Exhibit
10.1.2


SECOND
AMENDMENT TO CREDIT AGREEMENT AND WAIVER OF EVENT OF DEFAULT


                    This
Second Amendment to Credit Agreement and Waiver of Event of Default (this “Amendment”),
dated as of November 14, 2013, 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, a national banking association (“Lender”).


RECITALS


                    Borrowers
and Lender are parties to a Credit Agreement dated as of October 28, 2011, as
amended by a First Amendment to Credit Agreement and Waiver of Event of Default
dated as of November 28, 2012 (as so amended, and as the same may be further
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 waive an event of default under the Credit Agreement, and Lender has agreed
to make such amendments and grant such 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.          Amendment to
Section 4.9. The following sentence is added immediately following
subsection (d) of Section 4.9 of the Credit Agreement:


	
  

 	
  

 
	
  

 	
 Notwithstanding the
 foregoing or anything to the contrary contained in the definitions below, for
 purposes of determining Borrowers’ compliance with subsections (b) and
 (d) of this Section 4.9, up to $5,850,000 of goodwill impairment charges
 recognized by Borrowers on or about September 30, 2013 in connection with
 Borrowers’ Transition Networks business unit shall be excluded.

 


                    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 Event of 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, 2013, as required by Section 4.9(b) of the Credit
Agreement, an Event of Default has occurred 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)         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, (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, 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

 
	
  

 	
  

 
	
  

 	
           (b)         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 and
 any other agreements or instruments required hereunder and to perform all of
 its obligations hereunder, and this Amendment 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 this Amendment, the
 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.

 
	
  

 	
  

 
	
  

 	
           (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.


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                    8.          No
Other Waiver. Except as expressly set forth in Section 4 of this
Amendment, 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 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 Second 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
Second Amendment to Credit and Security Agreement

and Waiver of Event of Default