applicable to such
advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then Borrower shall
immediately pay to Bank the full amount drawn, together with interest thereon
from the date such drawing is paid to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances under the Line of
Credit.

 

SECTION 1.2    [RESERVED].

 

SECTION 1.3    INTEREST/FEES.

 

(a)           Interest. The outstanding principal balance of each credit subject
hereto shall bear interest at the rate of interest set forth in each promissory
note or other instrument or document executed in connection therewith. The
promissory notes or other instruments or documents executed in connection with
the credit(s) subject to this Agreement may calculate interest at a rate equal
to the sum of an index rate of interest plus a margin rate of interest. In the
event any index rate of interest would be less than 0.75%, then the index rate
of interest shall be deemed to be 0.75% and the applicable promissory note or
other instrument or document shall bear interest at a rate equal to the margin
rate of interest.

 

(b)           Computation and Payment. Interest shall be computed on the basis
set forth in each promissory note or other instrument or document required
hereby. Interest shall be payable at the times and place set forth in each
promissory note or other instrument or document required hereby.

 

(c)           Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
0.20% per annum (computed on the basis of a 360-day year, actual days elapsed)
on the daily unused amount of the Line of Credit, which fee shall be calculated
on a quarterly basis by Bank and shall be due and payable by Borrower in arrears
on the first day of each quarter commencing on October 1, 2020.

 

(d)           Commercial Subfeature Letter of Credit Fees and Commissions.
Borrower shall pay to Bank:

 

(i)            non-refundable up front issuance fees or commissions for the
issuance, extension or increase of each commercial Subfeature Letter of Credit
in an amount equal to Bank’s standard issuance fee or commission then in effect
for the issuance, extension or increase of commercial letters of credit, with
such fees and commissions payable at the time of issuance, extension or increase
or, if applicable, by such later date as may be specified in a billing for such
amount sent by Bank to Borrower; and

 

(ii)           fees or commissions for each drawing under any such commercial
Subfeature Letter of Credit and for the occurrence of any transfer, assignment,
amendment, cancellation or

 

 

 

 

other activity with respect to any such commercial Subfeature Letter of Credit
(including without limitation fees for document examination, discrepancies,
acceptances, deferred payment, reinstatement, document delivery, special
handling and other trade services), determined in accordance with Bank’s
standard fees and charges then in effect for such activity, and correspondent
bank fees and fees of any adviser, confirming institution or entity or other
nominated person, with such fees and commissions payable at the time of such
activity or, if applicable, by such later date as may be specified in a billing
for such amount sent by Bank to Borrower.

 

(e)        Standby Subfeature Letter of Credit Fees and Commissions. Borrower
shall pay to Bank:

 

(i)            non-refundable up front issuance fees or commissions for the
issuance, extension or increase (including any auto-extension) of each standby
Subfeature Letter of Credit in an amount equal to 1.25% per annum (computed on
the basis of a 360 day year, actual days projected to elapse) of the face or
increased amount, as applicable, of such standby Subfeature Letter of Credit
calculated over the projected term thereof (up to the scheduled expiration
date), with such fees and commissions payable at the time of issuance, extension
or increase or, if applicable, by such later date as may be specified in a
billing for such amount sent by Bank to Borrower; and

 

(ii)          fees or commissions for each drawing under any such standby
Subfeature Letter of Credit and for the occurrence of any transfer, assignment,
amendment, cancellation or other activity with respect to such standby
Subfeature Letter of Credit (including without limitation fees for document
examination, discrepancies, reinstatement, document delivery, special handling
and other trade services), determined in accordance with Bank’s standard fees
and charges then in effect for such activity, and correspondent bank fees and
fees of any adviser, confirming institution or entity or other nominated person,
with such fees and commissions payable at the time of such activity or, if
applicable, by such later date as may be specified in a billing for such amount
sent by Bank to Borrower.

 

SECTION 1.4 COLLECTION OF PAYMENTS. Except to the extent expressly specified
otherwise in any Loan Document other than this Agreement, Borrower authorizes
Bank to collect all amounts due to Bank from Borrower under this Agreement or
any other Loan Document (whether for principal, interest or fees, or as
reimbursement of drafts paid or other payments made by Bank under any credit
subject to this Agreement) by debiting any deposit account maintained by
Borrower with Bank for the full amount thereof. Should there be insufficient
funds in Borrower’s deposit accounts with Bank to pay all such sums when due,
the full amount of such deficiency shall be immediately due and payable by
Borrower.

 

SECTION 1.5 COLLATERAL. As security for all Obligations, Borrower shall grant to
Bank a Lien of first priority in the Pledged Securities. The foregoing shall be
evidenced by and subject to the terms of such security agreements, financing
statements, control agreements, and other documents as Bank shall reasonably
require, all in form and substance satisfactory to Bank. Borrower shall pay to
Bank immediately upon demand the full amount of all charges, costs and expenses
(to include fees paid to third parties and all allocated costs of Bank in-house
counsel, if any), expended or incurred by Bank in connection with any of the
foregoing security, including without limitation, filing and recording fees,
search fees, and costs of appraisals, audits and title insurance. As used
herein, “Obligations” means (a) all loans (including the advances made under the
Line of Credit), debts, principal, interest (including any interest that accrues
after the beginning of any proceeding under the Bankruptcy Code or any other
state or federal bankruptcy or insolvency law, assignments for the benefits of
creditors, receiverships and similar proceedings, in each case regardless of
whether allowed or allowable in whole or in part as a

 

 

 

 

claim in any such proceeding), premiums, liabilities, obligations (including
indemnification obligations), fees, expenses (including any fees or expenses
that accrue after the commencement of any bankruptcy, insolvency or similar
proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such proceeding), guaranties, and all covenants and duties of any
other kind and description owing by Borrower under or evidenced by this
Agreement or any of the other Loan Documents or otherwise owing to Bank under
any other present or future document, instrument or agreement, and irrespective
of whether for the payment of money, whether direct or indirect, absolute or
contingent, liquidated or unliquidated, determined or undetermined, voluntary or
involuntary, due, not due or to become due, sole, joint, several or joint and
several, incurred in the past or now existing or hereafter arising, however
arising, and including all interest not paid when due, and all other expenses or
other amounts that Borrower is required to pay or reimburse by the Loan
Documents or by law or otherwise in connection with the Loan Documents, and (b)
all obligations indebtedness, liabilities, reimbursement obligations, fees, or
expenses owing by Borrower to Bank or any of Bank’s affiliates with respect to
any financial product or accommodation extended to Borrower, whether direct or
indirect, absolute or contingent, liquidated or unliquidated, determined or
undetermined, voluntary or involuntary, due, not due or to become due, incurred
in the past or now existing or hereafter arising, however arising. In addition,
as used herein, “Lien” means, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or its income, including, without limitation, the interest of a
vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement, or any agreement to provide any of the above, and the
filing of any financing statement or similar instrument under the Minnesota
Uniform Commercial Code (as in effect from time to time) or comparable law of
any jurisdiction.

 

SECTION 1.6 GUARANTIES; GUARANTOR SECURITY AGREEMENTS. The payment and
performance of the Obligations shall be guaranteed jointly and severally by JDL
Technologies, Incorporated, a Minnesota corporation (“JDL”), Ecessa Corporation,
a Minnesota corporation (“Ecessa”), Transition Networks, Inc., a Minnesota
corporation (“Transition Networks”), Twisted Technologies, Inc., a Georgia
corporation (“Twisted Technologies”; collectively, JDL, Ecessa, Transition
Networks and Twisted Technologies, together with each other person or entity
that may execute a guaranty of the Obligations from time to time, the
“Guarantors” and each a “Guarantor”), as evidenced by and subject to the terms
of guaranties in form and substance satisfactory to Bank. If at any time Suttle,
Inc., a Minnesota corporation (“Suttle”), (x) owns assets with a value in excess
of $1,500,000 in the aggregate, (y) acquires additional assets after the date
hereof with an aggregate value in excess of $50,000, or (z) otherwise conducts
any business operations other than those current activities conducted by it
pursuant to a transition services agreement existing as of the date hereof (the
“Suttle Transition Services Agreement”), Borrower agrees that it will cause
Suttle to execute a guaranty in favor of Bank, in each case in form and
substance acceptable to Bank.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Borrower makes the following representations and warranties to Bank, on the date
hereof and on the date of each subsequent request for any extension of credit
hereunder (including, without limitation, the issuance of any product under any
subfeature contained herein, to the extent applicable), which representations
and warranties shall survive the execution of this Agreement and shall continue
in full force and effect until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Bank subject to this Agreement.

 

SECTION 2.1 LEGAL STATUS. (a) Borrower is a corporation duly organized and
validly existing and in good standing under the laws of Minnesota, and each
subsidiary of Borrower is duly organized, validly existing and in good standing
under the laws of the state of its formation or

 

 

 

 

incorporation, and Borrower and each subsidiary of Borrower is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect; and (b) no member of the Borrowing Group (as defined
below) is a Sanctioned Target (as defined below) of economic or financial
sanctions, sectoral sanctions, secondary sanctions, trade embargoes or
restrictions and anti-terrorism laws imposed, administered or enforced from time
to time by the United States of America, the United Nations Security Council,
the European Union, the United Kingdom, any other governmental authority with
jurisdiction over Borrower or any member of the Borrowing Group (collectively,
“Sanctions”). As used herein, “Borrowing Group” means: (i) Borrower,

(ii)   any direct or indirect parent of Borrower, (iii) any affiliate or
subsidiary of Borrower (including each Guarantor), (iv) any Third Party Obligor
(as defined below), and (v) any officer, director or agent acting on behalf of
any of the parties referred to in items (i) through and including (iv) with
respect to the obligations hereunder, this Agreement or any of the other Loan
Documents. “Sanctioned Target” means any target of Sanctions, including (A)
persons on any list of targets identified or designated pursuant to any
Sanctions, (B) persons, countries, or territories that are the target of any
territorial or country-based Sanctions program, (C) persons that are a target of
Sanctions due to their ownership or control by any Sanctioned Target(s), or (D)
persons otherwise a target of Sanctions, including vessels and aircraft, that
are designated under any Sanctions program. Suttle, Inc., a Minnesota
corporation (“Suttle”), is a wholly-owned subsidiary of Borrower that has no
assets or liabilities in excess of $1,500,000 and has no operations other than
fulfilling its obligations under a transition services agreement.

 

SECTION 2.2 AUTHORIZATION AND VALIDITY. This Agreement and each promissory note,
contract, security agreement, guaranty, instrument and other document required
hereby or at any time hereafter delivered to Bank in connection herewith
(collectively, as the same may be amended, restated, supplemented or otherwise
modified, the “Loan Documents”) have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will constitute
legal, valid and binding agreements and obligations of Borrower, Guarantor or
the party which executes the same, in each case enforceable in accordance with
their respective terms.

 

SECTION 2.3 NO VIOLATION. The execution, delivery and performance by Borrower
and Guarantors of each of the Loan Documents to which they are a party do not
violate any provision of any law or regulation, or contravene any provision of
the organizational and governing documents of Borrower or any Guarantor, or
result in any breach of or default under any contract, obligation, indenture or
other instrument to which Borrower or any Guarantor is a party or by which
Borrower or any Guarantor may be bound.

 

SECTION 2.4 LITIGATION. There are no pending, or to the best of Borrower’s
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which involve more than $500,000 or which could reasonably be expected to have a
material adverse effect on the financial condition or operation of Borrower or
any Guarantor (individually or in the aggregate) other than those existing as of
the date hereof and disclosed in Schedule 2.4 attached hereto.

 

SECTION 2.5 CORRECTNESS OF FINANCIAL STATEMENTS AND OTHER INFORMATION. The
annual financial statement of Borrower dated December 31, 2019, and all interim
or audited financial statements delivered to Bank since said date, true copies
of which have been delivered by Borrower to Bank, (a) are complete and correct
and present fairly the financial condition of Borrower, (b) disclose all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) have been prepared in accordance with
generally accepted accounting principles consistently applied. Since the
December 31, 2019, there has been no material adverse change in the financial
condition of

 

 

 

 

Borrower or any Guarantor (whether as a result of COVID-19 or otherwise), nor
has Borrower or any Guarantor mortgaged, pledged, granted a security interest in
or otherwise encumbered any of its assets or properties except in favor of Bank
or as otherwise permitted by Bank in writing. All information provided from time
to time by Borrower, any Guarantor or any other Third Party Obligor to Bank for
the purpose of enabling Bank to fulfill its regulatory and compliance
requirements, standards and processes was complete and correct at the time such
information was provided and, except as specifically identified to Bank in a
subsequent writing, remains complete and correct today. Borrower and each
Guarantor is solvent, and no transfer of property is being made by Borrower or
any Guarantor and no obligation is being incurred by Borrower or any Guarantor
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or any Guarantor.

 

SECTION 2.6 TAXES. Borrower and each subsidiary of Borrower has timely filed all
tax returns and reports required to be filed by it, and paid when due all taxes
shown on such tax returns to be due and payable and all assessments, fees and
other governmental charges upon Borrower, each subsidiary of Borrower and their
respective assets, income, businesses and franchises that are due and payable.
Borrower does not know of any unpaid tax or assessment or proposed tax or
assessment against Borrower or any of its subsidiaries except (a) as set forth
on Schedule 2.6 and (b) taxes owing for current or future periods that are not
yet due and payable.

 

SECTION 2.7 NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower or any Guarantor is a party or by which Borrower or
any Guarantor may be bound that requires the subordination in right of payment
of any of the Obligations to any other obligation of Borrower or any Guarantor.

 

SECTION 2.8 PERMITS, FRANCHISES. Except as the absence thereof would not
reasonably be expected to have a material adverse effect on Borrower or any of
its subsidiaries, Borrower and each subsidiary of Borrower possesses, and will
hereafter possess, all permits, consents, approvals, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable it to conduct the business in which it is now
engaged in compliance with applicable law.

 

SECTION 2.9 ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event
as defined in ERISA has occurred in the past six (6) years and is continuing
with respect to any Plan initiated by Borrower; Borrower has met its minimum
funding requirements under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit obligations as they come due in accordance with
the Plan documents and under generally accepted accounting principles.

 

SECTION 2.10 OTHER OBLIGATIONS; NO OTHER LIENS. Borrower is not in default on
any obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation. None of
Borrower, any Guarantor, or any subsidiary of Borrower or any Guarantor has
granted a Lien in or otherwise encumbered any of its assets or properties except
in favor of Bank and except for Permitted Liens.

 

SECTION 2.11 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.11
attached hereto, Borrower is in compliance in all material respects with all
applicable federal or state environmental, hazardous waste, health and safety
statutes, and any rules or regulations adopted pursuant thereto, which govern or
affect any of Borrower’s operations or properties, including without limitation,

 

 

 

 

the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances
Control Act, as any of the same may be amended, modified or supplemented from
time to time. None of the operations of Borrower is the subject of any federal
or state investigation evaluating whether any remedial action involving a
material expenditure is needed to respond to a release of any toxic or hazardous
waste or substance into the environment. Borrower has no material contingent
liability in connection with any release of any toxic or hazardous waste or
substance into the environment.

 

SECTION 2.12 SANCTIONS, ANTI-MONEY LAUNDERING AND ANTI-CORRUPTION LAWS. (a) each
member of the Borrowing Group has instituted, maintains and complies with
policies, procedures and controls reasonably designed to assure compliance with
Anti-Money Laundering Laws and Anti-Corruption Laws (each as defined below), and
Sanctions; and (b) to the best of Borrower’s knowledge, after due care and
inquiry, no member of the Borrowing Group is under investigation for an alleged
violation of any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws
by a governmental authority that enforces such laws. As used herein:
“Anti-Corruption Laws” means: (i) the U.S. Foreign Corrupt Practices Act of
1977, as amended; (ii) the U.K. Bribery Act 2010, as amended; and (iii)    any
other anti-bribery or anti-corruption laws, regulations or ordinances in any
jurisdiction in which the Borrower or any member of the Borrowing Group is
located or doing business. “Anti-Money Laundering Laws” means applicable laws or
regulations in any jurisdiction in which the Borrower or any member of the
Borrowing Group is located or doing business that relates to money laundering,
any predicate crime to money laundering, or any financial record keeping and
reporting requirements related thereto.

 

SECTION 2.13 COMPLIANCE WITH LAWS, ETC. None of Borrower, any Guarantor, or any
subsidiary of Borrower or any Guarantor is an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act. None
of Borrower, any Guarantor, or any subsidiary of Borrower or any Guarantor is
engaged as one of its important activities in extending credit for margin stock
(under Regulations T and U of the Federal Reserve Board of Governors). Borrower,
each Guarantor, and each subsidiary of Borrower and each Guarantor has complied
in all material respects with the Federal Fair Labor Standards Act. None of
Borrower, any Guarantor, or any subsidiary of Borrower or any Guarantor has
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to result in a material adverse change or subject such parties to
costs or liability in excess of $500,000.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1 CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT. The effective
date of this Agreement shall be (a) the date that each of the following
conditions set forth in this Section 3.1 have been satisfied or waived, as
determined by Bank, or (b) such alternative date to which Bank and Borrower may
mutually agree, in each case as evidenced by Bank’s system of record.
Notwithstanding the occurrence of the effective date of this Agreement, Bank
shall not be obligated to extend credit under this Agreement or any other Loan
Document until all conditions to each extension of credit set forth in Section
3.2 have been fulfilled to Bank’s satisfaction.

 

(a)           Approval of Bank Counsel. All legal matters incidental to the
effectiveness of this Agreement shall be satisfactory to Bank’s counsel.

 

(b)           Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed by all parties (as
applicable):

 

 

 

(i)            This Agreement and each promissory note or other instrument or
document required hereby.

 

(ii)           With respect to the Pledged Securities, the Security Agreement:
Securities Account and Securities Account Control Agreement, in each case duly
executed by Borrower, Bank and, with respect to such control agreement, Wells
Fargo Securities, LLC.

 

(iii)       A guaranty, duly executed by each Guarantor.

 

(iv)         A copy of the current account agreement and recent account
statement with respect to the Pledged Securities Account.

 

(v)          Completed Statements of Purpose for an Extension of Credit Secured
by Margin Stock – FR U-1, in each case duly executed by Borrower.

 

(vi)         Uniform Commercial Code and other searches and all Uniform
Commercial Code and other filings deemed necessary by Bank with respect to
Borrower will have been completed and will have confirmed Bank’s first-priority
Liens in the collateral pledged pursuant to the Loan Documents, and the results
thereof will be otherwise satisfactory to Bank.

 

(vii)        Certificates of insurance and related endorsements thereto, noting
Bank’s interest therein.

 

(viii)       Such other documents as Bank may require.

 

(c)           Satisfaction of Regulatory and Compliance Requirements. In
addition to any requirements set forth above, and notwithstanding Borrower’s
execution or delivery of this Agreement or any other Loan Document, all
regulatory and compliance requirements, standards and processes shall be
completed to the satisfaction of Bank.

 

SECTION 3.2 CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank’s satisfaction of each of the following conditions:

 

(a)           Compliance. The representations and warranties contained herein
and in each of the other Loan Documents shall be true in all material respects
(or, in the case of any such representation or warranty already qualified by
materiality, in all respects) on and as of the date of the signing of this
Agreement and on the date of each extension of credit by Bank pursuant hereto,
with the same effect as though such representations and warranties had been made
on and as of each such date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be true and correct in all material respects (or, in the case of any such
representation or warranty already qualified by materiality, in all respects)
only as of such specified date), and on each such date, no Event of Default as
defined herein, and no condition, event or act which with the giving of notice
or the passage of time or both would constitute such an Event of Default (each,
a “Default”), shall have occurred and be continuing or shall exist.

 

(b)           Documentation. Bank shall have received all additional documents
which may be required in connection with such extension of credit, including,
without limitation, the following:

 

(i)            For the issuance of a commercial letter of credit under any
credit subject to this Agreement, Bank’s standard Application for Commercial
Letter of Credit.

 

 

 

 

(ii)           For the issuance of a standby letter of credit under any credit
subject to this Agreement, Bank’s standard Application for Standby Letter of
Credit.

 

(iii)          For any credit extension that is subject to confirmation of
compliance with any limitation on borrowings hereunder at the time it is made,
if requested by Bank, a borrowing base certificate demonstrating compliance with
such requirements.

 

(c)           Letter of Credit Documentation. Prior to the issuance of any
letter of credit, Bank shall have received a Letter of Credit Agreement and any
other letter of credit documentation required by Bank, in each case completed
and duly executed by Borrower.

 

(d)           Payment of Fees. Bank shall have received payment in full of any
fee required by any of the Loan Documents to be paid at the time such credit
extension is made.

 

(e)           Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, any Guarantor or any other Third Party Obligor hereunder, if any, nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower, Guarantor or any other Third Party Obligor, if any.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto and termination of all obligations of Bank under the Loan
Documents, Borrower shall, and shall cause all Guarantors and subsidiaries of
Borrower and Guarantors to, unless Bank otherwise consents in writing:

 

SECTION 4.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein, and immediately upon demand by Bank, the amount
by which the outstanding principal balance of any credit subject hereto at any
time exceeds any limitation on borrowings applicable thereto.

 

SECTION 4.2 ACCOUNTING RECORDS; INSPECTIONS. Maintain adequate books and records
in accordance with generally accepted accounting principles consistently
applied, and permit any representative of Bank, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the same,
and to inspect the properties of Borrower; provided that, so long as no Default
or Event of Default is continuing, such inspection, audit and examination shall
be conducted with 48 hours’ written notice to Borrower. If at any time any
change in generally accepted accounting principles would affect the computation
of any covenant (including the computation of any financial covenant) set forth
in this Agreement or any other Loan Document, Borrower and Bank shall negotiate
in good faith to amend such covenant to preserve the original intent in light of
such change; provided, that, until so amended, (i) such covenant shall continue
to be computed in accordance with the application of generally accepted
accounting principles prior to such change and (ii) Borrower shall provide to
Bank a written reconciliation in form and substance reasonably satisfactory to
Bank, between calculations of such covenant and/or pricing grid made before and
after giving effect to such change in generally accepted accounting principles.

 

 

 

 

SECTION 4.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Provide to Bank all of
the following, in form and detail satisfactory to Bank:

 

(a)           no later than 5 days after the last day of each month, a current
account statement for the Pledged Securities Account as of such last day of the
month, containing and accurate and complete statement of the Pledged Securities
in the Pledged Securities Account;

 

(b)           as soon as available but no later than 45 days after each quarter
end, a consolidated and consolidating unaudited balance sheet, income statement,
statement of cash flow, and statement of owner’s equity with respect to
Borrower, Guarantors and their respective subsidiaries during such period and
compared to the prior period and plan, prepared in accordance with GAAP, subject
to year-end audit adjustments and the absence of footnotes, together with a
corresponding discussion and analysis of results from management;

 

(c)           contemporaneously with each quarterly financial statement of
Borrower required hereby, a certificate of the president or chief financial
officer of Borrower, as applicable, that said financial statements are accurate,
that Borrower is in compliance with all financial covenants in this Agreement
(as evidenced by detailed calculations attached to such certificate), and that
there exists no Default or Event of Default (a “Compliance Certificate”);

 

(d)           as soon as available but no later than 120 days after the end of
each fiscal year of Borrower, consolidated and consolidating financial
statements of Borrower, Guarantors and their respective subsidiaries for such
fiscal year, audited by independent certified public accountants reasonably
acceptable to Bank, prepared in accordance with GAAP, and certified, without any
qualifications (including any (i) “going concern” or like qualification or
exception, (ii) qualification or exception as to the scope of such audit, or
(iii) qualification which relates to the treatment or classification of any item
and which, as a condition to the removal of such qualification, would require an
adjustment to such item), by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, statement of cash flow, and statement of owner’s equity
and, if prepared, such accountants’ letter to management), together with a
Compliance Certificate;

 

(e)           if and when filed by Borrower, copies of each form 10-Q quarterly
report, form 10-K annual report, and form 8-K current reports, together with
copies of any other filings made by Borrower with the Securities and Exchange
Commission and any other information that is provided by Borrower to its
shareholders generally;

 

(f)            from time to time such other financial and business information
as Bank may reasonably request, including without limitation, copies of rent
rolls and other information with respect to any real property collateral
required hereby;

 

(g)           not later than March 31 of each year, a copy of Borrower’s
consolidated and consolidating projections for such calendar year, to include
balance sheet, income statement, statement of cash flows, and sources and uses
of funds statement; and

 

(h)           from time to time such other information as Bank may request for
the purpose of enabling Bank to fulfill its regulatory and compliance
requirements, standards and processes.

 

SECTION 4.4    COMPLIANCE.

 

(a)           Preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents

 

 

 

 

under which Borrower or any Guarantor is organized and/or which govern Borrower
and each Guarantor and their respective subsidiaries all laws, rules,
regulations and orders of any governmental authority applicable to Borrower, any
Guarantor and/or its business, and each subsidiary thereof and/or its business,
the failure to maintain or comply with which could reasonably be expected to
cause a material adverse change; and

 

(b)          comply with, and cause each member of the Borrowing Group to comply
with, all Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws.

 

SECTION 4.5 INSURANCE. (a) Maintain and keep in force, for each business in
which Borrower and each subsidiary of Borrower is engaged, insurance of the
types and in amounts customarily carried in similar lines of business, including
but not limited to fire, extended coverage, commercial general liability, flood,
and, if required by governmental regulation or Bank, hurricane, windstorm,
seismic property damage, workers’ compensation, marine cargo insurance, and
specific hazards affecting any real property, including terrorism, with all such
insurance carried in amounts satisfactory to Bank and where required by Bank,
with replacement cost, mortgagee loss payable and lender loss payable
endorsements in favor of Bank, and (b) deliver to Bank prior to the date hereof,
and from time to time at Bank’s request, schedules setting forth all insurance
then in effect, together with a lender’s loss payee and other assignments and
endorsements for all such insurance naming Bank as a lender loss payee with
regard to property coverage and business interruption insurance and as
additional insured with regard to liability insurance. Such insurance may be
obtained from an insurer or through an insurance agent of Borrower’s choice,
provided that any insurer chosen by Borrower is acceptable to Bank on such
reasonable grounds as may be permitted under applicable law.

 

SECTION 4.6 FACILITIES. Keep all properties useful or necessary to Borrower’s
and each of its subsidiaries’ businesses in good repair and condition, ordinary
wear and tear excepted, and from time to time make necessary repairs, renewals
and replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.

 

SECTION 4.7 TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments.

 

SECTION 4.8 LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any subsidiary of Borrower
involving more than $250,000 or which could reasonably be expected to cause a
material adverse change.

 

SECTION 4.9 FINANCIAL CONDITION. Maintain Borrower’s consolidated financial
condition as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein):

 

(a)           Tangible Net Worth of not less than $35,000,000 at all times,
reported to Bank on a quarterly basis. As used herein, “Tangible Net Worth”
means the aggregate of total stockholders’, members’ and partners’ equity, as
applicable, minus any intangible assets, minus any loans or advances to, or
investments in, any affiliates or other related entities or individuals.

 

(b)          [Reserved.]

 

SECTION 4.10 NOTICE TO BANK. Promptly (but in no event more than five (5) days
after the occurrence of each such event or matter and in no event more than one
(1) business day after the occurrence of each such event or matter described
below with respect to Sanctions, Anti-Money

 

 

 

 

Laundering Laws, and Anti-Corruption Laws) give written notice to Bank in
reasonable detail of: (a) the occurrence of any Default or Event of Default; (b)
any change in the name or the organizational structure of Borrower or subsidiary
of Borrower, including, by illustration, merger, conversion or division; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan; (d) any
termination or cancellation of any insurance policy which Borrower or any
subsidiary is required to maintain, or any loss through liability or property
damage, or through fire, theft or any other cause affecting Borrower’s or any
subsidiary’s property in excess of an aggregate of $250,000; or (e) any breach
of any covenant contained herein related to Sanctions, Anti-Money Laundering
Laws, and Anti-Corruption Laws or the Borrower’s inability to make the
representations and warranties contained herein related to Sanctions, Anti-Money
Laundering Laws, and Anti-Corruption Laws on any date, or the failure of any
representations and warranties contained herein related to Sanctions, Anti-Money
Laundering Laws, and Anti-Corruption Laws to be true and correct in all respects
on or as of any date.

 

SECTION 4.11 WINDDOWN OF SUTTLE. Within 45 days (or such longer period as agreed
by Bank in writing) after Suttle’s completion of its obligations under the
Suttle Transition Services Agreement, Borrower shall provide written notice of
the same to Bank and shall (a) liquidate Suttle’s remaining assets, distribute
all proceeds to Borrower and dissolve Suttle, or (b) merge Suttle into Borrower,
and shall promptly deliver written evidence of such dissolution or merger, as
applicable, to Bank.

 

SECTION 4.12 AMENDMENT OF ARTICLES. No later than June 30, 2021, Borrower shall
deliver to Bank a copy of a duly approved and filed amendment to Borrower’s
articles of incorporation reflecting the removal of any requirement that
Borrower obtain its shareholders’ vote, approval or consent prior to granting a
lien in, pledge of, or mortgage of any of Borrower’s assets (or any portion
thereof).

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto and termination of all obligations of Bank under the
Loan Documents, Borrower will not, and will not permit any Guarantor or
subsidiary of Borrower and Guarantors to, without Bank’s prior written consent:

 

SECTION 5.1    USE OF FUNDS. SOURCES OF REPAYMENT AND COLLATERAL.

 

(a)           Use, or permit any member of the Borrowing Group to use, any of
the proceeds of any credit extended hereunder except for the purposes stated in
Article I hereof, or directly or indirectly use any such proceeds to fund,
finance or facilitate any activities, business or transactions: (i) that are
prohibited by Sanctions; (ii) that would be prohibited by Sanctions if conducted
by Bank or any of Bank’s affiliates; or (iii) that would be prohibited by any
Anti-Money Laundering Laws or Anti-Corruption Laws.

 

(b)           Fund any repayment of the obligations hereunder or under any other
Loan Document with proceeds, or provide any property as collateral for any such
obligations, or permit any third party to provide any property as collateral for
any such obligations, that is directly or indirectly derived from any
transaction or activity that is prohibited by any Sanctions, Anti-Money
Laundering Laws or Anti-Corruption Laws, or that could otherwise cause Bank or
any of Bank’s affiliates to be in violation of any Sanctions, Anti-Money
Laundering Laws or Anti-Corruption Laws.

 

 

 

 

(c)           Use, or permit any member of the Borrowing Group to use, any of
the proceeds of any credit extended hereunder to purchase or carry margin stock
or for any other purpose that violates the terms of Regulation T, U, or X of the
Board of Governors of the Federal Reserve System.

 

SECTION 5.2 CAPITAL EXPENDITURES. Make any additional investment in fixed or
capital assets (including assets leased under capital leases), except to the
extent constituting Permitted Indebtedness.

 

SECTION 5.3 [RESERVED].

 

SECTION 5.4 OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the Obligations, and (b) Permitted Indebtedness. As
used herein:

 

(i)            “Indebtedness” means the following, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or several: (A) all
obligations for borrowed money (including recourse and other obligations to
repurchase accounts or chattel paper under factoring, receivables purchase or
similar financing arrangement or for the deferred purchase price of property or
services); (B) all obligations in respect of surety bonds and letters of credit;
(C) all obligations evidenced by notes, bonds, debentures or other similar
instruments, (D) all capital lease obligations; (E) all obligations or
liabilities of others secured by a Lien on any asset of Borrower, any Guarantor
or any subsidiary of Borrower or any Guarantor, whether or not such obligation
or liability is assumed; (F) all obligations to pay the deferred purchase price
of assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices); (G) all guaranties
of the obligations of another Person; and (H) all obligations owing under any
“swap agreement” as that term is defined in Section 101(53B)(A) of the United
States Bankruptcy Code (which amounts will be calculated based on the amount
that would be payable by the applicable Loan Party if such agreement were
terminated on the date of determination) (such agreements under this clause (H)
referred to herein as “Hedge Agreements”).

 

(ii)           “Permitted Indebtedness” means (A) Indebtedness described on
Schedule 5.4 hereto; (B) purchase money indebtedness incurred in connection with
the financing of the purchase of fixed assets (including capitalized leases
permitted hereunder) in an aggregate amount outstanding at any time not to
exceed $1,000,000; and (C) Indebtedness acquired in connection with a Permitted
Acquisition, so long as such Indebtedness is either purchase money indebtedness
or a capital lease with respect to Equipment or mortgage financing with respect
to real property, such Indebtedness was in existence prior to the date of such
Permitted Acquisition, and such Indebtedness was not incurred in connection
with, or in contemplation of, such Permitted Acquisition.

 

(iii)          “Permitted Acquisition” means an acquisition by Borrower of (A)
assets constituting a business, division or product line of any entity not
already a subsidiary of Borrower, or (B)  the capital stock or equity of any
such entity (including by way of merger) as a result of which stock acquisition
such entity shall become a subsidiary of Borrower or shall be merged with and
into a subsidiary of Borrower, provided that (in each case):

 

(I)           no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed acquisition and
the proposed acquisition is consensual;

 

 

 

(II)          no Indebtedness will be incurred, assumed, or would exist with
respect to Borrower or its subsidiaries as a result of such acquisition, other
than Indebtedness permitted under clause (C) of the definition of Permitted
Indebtedness and no Liens will be incurred, assumed, or would exist with respect
to the assets of Borrower or its Subsidiaries as a result of such acquisition
other than Permitted Liens;

 

(III)         if requested by Bank, Borrower has provided Bank with its due
diligence package relative to the proposed acquisition, in form and substance
reasonably satisfactory to Bank;

 

(IV)         Borrower has provided Bank with written notice of the proposed
acquisition at least 15 business days prior to the anticipated closing date of
the proposed acquisition and, not later than 5 business days prior to the
anticipated closing date of the proposed acquisition, copies of the acquisition
agreement and other material documents relative to the proposed acquisition,
which agreement and documents must be reasonably acceptable to Bank;

 

(V)          the business activities of the acquired entity are substantially
similar to the business activities conducted by Borrower or its subsidiaries at
the time of the transaction or a reasonable extension thereof;

 

(VI)         in the case of any consolidation or merger, Borrower or an existing
subsidiary of Borrower shall be the continuing or surviving corporation
(provided, however, that under no circumstances may Borrower merge into or
consolidate with any subsidiary of Borrower); and

 

(VII)        the purchase consideration payable in respect of all Permitted
Acquisitions (including all proposed acquisitions and including all deferred
payment and earn-out obligations) shall not exceed $5,000,000 in the aggregate
in any rolling twelve-month period.

 

SECTION 5.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Cause, permit,
participate in or suffer to occur, any of the following (including by way of
division): (a) merge with or consolidate with any other person or entity;
provided, however, that a subsidiary of Borrower may merge into Borrower so long
as Borrower is the surviving entity; (b) make any substantial change in the
nature of the business of Borrower, any Guarantor or any subsidiary of Borrower
or Guarantor as conducted as of the date hereof; (c) make any material change in
the existing executive management personnel of an Borrower, any Guarantor or any
subsidiary of Borrower or Guarantor; (d) except as expressly set forth in
Section 4.11, liquidate or dissolve the business of Borrower, any Guarantor or
any subsidiary of Borrower or Guarantor or make any change in the organizational
structure of Borrower or any Guarantor (including, by illustration, by merger,
conversion or division) that is not expressly permitted under the terms of a
Loan Document; provided, however, that a Guarantor or a subsidiary of Borrower
or a Guarantor may liquidate or dissolve so long as all of the rights and assets
of such Guarantor or subsidiary are transferred and/or assigned to Borrower or a
continuing Guarantor; (e) become a member or partner in a joint venture,
partnership or limited liability company; (f) acquire all or substantially all
of the assets of any other person or entity (or any division, business unit or
line of business of any other entity), or acquire any assets outside the
ordinary course of business of any Loan Party or any Subsidiary of any Loan
Party, other than in connection with a Permitted Acquisition; (g) sell, lease,
transfer or otherwise dispose of any of the assets of Borrower, any Guarantor or
any subsidiary of Borrower or Guarantor, except for the sale of Inventory in the
ordinary course of its business and except as permitted under the foregoing
clause (d); (h) other than in connection with a Permitted Acquisition, create or
acquire any subsidiary; provided, however, that if a subsidiary is created or
acquired in connection with a Permitted Acquisition, Borrower shall cause such
subsidiary to execute a guaranty of the Obligations and deliver copies of its
organizational documents and other certificates as may be necessary in
connection therewith, and such

 

 

 

 

subsidiary shall thereafter be a Guarantor; (i) enter into any other transaction
outside the ordinary course of business (including any sale and leaseback
transaction); or (j) liquidate, wind up, or dissolve itself or suspend or cease
operation of a substantial portion of its business (except in accordance with
the foregoing clause (d)).

 

SECTION 5.6 GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower, any Guarantor
or any subsidiary of Borrower or Guarantor, as security for, any liabilities or
obligations of any other person or entity, except any of the foregoing in favor
of Bank and except those existing on the date hereof and disclosed on Schedule
5.6 hereto.

 

SECTION 5.7 LOANS, ADVANCES, INVESTMENTS. Make any Investment in any person or
entity other than Permitted Investments. “Investment” means, with respect to any
person or entity, any investment by such person or entity in any other person or
entity (including affiliates) in the form of loans, guarantees, advances,
capital contributions (excluding (i) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business
not to exceed $50,000 in the aggregate during any fiscal year of Borrower, and
(ii) bona fide Accounts arising in the ordinary course of business), or
acquisitions of Indebtedness, capital stock or equity, or all or substantially
all of the assets of such other person or entity (or of any division or business
line of such other person or entity), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with
generally accepted accounting principles. “Permitted Investments” means (a)
Investments in cash and cash equivalents; (b) Investments in negotiable
instruments deposited or to be deposited for collection in the ordinary course
of business; (c) advances made in connection with purchases of goods or services
in the ordinary course of business; (d) Investments owned by Borrower, any
Guarantor or any subsidiary of Borrower or any Guarantor on the date hereof and
disclosed on Schedule 5.7 hereto; (e) Investments by Borrower in any subsidiary
of Borrower that is not a Guarantor in an aggregate outstanding amount not to
exceed $100,000 at any time; and (f) other investments by Borrower in an
aggregate amount not to exceed $1,000,000 per fiscal year.

 

SECTION 5.8    [RESERVED].

 

SECTION 5.9 PLEDGE OF ASSETS; LIENS. Mortgage, pledge, grant or permit to exist
a security interest in, or lien upon, all or any portion of Borrower’s assets
now owned or hereafter acquired, except any of the foregoing in favor of Bank or
Permitted Liens. As used herein, “Permitted Liens” means (a) Liens for unpaid
taxes, assessments, or other governmental charges or levies that are not yet
delinquent; (b) Liens set forth on Schedule 5.9 hereto; (c) the interests of
lessors under operating leases and non-exclusive licensors under license
agreements; and (d) purchase money Liens or the interests of lessors under
capital leases to the extent that such Liens or interests secure Permitted
Indebtedness consisting of purchase money Indebtedness and so long as (i) such
Lien attaches only to the asset purchased or acquired and the cash proceeds, and
(ii) such Lien only secures the purchase-money Indebtedness that was incurred to
acquire the asset purchased or acquired.

 

SECTION 5.10 AFFILIATE TRANSACTIONS. Directly or indirectly enter into, or
permit to exist, any material transaction with any Affiliate of Borrower or any
Guarantor, except for: (a)  transactions that are in the ordinary course of the
business of Borrower, such Guarantor or such subsidiary, and are on fair and
reasonable terms that are no less favorable to Borrower, such Guarantor or such
subsidiary than would be obtained in an arm’s length transaction with a
non-affiliated person or entity; and (b) so long as it has been approved by
Borrower’s, such Guarantor’s or such subsidiary’s board of directors (or
comparable governing body) in accordance with applicable law, the payment of
reasonable compensation, severance, or employee benefit arrangements to
employees, officers, and

 

 

 

 

directors of Borrower, such Guarantor or such subsidiary in the ordinary course
of business and consistent with industry practice.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1 The occurrence of any of the following shall constitute an “Event of
Default” under this Agreement:

 

(a)           Borrower shall fail to pay when due any Obligation.

 

(b)           Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made
(or deemed made).

 

(c)           Any default in the performance of or compliance with: (1) any
collateral value requirement set forth herein or in any other Loan Document; (2)
any negative covenant set forth in Article V hereof; (3) any affirmative
covenant set forth in Article IV hereof requiring the delivery of financial
statements and other information to Bank; or (4) any obligation, agreement or
other provision contained herein or in any other Loan Document related to
Sanctions, Anti-Money Laundering Laws, or Anti-Corruption Laws.

 

(d)           Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those defaults specifically described as constituting an
“Event of Default” under any other subsection of this Section 6.1), and with
respect to such default(s) that by their nature can be cured (excluding any
defaults specifically described as constituting an “Event of Default” under any
other subsection of this Section 6.1, none of which shall be subject to a cure
period), such default shall continue for a period of twenty (20) days from the
earlier of (A) the date on which such failure shall first become known to or
should have been known by any officer of Borrower, any Guarantor or any other
Third Party Obligor or (B) the date on which written notice thereof is given to
Borrower by Bank.

 

(e)           Any default in the payment or performance of any obligation, or
any defined event of default, under the terms of any contract, instrument or
document (other than any of the Loan Documents) pursuant to which Borrower, any
Guarantor, the owner of any collateral securing the obligations hereunder or
under any other Loan Document, or any general partner or joint venturer in
Borrower if a partnership or joint venture (with each such guarantor, owner of
pledged collateral, general partner and/or joint venturer referred to herein as
a “Third Party Obligor”) has incurred any debt or other liability to any person
or entity involving an aggregate amount of $250,000 or more, and such default
(i) occurs at the final maturity of the obligations thereunder, or (ii) results
in a right by such third Person, irrespective of whether exercised, to
accelerate the maturity of such Loan Party’s obligations thereunder.

 

(f)            Borrower, any Guarantor or any other Third Party Obligor shall
become insolvent, or shall suffer or consent to or apply for the appointment of
a receiver, trustee, custodian or liquidator of itself or any of its property,
or shall generally fail to pay its debts as they become due, or shall make a
general assignment for the benefit of creditors; Borrower, any Guarantor or any
other Third Party Obligor shall file a voluntary petition in bankruptcy, or
seeking reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time (“Bankruptcy
Code”), or under any state or federal law granting relief to debtors, whether
now or hereafter in effect; or Borrower or any Third Party

 

 

 

 

Obligor shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition; or Borrower, any Guarantor or
any other Third Party Obligor shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower, any Guarantor or any other Third Party
Obligor by any court of competent jurisdiction under the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or
other relief for debtors.

 

(g)          The filing of a notice of judgment lien against Borrower, any
Guarantor or any other Third Party Obligor; or the recording of any abstract or
transcript of judgment against Borrower, any Guarantor or any other Third Party
Obligor in any county or recording district in which Borrower, any Guarantor or
any such other Third Party Obligor has an interest in real property; or the
service of a notice of levy and/or of a writ of attachment or execution, or
other like process, against the assets of Borrower, any Guarantor or any other
Third Party Obligor; or the entry of a judgment, order or award for the payment
of money in an amount in excess of $250,000 in any one case or in excess of
$500,000 in the aggregate (to the extent not covered by independent third-party
insurance as to which the insurer has been notified of such judgment or order
and has not denied or failed to acknowledge coverage) is entered or filed
against any Loan Party, or with respect to any of their respective assets
against Borrower, any Guarantor or any other Third Party Obligor; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower, any Guarantor or any
other Third Party Obligor.

 

(h)          There shall exist or occur (i) any event or condition that Bank in
good faith believes likely to materially impair, or is substantially likely to
materially impair, the prospect of payment or performance by Borrower, any
Guarantor, any other Third Party Obligor, or (ii) a material adverse change.

 

(i)           The death or incapacity of Borrower, any Guarantor or any other
Third Party Obligor if an individual. The withdrawal, resignation or expulsion
of any one or more of the general partners in Borrower, any Guarantor or any
other Third Party Obligor if a partnership. The dissolution, division, or
liquidation of Borrower, any Guarantor or any other Third Party Obligor if a
corporation, partnership, joint venture or other type of entity; or Borrower,
any Guarantor or any such other Third Party Obligor, or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution,
division, or liquidation of Borrower, any Guarantor or any other Third Party
Obligor.

 

(j)           The occurrence of a Change of Control. As used herein, “Change of
Control” means that (a)  Borrower fails to own and control, directly or
indirectly, 100% of the capital stock or equity interests, howsoever designated,
of each of Suttle, JDL, Ecessa and Transition Networks, or (b) any “person” or
“group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act)
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 20%, or more, of the capital stock of Borrower having
the right to vote for the election of members of the board of directors of
Borrower, or (c) a majority of the members of the board of directors do not
constitute Continuing Directors, or (d) JDL fails to own and control, directly
or indirectly, 100% of the Stock of Twisted Technologies. “Continuing Director”
means (a) any member of the board of directors who was a director of Borrower on
the date hereof, and (b) any individual who becomes a member of the board of
directors Borrower after the date hereof if such individual was approved,
appointed or nominated for election to the board of directors by a majority of
the Continuing Directors, but excluding any such individual originally proposed
for election in opposition to the board of directors in office at the date
hereof in an actual or threatened election contest relating to the election of
the directors (or comparable managers) of Borrower and whose initial assumption
of office resulted from such contest or the settlement thereof.

 

 

(k)           The sale, transfer, hypothecation, assignment or encumbrance,
whether voluntary, involuntary or by operation of law, without Bank’s prior
written consent, of all or any part of or interest in any real property
collateral required hereby (if any).

 

(l)            Borrower, any Guarantor or any other Third Party Obligor fails to
perform any obligation under any other Loan Document to which it is a party (and
such failure continues beyond any applicable period of cure or grace); or
Borrower, any Guarantor or any other Third Party Obligor repudiates or revokes
or purports to repudiate or revoke any obligation under any other Loan Document
to which it is a party.

 

SECTION 6.2 REMEDIES. Upon the occurrence of any Event of Default: (a) all
principal, unpaid interest outstanding and other indebtedness of Borrower under
each of the Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank’s option and without notice (except as expressly provided in any
mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on
any real property collateral) become immediately due and payable without
presentment, demand, protest or any notices of any kind, including without
limitation, notice of nonperformance, notice of protest, notice of dishonor,
notice of intention to accelerate or notice of acceleration, all of which are
hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to
extend any further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers and remedies
available under each of the Loan Documents, or accorded by law, including
without limitation the right to resort to any or all security for any credit
subject hereto and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law. All rights, powers and remedies of
Bank may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1 NO WAIVER. No delay, failure or discontinuance of Bank in exercising
any right, power or remedy under any of the Loan Documents shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude, waive or otherwise
affect any other or further exercise thereof or the exercise of any other right,
power or remedy. Any waiver, permit, consent or approval of any kind by Bank of
any breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

 

SECTION 7.2 NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

 

BORROWER:     COMMUNICATIONS SYSTEMS, INC.

10900 Red Circle Drive

Minnetonka, MN 55343

Attn: Mark Fandrich, Chief Financial Officer

Email: mark.fandrich@commsysinc.com

 

 

 

 

BANK:                WELLS FARGO BANK, NATIONAL ASSOCIATION

[Account Number Redacted]

90 South Seventh Street

Minneapolis, MN 55402

Attn: Kael Peterson

Email: kael.peterson@wellsfargo.com

 

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the

U.S. mail, first class and postage prepaid; and (c) if sent by facsimile, upon
receipt.

 

SECTION 7.3 COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including, to the extent permitted by applicable law,
reasonable attorneys’ fees (to include outside counsel fees and all allocated
costs of Bank’s in-house counsel (if any)), expended or incurred by Bank in
connection with (a) the negotiation and preparation of this Agreement and the
other Loan Documents, Bank’s continued administration hereof and thereof, and
the preparation of any amendments and waivers hereto and thereto, (b) the
enforcement of Bank’s rights and/or the collection of any amounts which become
due to Bank under any of the Loan Documents, whether or not suit is brought, and
(c) the prosecution or defense of any action in any way related to any of the
Loan Documents, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower, any Guarantor or any other person or entity. Whenever in this
Agreement and the other Loan Documents Borrower is obligated to pay for the
attorneys’ fees of Bank, or the phrase “reasonable attorneys’ fees” or a similar
phrase is used, it shall be Borrower’s obligation to pay the attorneys’ fees
actually incurred or allocated, at standard hourly rates, without regard to any
statutory interpretation, which shall not apply, Borrower hereby waiving the
application of any such statute. Notwithstanding anything in this Agreement to
the contrary, reasonable attorneys’ fees shall not exceed the amount permitted
by law.

 

SECTION 7.4 SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank’s prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank’s rights and benefits under each of the Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any credit subject hereto, Borrower or its
business, any guarantor hereunder or the business of such guarantor, if any, or
any collateral required hereunder.

 

SECTION 7.5 ENTIRE AGREEMENT; AMENDMENT. To the full extent permitted by law,
this Agreement and the other Loan Documents constitute the entire agreement
between Borrower and Bank with respect to each credit subject hereto and
supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof. This Agreement may be amended or modified
only in writing signed by each party hereto.

 

SECTION 7.6 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect

 

 

 

 

cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.

 

SECTION 7.7 TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.

 

SECTION 7.8 SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

 

SECTION 7.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

 

SECTION 7.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota (such State, Commonwealth or
District is referred to herein as the “State”), but giving effect to federal
laws applicable to national banks, without reference to the conflicts of law or
choice of law principles thereof.

 

SECTION 7.11 BUSINESS PURPOSE. Borrower represents and warrants that each credit
subject hereto is made for (a) a business, commercial, investment, agricultural
or other similar purpose, (b)  the purpose of acquiring or carrying on a
business, professional or commercial activity, or (c) the purpose of acquiring
any real or personal property as an investment and not primarily for a personal,
family or household use.

 

SECTION 7.12 RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of
an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from
time to time, without notice, which is hereby expressly waived by Borrower, and
whether or not Bank shall have declared any credit subject hereto to be due and
payable in accordance with the terms hereof, to set off against, and to
appropriate and apply to the payment of, Borrower’s obligations and liabilities
under the Loan Documents (whether matured or unmatured, fixed or contingent,
liquidated or unliquidated), any and all amounts owing by Bank to Borrower
(whether payable in U.S. dollars or any other currency, whether matured or
unmatured, and in the case of deposits, whether general or special (except trust
and escrow accounts), time or demand and however evidenced), and (b) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such obligations and liabilities and to return as unpaid for insufficient
funds any and all checks and other items drawn against any deposits so held as
Bank, in its sole discretion, may elect. Bank may exercise this remedy
regardless of the adequacy of any collateral for the obligations of Borrower to
Bank and whether or not the Bank is otherwise fully secured. Borrower hereby
grants to Bank a security interest in all deposits and accounts maintained with
Bank to secure the payment of all obligations and liabilities of Borrower to
Bank under the Loan Documents.

 

SECTION 7.13 JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS.

 

(a)                FORUM NON CONVENIENS. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THE 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 HENNEPIN, STATE OF MINNESOTA; PROVIDED,
THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT BANK’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE BANK
ELECTS TO BRING SUCH ACTION OR

 

 

 

 

WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER, EACH GUARANTOR
AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

 

(b)          WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER, EACH GUARANTOR AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF
ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION
DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT OR ANY
TRANSACTION CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”).
EACH OF BORROWER, GUARANTORS AND BANK REPRESENTS THAT IT 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.

 

(c)          SUBMISSION TO JURISDICTION. EACH OF BORROWER AND GUARANTORS HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF HENNEPIN AND THE STATE OF
MINNESOTA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN ANY LOAN DOCUMENT SHALL AFFECT
ANY RIGHT THAT BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO ANY LOAN DOCUMENT AGAINST BORROWER OR ANY GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(d)          WAIVER OF CLAIMS. NO CLAIM MAY BE MADE BY BORROWER OR ANY GUARANTOR
AGAINST BANK OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL,
REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF
ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF
OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY ANY LOAN DOCUMENT, OR ANY ACT,
OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH OF BORROWER AND
GUARANTORS HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR
SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.

 

SECTION 7.14 AMENDMENT AND RESTATEMENT; RELEASE. This Agreement constitutes an
amendment to, and a complete restatement of, that certain Credit Agreement dated
as of August 12, 2016 (as amended to date, the “Prior Credit Agreement”). The
execution and delivery of this Agreement shall not constitute a novation of the
Prior Credit Agreement or any indebtedness or other obligations owing to Bank
thereunder. On the date hereof, the credit facilities described in the Prior
Credit Agreement shall be amended, modified and restated in their entirety by
the facilities described herein, and all loans and other obligations of Borrower
outstanding as of the date hereof shall be deemed to be loans and obligations
outstanding under the corresponding facilities described herein, without further
action by

 

 

 

 

any person or entity. Borrower hereby absolutely and unconditionally releases
and forever discharges the Bank and any and all affiliates of Bank,
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 related to or arising out of the Prior Credit
Agreement and each other loan document, agreement, instrument, letter of credit
agreement, application or other document between Borrower and the foregoing,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which 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 hereof, whether such claims, demands and causes of action are
matured or unmatured or known or unknown.

 

Signature page follows

 

 

 

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Agreement to be executed as of the effective date set forth
above.

 

COMMUNICATIONS SYSTEMS, INC.  

WELLS FARGO BANK,

NATIONAL ASSOCIATION

              By:  [a201385002_v1.jpg]   By:     Name:  Mark D. Fandrich   Name:
Kael Peterson   Title: Chief Financial Officer   Title: Senior Vice President  

 

Signature Page to Credit Agreement

 

 

 

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Agreement to be executed as of the effective date set forth
above.

 

COMMUNICATIONS SYSTEMS, INC.  

WELLS FARGO BANK,

NATIONAL ASSOCIATION

              By:     By:     Name:       Name: Kael Peterson   Title:    
Title: Senior Vice President  

 

Signature Page to Credit Agreement

 

 

 

 

SCHEDULES DELETED