SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                           ---------------------------

                          COMMUNICATIONS SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

         Minnesota                                              41-0957999
(State of other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                              213 South Main Street
                             Hector, Minnesota 55342
              (Address of Principal Executive Offices and zip code)
                          -----------------------------

                          COMMUNICATIONS SYSTEMS, INC.
                                 1992 STOCK PLAN
                            (Full title of the Plan)
                           ---------------------------

                                Curtis A. Sampson
                          Communications Systems, Inc.
                              213 South Main Street
                             Hector, Minnesota 55342
                                 (320) 848-6231
                          (Name, address, including zip
                            code and telephone number
                              of agent for service)

                                    Copy to:
                                 Richard Primuth
                           Lindquist & Vennum P.L.L.P.
                                 4200 IDS Center
                              Minneapolis, MN 55402
                                 (612) 371-3211

                         CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
                               Proposed
Title of                        Maximum     Proposed
Securities         Amount      Aggregate     Maximum
to be              to be       Offering     Aggregate           Amount of
Registered      Registered(2)    Price      Offering          Registration
                               Per Share     Price                 Fee
--------------  -------------  ---------  --------------      ------------
Common Stock,     1,000,000    $12.00(1)  $12,000,000.00(1)     $3,168.00
$.05 par value

--------------------------------------------------------------------------------

(1)  Estimated  soley  for the  purpose  of  determining  the  registration  fee
     pursuant  to Rule 457(c) and (h) and based upon the average of the high and
     low  transaction  prices of the  Company's  Common Stock as reported on the
     Nasdaq  National  Market System on December 2, 1999.

(2)  400,000  shares (as adjusted for a stock split in 1993) were  registered on
     Form S-8 (File No.  33-60930) on April 12, 1993 and 500,000 were registered
     on Form S-8 (File No. 33-99566) on November 17, 1995.  1,000,000 shares are
     being registered herewith.
                  --------------------------------------------


<PAGE>


               INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
                                  BY REFERENCE

     A Registration Statement on Form S-8 (File No. 33-60930) was filed with the
Securities and Exchange  Commission on April 12, 1993 covering the  registration
of 400,000 shares (as adjusted for a stock split in 1993)  initially  authorized
for issuance under the Company's  1992 Stock Plan (the "Plan").  A filing fee of
was  paid at the time the  Registration  Statement  was  filed.  A  Registration
Statement  on Form S-8 (File No.  33-99566)  was filed with the  Securities  and
Exchange  Commission on November 17, 1995 covering the  registration  of 500,000
shares  authorized  for issuance  under the Plan. A filing fee of $2,693.97  was
paid at the time that  Registration  Statement  was filed.  Pursuant  to general
Instruction  E of Form  S-8,  this  Registration  Statement  is  being  filed to
register the additional 1,000,000 shares authorized under the Plan. An amendment
to the Plan to increase by 500,000 the number of reserved and authorized  shares
under the Plan was  authorized by the Company's  Board of Directors on March 31,
1998. This amendment was approved by the Company's shareholders on May 19, 1998.
An amendment  to the Plan to increase by another  500,000 the number of reserved
and authorized  shares under the Plan was  authorized by the Company's  Board on
April 1, 1999 and such amendment was approved by the Company's  shareholders  on
May 18, 1999. This  Registration  Statement is intended to register the 1998 and
1999  amendments  for an  aggregate  increase  of  1,000,000  additional  shares
authorized under the Plan. This Registration Statement should also be considered
a post-effective amendment to prior Registration Statements. The contents of the
prior Registration Statements are incorporated herein by reference.

PART I

         Pursuant to part I of Form S-8, the  information  required by Items 1
and 2 of Form S-8 in not filed as a part of this Registration Statement.

PART II

Item 3.  Incorporation of Documents by Reference.

         The  following   documents  filed  with  the  Securities  and  Exchange
Commission are hereby incorporated by reference:

         (a) The Annual Report of the Company on Form 10-K for the calendar year
             ended December 31, 1998.

         (b) The Quarterly  Reports of the Company on Form 10-Q for the quarters
             ended March 31, 1999, June 30, 1999 and September 30, 1999.

         (c) The Definitive Proxy Statement dated April 5, 1999 for the Annual
             Meting of Shareholders held on May 18, 1999.

         (d) The description of the Company's  Common Stock as set forth in the
             Company's  Registration  Statement on Form S-1 dated June 17, 1983
             (Registration No. 2-84100), including any amendment or report filed
             for the purpose of updating such description.

         All documents  subsequently  filed by the Company  pursuant to Sections
13(a),  13(c), 14 and 15(d) of the Securities  Exchange Act of 1934 prior to the
completion  or  termination  of this offering of shares of Common Stock shall be
deemed to be incorporated by reference in this Registration  Statement and to be
a part hereof from the date of filing of such documents.

Item 4.  Description of Securities.
Not applicable.

                                       1
<PAGE>

Item 5. Interest of Named Experts and Counsel.

         Richard A. Primuth, Secretary of the Company, is a partner of Lindquist
&  Vennum  P.L.L.P.,  which  is the law  firm  passing  on the  validity  of the
securities issued under the Plan.

Item 6. Indemnification of Directors of Officers.

         The Company  Bylaws  provide that the  Registrant  shall  indemnify any
person  made or  threatened  to be made a party to any  threatened,  pending  or
completed  civil,   criminal,   administrative,   arbitration  or  investigative
proceeding,  including a proceeding  by or in the right of the  corporation,  by
reason of the former or present  official  capacity of the person,  provided the
person seeking indemnification meets five criteria set forth in Section 302A.521
of the Minnesota Business Corporation Act.

         The Registrant's  Bylaws also authorize the Board of Directors,  to the
extent  permitted  by  applicable  law,  to  indemnify  any person or entity not
described  in the  Bylaws  pursuant  to,  and to the  extent  described  in,  an
agreement between the Company and such person, or as otherwise determined by the
Board of Directors in its discretion.

         Section  302A.521 of the Minnesota  Business  Corporation  Act provides
that a  corporation  shall  indemnify any person made or threatened to be made a
party to a proceeding by reason of acts or omissions performed in their official
capacity as an officer,  director,  employee or agent of the corporation against
judgments, penalties, fines, including without limitation, excise taxes assessed
against such person with respect to an employee benefit plan,  settlements,  and
reasonable expenses,  including  attorneys' fees and disbursements,  incurred by
such person in connection  with the  proceeding  if, with respect to the acts or
omissions of such person  complained of in the  proceeding,  such person (i) has
not been  indemnified by another  organization or employee  benefit plan for the
same  expenses  with respect tot eh same acts or  omissions;  (ii) acted in good
faith;  (iii)  received no improper  personal  benefit and  Minnesota  Statutes,
Section  302A.255  (regarding  conflicts of interest),  if applicable,  has been
satisfied; (iv) in the case of a criminal proceeding, has no reasonable cause to
believe the conduct was  unlawful;  and (v) in the case of acts or  omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interest of the corporation,  or in the case of acts
or omissions by persons in their  capacity  for other  organization,  reasonably
believed  that  the  conduct  was  not  opposed  to the  best  interests  of the
corporation.  In addition,  Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment or reimbursement by the corporation,  upon written request,  of
reasonable expenses (including  attorneys' fees) incurred by a person in advance
of the final  disposition of a proceeding in certain  instances if a decision as
to required  indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a  designated  committee  of  the  Board,  by  special  legal  counsel,  by  the
shareholders or by a court.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing  provisions,  or  otherwise,  we have been advised that, in the
opinion of the SEC, such  indemnification  is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

Item 7.  Exemption from Registration Claimed.

         Not Applicable.

                                       2
<PAGE>

Item 8. Exhibits.

        Exhibit

        4.1  992 Stock Plan, as amended

        5.1  Opinion of Lindquist & Vennum P.L.L.P.

        23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)

        23.2 Consent of Deloitte & Touche L.L.P., independent public accountants

        24.1 Power of Attorney (set forth on signature page hereof)

Item 9. Undertakings.

        The Company hereby undertakes:

(a) (1) To file,  during any period in which  offers or sales are being made,  a
post-effective amendment to this registration statement:

                  (i)  To include any prospectus required by section 10(a)(3) of
         the Securities Act of 1933;

                  (ii) To reflect in the  prospectus any facts or events arising
         after the  effective  date of the  registration  statement (or the most
         recent  post-effective  amendment thereof) which individually or in the
         aggregate,  represent a fundamental change in the information set forth
         in the  registration  statement.  Notwithstanding  the  foregoing,  any
         increase  or  decrease  in volume of  securities  offered (if the total
         dollar  value of  securities  offered  would not exceed  that which was
         registered) and any deviation from the low or high end of the estimated
         maximum offering range may be reflected in the form of prospectus filed
         with the Commission pursuant to Rule 424(b) under the Securities Act of
         1933 if, in the aggregate, the changes in volume and price represent no
         more than a 20%  change in the  maximum  aggregate  offering  price set
         forth in the  "Calculation of Registration  Fee" table in the effective
         registration statement; and

                  (iii) To include any material  information with respect to the
         plan of  distribution  not  previously  disclosed  in the  registration
         statement  or  any  material   change  to  such   information   in  the
         registration statement.

         (2) For  determining  liability under the Securities Act, to treat each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

         (3) To file a post-effective  amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

(b) The  Company  hereby  undertakes  that,  for  purposes  of  determining  any
liability under the Securities Act of 1933, each filing of the Company's  annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable,  each filing of an employee benefit plan's annual report
pursuant  to  Section  15(d) of the  Securities  Exchange  Act of 1934)  that is
incorporated by reference in the Registration  Statement shall be deemed to be a
new Registration  Statement relating to the securities offered therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

                                       3
<PAGE>

(h) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to  directors,  officers,  and  controlling
persons of the small business  issuer pursuant to the foregoing  provisions,  or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action,  suit  or  proceeding)  is  asserted  by  such  director,   officer,  or
controlling person in connection with the securities being registered, the small
business  issuer will,  unless in the opinion of its counsel the matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question  whether such  indemnification  by it is against  public  policy as
expressed  in the Act and will be  governed  by the final  adjudication  of such
issue.



                                       4
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of Hector and the State of  Minnesota on the 2nd day of
December, 1999.

                       COMMUNICATIONS SYSTEMS, INC.


                       By /s/ Curtis A. Sampson
                       Curtis A. Sampson, Chairman of the Board, President
                       and Chief Executive Officer (Principal Executive Officer)

                                POWER OF ATTORNEY

         The undersigned officers and directors of Communications  Systems, Inc.
hereby constitute and appoint Curtis A. Sampson and Paul N. Hanson, or either of
them, with power to act one without the other, our true and lawful capacities to
sign  any and  all  amendments  (including  post-effective  amendments)  to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities  and Exchange  Commission,  granting unto said  attorney-in-fact  and
agent,  full power and  authority to do and perform each and every act and thing
necessary  or advisable  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming all that said  attorney-in-fact  and agent, or his  substitutes,  may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this  Registration  Statement has been signed below by the following  persons on
December 2, 1999 in the capacities indicated.

Signature                                   Title

/s/ Curtis A. Sampson                       Chairman of the Board, President,
Curtis A. Sampson                           Chief Executive Officer and Director
                                            (Principal Executive Officer)


/s/ Paul J. Anderson                        Director
Paul J. Anderson


/s/ Edwin C. Freeman                        Director
Edwin C. Freeman


/s/ Wayne E. Sampson                        Director
Wayne E. Sampson


/s/ Edward E. Strickland                    Director
Edward E. Strickland


                                       5
<PAGE>

/s/ Joseph W. Parris                        Director
Joseph W. Parris


/s/Luella Gross Goldberg                    Director
Luella Gross Goldberg


/s/ Frederick M. Green                      Director
Frederick M. Green


/s/ Gerald D. Pint                          Director
Gerald D. Pint


/s/ Randall D. Sampson                      Director
Randall D. Sampson




                                       6
<PAGE>

                          COMMUNICATIONS SYSTEMS, INC.
                                 1992 STOCK PLAN


     SECTION 1.  General Purpose of Plan; Definitions.

     The name of this plan is the Communications  Systems,  Inc. 1992 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Communications  Systems, Inc.
(the "Company") and its Subsidiaries to retain and attract  executives and other
key  employees  who  contribute  to the  Company's  success  by  their  ability,
ingenuity and industry,  and to enable such  individuals  to  participate in the
long-term  success  and  growth  of the  Company  by giving  them a  proprietary
interest in the Company.

     For purposes of the Plan, the following terms shall be defined as set forth
below:
     (a) "Board" means the Board of Directors of the Company.

     (b) "Cause" means a felony conviction of a participant or the failure of
          a participant to contest prosecution for a felony, or a  participant's
          willful misconduct or dishonesty, any of which is directly and
          materially harmful to the business or reputation of the Company.

     (c) "Code" means the Internal Revenue Code of 1986, as amended.

     (d) "Committee"  means the Committee  referred to in Section 2 of the Plan.
         If at any time no Committee  shall be in office,  then the functions of
         the Committee specified in the Plan shall be exercised by the Board.

     (e) "Company" means Communications Systems, Inc., a corporation organized
         under the laws of the State of Minnesota (or any successor
         corporation).

     (f) "Continuing Directors" means (i) individuals who on the effective date
         of the  Plan  constituted  the  Board  of  Directors  of the Company
         and  (ii)  any  new  director  who  subsequent  to  the effective  date
         of the Plan is elected or nominated  for election by a majority of the
         directors  who held such office  immediately prior to any of the events
         involving a change in  ownership or control described in Sections 5(c)
         and 7(c)(v).

     (g) "Deferred Stock" means an award made pursuant to Section 8 below of the
         right to receive Stock at the end of a specified deferral period.

     (h) "Disability" means permanent and total disability as determined by the
         Committee.

     (i) "Disinterested Director" shall have the meaning set forth in Rule
         16b-3(c)(2) as  promulgated  by  the  Securities  and  Exchange
         Commission  under the  Securities  Exchange  Act of 1934,  or any
         successor definition adopted by the Commission.

     (j) "Early Retirement" means retirement, with consent of the Committee at
         the time of retirement,  from active employment with  the  Company  and
         any  Subsidiary  or Parent  Corporation  of the Company.

     (k) "Fair Market  Value" means the value of the Stock on a given date as
         determined by the Committee in accordance  with Section 422 of the Code
         and any applicable Treasury Department regulations with respect to
         incentive stock options.

                                       1
<PAGE>

     (l) "Incentive Stock Option" means any Stock Option intended to be and
         designated as an "Incentive Stock Option" within the meaning of Section
         422 of the Code.

     (m) "Non-Qualified Stock Option" means any Stock Option that is not an
         Incentive Stock Option, and is intended to be and is designated as a
         "Non-Qualified Stock Option."

     (n) "Normal Retirement" means retirement from active employment with the
         Company and any Subsidiary or Parent Corporation of the Company on or
         after age 65.

     (o) "Ownership Change" means an "ownership change" as defined in Section
         382(g) of the Code determined without regard to Section 382(i)(3)
         of the Code.

     (p) "Parent  Corporation"  means  any  corporation  (other  than  the
         Company) in an  unbroken  chain of  corporations  ending with the
         Company if each of the corporations (other than the Company) owns
         stock  possessing 50% or more of the total combined  voting power
         of all classes of stock in one of the other  corporations  in the
         chain.

     (q) "Restricted Stock" means an award of shares of Stock that are subject
         to restrictions under Section 7 below.


     (r) "Retirement" means Normal Retirement or Early Retirement.

     (s) "Stock" means the Common Stock, $.05 par value per share, of the
         Company.

     (t) "Stock Appreciation Right" means the right pursuant to an award granted
         under Section 6 below to surrender to the Company all or a portion of a
         Stock Option in exchange for an amount equal to the difference between
         (i) the Fair Market Value, as of the date such Stock Option or such
         portion thereof is surrendered, of the shares of Stock covered  by such
         Stock Option or such portion thereof, and (ii) the aggregate exercise
         price of such Stock Option or such portion thereof.

     (u) "Stock Option" means any option to purchase shares of Stock granted
         pursuant to Section 5 below.


     (v) "Subsidiary" means any corporation (other than the Company) in an
         unbroken chain of corporations beginning with the Company if each of
         the corporations (other than the last corporation in the unbroken
         chain) owns stock  possessing  50% or more of the total combined voting
         power of all classes of stock in one of the other corporations in the
         chain.


     SECTION 2.  Administration.

     The Plan shall be  administered by the Board of Directors or by a Committee
of not less than three  Disinterested  Directors,  who shall be appointed by the
Board of  Directors  of the Company  and who shall serve at the  pleasure of the
Board. If the Plan is administered by the Board,  each member of the Board shall
be a Disinterested Director.

     The  Committee  shall  have the power and  authority  to grant to  eligible
employees,  pursuant  to the terms of the Plan:  (i) Stock  Options,  (ii) Stock
Appreciation Rights, (iii) Restricted Stock, and (iv) Deferred Stock awards.

                                       2
<PAGE>

     In particular, the Committee shall have the authority:
     (i)   to select the officers  and other key  employees of the Company and
           its Subsidiaries to whom Stock Options,  Stock  Appreciation  Rights,
           Restricted Stock and/or Deferred Stock awards may from time to time
           be granted hereunder;

     (ii)  to determine whether and to what extent Incentive Stock Options,
           Non-Qualified Stock Options,  Stock Appreciation  Rights,  Restricted
           Stock or Deferred  Stock awards, or a combination  of the  foregoing,
           are to be granted hereunder;

     (iii) to determine the number of shares to be covered by each such award
           granted hereunder;

     (iv)  to determine the terms and conditions, not inconsistent with the
           terms of the Plan, of any award granted hereunder (including, but not
           limited to, any restriction on any Stock Option or other award and/or
           the shares of Stock relating thereto); and

     (v)   to determine whether, to what extent and under what circumstances
           Stock and other amounts payable with respect  to an award under  this
           Plan shall be deferred either automatically or at the election of the
           participant.

        The Committee  shall have the authority to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable;  to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements  relating thereto);
and to otherwise  supervise the  administration  of the Plan.  The Committee may
delegate  its  authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.

        All decisions  made by the Committee  pursuant to the  provisions of the
Plan shall be final and binding on all persons,  including  the Company and Plan
participants.

        SECTION 3.   Stock Subject to Plan.

        The  total  number  of  shares  of  Stock  reserved  and  available  for
distribution  under the Plan shall be  1,900,000.  Such shares may  consist,  in
whole or in part, of authorized and unissued shares.

        Subject to paragraph (b)(iv) of Section 6 below, if any shares that have
been optioned cease to be subject to Stock Options,  or if any shares subject to
any Restricted Stock or Deferred Stock award granted  hereunder are forfeited or
such award otherwise terminates without a payment being made to the participant,
such shares shall again be available for  distribution in connection with future
awards under the Plan.

                                       3
<PAGE>

        In   the   event   of   any   merger,   reorganization,   consolidation,
recapitalization,  stock dividend, other change in corporate structure affecting
the Stock,  or spin-off or other  distribution of assets to  shareholders,  such
substitution  or  adjustment  shall be made in the  aggregate  number  of shares
reserved for issuance  under the Plan,  in the number and option price of shares
subject to  outstanding  options  granted  under the Plan,  and in the number of
shares  subject to Restricted  Stock or Deferred  Stock awards granted under the
Plan as may be  determined  to be  appropriate  by the  Committee,  in its  sole
discretion, provided that the number of shares subject to any award shall always
be a whole number.  Such  adjusted  option price shall also be used to determine
the amount  payable by the Company upon the  exercise of any Stock  Appreciation
Right associated with any Stock Option.

        SECTION 4.  Eligibility.

        Officers and other key employees of the Company and its Subsidiaries who
are responsible for or contribute to the management, growth and/or profitability
of the business of the Company and its  Subsidiaries  are eligible to be granted
Stock Options,  Stock  Appreciation  Rights,  Restricted Stock or Deferred Stock
awards under the Plan.  The optionees and  participants  under the Plan shall be
selected from time to time by the Committee, in its sole discretion,  from among
those eligible, and the Committee shall determine,  in its sole discretion,  the
number of shares covered by each award.

        SECTION 5.  Stock Options.

        Any Stock Option granted  under  the Plan  shall be in such  form as the
Committee may from time to time approve.  4. 5. The Stock Options  granted under
the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified
Stock Options.  No Incentive Stock Options shall be granted under the Plan after
March 17, 2002.

        The Committee shall have the authority to grant any optionee  Incentive
Stock Options,  Non-Qualified  Stock  Options,  or both types of options in each
case with or without Stock  Appreciation  Rights.  To the extent that any option
does not qualify as an Incentive  Stock Option,  it shall  constitute a separate
Non-Qualified Stock Option.

        Anything in the  Plan to the  contrary notwithstanding,  no term of this
Plan  relating to  Incentive  Stock  Options  shall be  interpreted,  amended or
altered,  nor shall any  discretion  or authority  granted  under the Plan be so
exercised,  so as to disqualify  either the Plan or any  Incentive  Stock Option
under  Section 422 of the Code.  The preceding  sentence  shall not preclude any
modification or amendment to an outstanding  Incentive Stock Option,  whether or
not such  modification or amendment  results in  disqualification  of such Stock
Option as an Incentive Stock Option,  provided the optionee  consents in writing
to the modification or amendment.

        Stock Options  granted  under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

(a)  Option Price. The option price per share of Stock purchasable under a Stock
     Option shall be  determined  by the Committee at the time of grant and may,
     except as provided in this paragraph, be less than the Fair Market Value of
     the Stock on the date the Stock  Option is  granted.  In the event that the
     Committee  does  not  determine  the  exercise  price  per  share  of Stock
     purchasable  under a Stock  Option,  the  exercise  price shall be the Fair
     Market Value of the Stock on the date the Stock Option is granted except as
     otherwise  required in this  paragraph.  In no event shall the Stock Option
     price per share of Stock  purchasable  under an Incentive Stock Option or a
     Non-Qualified Stock Option be less than 100% or 50%,  respectively,  of the
     Fair Market Value of the Stock on the date the Stock Option is granted.  If
     an employee  owns or is deemed to own (by reason of the  attribution  rules
     applicable  under Section 424(d) of the Code) more than 10% of the combined
     voting  power  of all  classes  of  stock  of  the  Company  or any  Parent
     Corporation or Subsidiary and an Incentive  Stock Option is granted to such
     employee,  the exercise price shall be no less than 110% of the Fair Market
     Value of the Stock on the date the Stock Option is granted.

                                       4
<PAGE>

(b)  Option Term. The term of each Stock Option shall be fixed by the Committee,
     but no  Incentive  Stock Option  shall be  exercisable  more than ten years
     after the date the Stock Option is granted. In the event that the Committee
     does not fix the term of a Stock  Option,  the term shall be ten years from
     the date the Stock Option is granted.  Notwithstanding the foregoing, if an
     employee  owns or is deemed to own (by reason of the  attribution  rules of
     Section  424(d) of the Code) more than 10% of the combined  voting power of
     all classes of stock of the Company or any Parent Corporation or Subsidiary
     and an Incentive Stock Option is granted to such employee, the term of such
     Stock Option shall be no more than five years from the date of grant.

(c)  Exercisability. Stock Options shall be exercisable at such time or times as
     determined  by the  Committee  at or after  grant.  In the  event  that the
     Committee  does not  determine  the time at which a Stock  Option  shall be
     exercisable, such Stock Option shall be exercisable one year after the date
     of grant.  If the Committee  provides,  in its  discretion,  that any Stock
     Option is exercisable  only in  installments,  the Committee may waive such
     installment exercise provisions at any time.



(d)  Method of Exercise.  Stock  Options may be exercised in whole or in part at
     any time during the option period by giving  written  notice of exercise to
     the Company  specifying  the number of shares to be purchased.  Such notice
     shall be  accompanied by payment in full of the purchase  price,  either by
     certified or bank check, or by any other form of legal consideration deemed
     sufficient  by the  Committee and  consistent  with the Plan's  purpose and
     applicable law, including  promissory notes or a properly executed exercise
     notice together with irrevocable instructions to a broker acceptable to the
     Company  to  promptly  deliver  to the  Company  the amount of sale or loan
     proceeds to pay the exercise price. As determined by the Committee,  in its
     sole discretion, payment in full or in part may also be made in the form of
     unrestricted  Stock  already  owned by the  optionee or, in the case of the
     exercise of a  Non-Qualified  Stock  Option,  Restricted  Stock or Deferred
     Stock  subject to an award  hereunder  (based,  in each  case,  on the Fair
     Market  Value  of the  Stock  on the  date  the  option  is  exercised,  as
     determined by the Committee),  provided,  however,  that, in the case of an
     Incentive Stock Option,  the right to make a payment in the form of already
     owned shares may be authorized only at the time the option is granted,  and
     provided further that in the event payment is made in the form of shares of
     Restricted  Stock or a Deferred  Stock award,  the optionee  will receive a
     portion of the option shares in the form of, and in an amount equal to, the
     Restricted  Stock or  Deferred  Stock  award  tendered  as  payment  by the
     optionee.  If the terms of a Stock Option so permit,  an optionee may elect

                                       5
<PAGE>

     to pay all or part of the  exercise  price by having the  Company  withhold
     from the shares of Stock that would  otherwise be issued upon exercise that
     number of shares of Stock having a Fair Market Value equal to the aggregate
     exercise  price for the shares with respect to which such election is made.
     No shares of Stock shall be issued  until full  payment  therefor  has been
     made. An optionee  shall  generally  have the rights to dividends and other
     rights of a shareholder  with respect to shares  subject to the option when
     the optionee  has given  written  notice of exercise,  has paid in full for
     such shares, and, if requested,  has given the representation  described in
     paragraph (a) of Section 12.

(e)  Non-Transferability  of Options.  No Stock Option shall be  transferable by
     the  optionee  otherwise  than  by  will  or by the  laws  of  descent  and
     distribution,  and all  Stock  Options  shall be  exercisable,  during  the
     optionee's lifetime, only by the optionee.

(f)  Termination  by Death.  If an optionee's  employment by the Company and any
     Subsidiary or Parent  Corporation  terminates by reason of death, the Stock
     Option  may  thereafter  be  immediately  exercised,  to  the  extent  then
     exercisable (or on such accelerated  basis as the Committee shall determine
     at or after  grant),  by the legal  representative  of the estate or by the
     legatee of the  optionee  under the will of the  optionee,  for a period of
     three  years (or such  shorter  period as the  Committee  shall  specify at
     grant)  from the date of such death or until the  expiration  of the stated
     term of the option, whichever period is shorter.

(g)  Termination  by Reason of  Disability.  If an optionee's  employment by the
     Company and any  Subsidiary or Parent  Corporation  terminates by reason of
     Disability,  any Stock  Option  held by such  optionee  may  thereafter  be
     exercised,  to the extent it was exercisable at the time of termination due
     to  Disability  (or  on  such  accelerated  basis  as the  Committee  shall
     determine at or after  grant),  but may not be exercised  after three years
     (or such shorter  period as the Committee  shall specify at grant) from the
     date of such termination of employment or the expiration of the stated term
     of the option,  whichever period is shorter. In the event of termination of
     employment  by  reason  of  Disability,  if an  Incentive  Stock  Option is
     exercised  after the  expiration  of the  exercise  periods  that apply for
     purposes of Section 422 of the Code, the option will  thereafter be treated
     as a Non-Qualified Stock Option.

(h)  Termination  by Reason of  Retirement.  If an optionee's  employment by the
     Company and any  Subsidiary or Parent  Corporation  terminates by reason of
     Retirement,  any Stock  Option  held by such  optionee  may  thereafter  be
     exercised to the extent it was exercisable at the time of such  Retirement,
     but may not be  exercised  after  three  years (or such  shorter  period as
     Committee  shall  specify at grant)  from the date of such  termination  of
     employment or the  expiration  of the stated term of the option,  whichever
     period is shorter.  In the event of  termination of employment by reason of
     Retirement,  if an Incentive Stock Option is exercised after the expiration
     of the exercise periods that apply for purposes of Section 422 of the Code,
     the option will thereafter be treated as a Non-Qualified Stock Option.

(i)  Other  Termination.  Unless  otherwise  determined by the Committee,  if an
     optionee's   employment  by  the  Company  and  any  Subsidiary  or  Parent
     Corporation  terminates  for any reason  other than  death,  Disability  or
     Retirement,  the Stock Option shall  thereupon  terminate,  except that the
     option  may  be  exercised  to  the  extent  it  was  exercisable  at  such
     termination  for the lesser of three  months or the balance of the option's
     term if the  optionee  is  involuntarily  terminated  without  Cause by the
     Company and any Subsidiary or Parent Corporation.

                                       6
<PAGE>

(j)  Annual Limit on Incentive  Stock  Options.  The aggregate Fair Market Value
     (determined as of the time the Stock Option is granted) of the Common Stock
     with  respect to which an  Incentive  Stock  Option  under this Plan or any
     other plan of the  Company  and any  Subsidiary  or Parent  Corporation  is
     exercisable  for the first time by an  optionee  during any  calendar  year
     shall not exceed $100,000.

        SECTION 6.  Stock Appreciation Rights.

(a)  Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
     with all or part of any Stock Option granted under the Plan. In the case of
     a Non-Qualified Stock Option, such rights may be granted either at or after
     the time of the grant of such  Option.  In the case of an  Incentive  Stock
     Option,  such  rights may be  granted  only at the time of the grant of the
     Stock Option.

     A Stock Appreciation Right or applicable portion thereof granted with
     respect to a given Stock Option  shall  terminate  and no longer be
     exercisable upon the termination or exercise of the related Stock Option,
     except that a Stock  Appreciation Right granted with respect to less than
     the full number of shares  covered by a related Stock Option shall not be
     reduced until the exercise or  termination  of the related Stock Option
     exceeds the number of shares not covered by the Stock Appreciation Right.

     A Stock  Appreciation  Right may be exercised by an optionee, in accordance
     with paragraph (b) of this Section,  by surrendering the applicable portion
     of the related Stock Option. Upon such exercise and surrender, the optionee
     shall be entitled to receive an amount  determined in the manner prescribed
     in  paragraph  (b) of  this  Section.  Stock  Options  which  have  been so
     surrendered,  in whole or in part,  shall no longer be  exercisable  to the
     extent the related Stock Appreciation Rights have been exercised.

(b)  Terms and Conditions.  Stock  Appreciation  Rights shall be subject to such
     terms and conditions,  not inconsistent with the provisions of the Plan, as
     shall be  determined  from  time to time by the  Committee,  including  the
     following:

    (i)               Stock  Appreciation  Rights shall be  exercisable  only at
                      such  time or  times  and to the  extent  that  the  Stock
                      Options  to which  they  relate  shall be  exercisable  in
                      accordance  with  the  provisions  of  Section  5 and this
                      Section of the Plan.

    (ii)              Upon  the  exercise  of a  Stock  Appreciation  Right,  an
                      optionee  shall be entitled to receive up to, but not more
                      than,  an amount in cash or shares of Stock equal in value
                      to the  excess  of the Fair  Market  Value of one share of
                      Stock over the exercise  price per share  specified in the
                      related  option  multiplied  by the  number  of  shares in
                      respect of which the Stock  Appreciation  Right shall have
                      been  exercised,  with the  Committee  having the right to
                      determine the form of payment.

    (iii)             Stock Appreciation Rights shall be transferable only when
                      and to the extent that the underlying Stock Option would
                      be transferable under Section 5 of the Plan.

    (iv)              Upon the exercise of a Stock Appreciation Right, the Stock
                      Option or part thereof to which such Stock Appreciation
                      Right is related shall be deemed to have been exercised
                      for the purpose of the limitation set forth in Section 3
                      of the Plan on the number of shares of Stock to be issued
                      under the Plan, but only to the extent of the number of
                      shares issued or issuable under the Stock Appreciation
                      Right at the time of exercise based on the value of the
                      Stock Appreciation Right at such time.

                                       7
<PAGE>

    (v)               A Stock  Appreciation  Right granted in connection with an
                      Incentive  Stock Option may be exercised  only if and when
                      the market  price of the Stock  subject  to the  Incentive
                      Stock Option exceeds the exercise price of such Option.

SECTION 7.  Restricted Stock.

(a)            Administration.  Shares of Restricted  Stock may be issued either
               alone or in addition to other awards  granted under the Plan. The
               Committee  shall  determine the officers and key employees of the
               Company and Subsidiaries to whom, and the time or times at which,
               grants of Restricted  Stock will be made, the number of shares to
               be  awarded,  the time or times  within  which such awards may be
               subject to  forfeiture,  and all other  conditions of the awards.
               The  Committee may also  condition the grant of Restricted  Stock
               upon  the  attainment  of  specified   performance   goals.   The
               provisions of  Restricted  Stock awards need not be the same with
               respect to each recipient.

(b)            Awards and Certificates. The prospective recipient of an award of
               shares of Restricted Stock shall not have any rights with respect
               to such award,  unless and until such  recipient  has executed an
               agreement evidencing the award and has delivered a fully executed
               copy thereof to the Company,  and has otherwise complied with the
               then applicable terms and conditions.

               (i)    Each  participant  shall be issued a stock  certificate in
                      respect of shares of  Restricted  Stock  awarded under the
                      Plan. Such certificate  shall be registered in the name of
                      the  participant,  and shall  bear an  appropriate  legend
                      referring  to  the  terms,  conditions,  and  restrictions
                      applicable to such award,  substantially  in the following
                      form:

                             "The  transferability  of this  certificate and the
                             shares of stock  represented  hereby are subject to
                             the terms and conditions (including  forfeiture) of
                             the  Communications  Systems,  Inc. 1992 Stock Plan
                             and  an   Agreement   entered   into   between  the
                             registered owner and Communications  Systems,  Inc.
                             Copies  of such Plan and  Agreement  are on file in
                             the offices of Communications  Systems,  Inc., P.O.
                             Box 777, Hector, MN 55342."

               (ii)   The Committee  shall  require that the stock  certificates
                      evidencing  such  shares be held in custody by the Company
                      until the  restrictions  thereon  shall have  lapsed,  and
                      that, as a condition of any  Restricted  Stock award,  the
                      participant  shall have delivered a stock power,  endorsed
                      in blank, relating to the Stock covered by such award.

(c)            Restrictions and Conditions.  The shares of Restricted Stock
               awarded pursuant to the Plan shall be subject to the following
               restrictions and conditions:

               (i)    Subject  to the  provisions  of this  Plan  and the  award
                      agreement, during a period set by the Committee commencing
                      with the date of such  award (the  "Restriction  Period"),
                      the participant shall not be permitted to sell,  transfer,
                      pledge or assign shares of Restricted  Stock awarded under
                      the Plan. In no event shall the Restriction Period be less
                      than one (1) year. Within these limits,  the Committee may
                      provide for the lapse of such restrictions in installments
                      where deemed appropriate.

               (ii)   Except as provided in paragraph (c)(i) of this Section,
                      the participant shall have, with respect to the shares of
                      Restricted Stock, all of the rights of a shareholder of
                      the Company, including the right to vote the shares and
                      the right to receive any cash dividends. The Committee, in
                      its sole discretion, may permit or require the payment of


                                       8
<PAGE>

                      cash dividends to be deferred and, if the Committee so
                      determines, reinvested in additional shares of Restricted
                      Stock (to the extent shares are available under Section 3
                      and subject to paragraph (f) of Section 12).  Certificates
                      for shares of unrestricted Stock shall be delivered to the
                      grantee promptly after, and only after, the period of
                      forfeiture shall have expired without forfeiture in
                      respect of such shares of Restricted Stock.

               (iii)  Subject  to the  provisions  of the  award  agreement  and
                      paragraph  (c)(iv) of this Section,  upon  termination  of
                      employment for any reason during the  Restriction  Period,
                      all shares still subject to restriction shall be forfeited
                      by the participant.

               (iv)   In  the  event  of  special  hardship  circumstances  of a
                      participant whose employment is terminated (other than for
                      Cause),  including death, Disability or Retirement,  or in
                      the event of an  unforeseeable  emergency of a participant
                      still  in  service,   the  Committee   may,  in  its  sole
                      discretion,  when it finds  that a waiver  would be in the
                      best  interest of the  Company,  waive in whole or in part
                      any or all  remaining  restrictions  with  respect to such
                      participant's shares of Restricted Stock.

               (v)    Notwithstanding the foregoing, all restrictions with
                      respect to any participant's shares of Restricted Stock
                      shall lapse, on the date determined by the Committee,
                      prior to, but in no event more than sixty (60) days prior
                      to, the occurrence of any of the following events:
                      (i) dissolution or liquidation of the Company, other than
                      in conjunction with a bankruptcy of the Company or any
                      similar occurrence, (ii) any merger, consolidation,
                      acquisition, separation, reorganization, or similar
                      occurrence, where the Company will not be the surviving
                      entity, (iii) the transfer of substantially all of the
                      assets of the Company, (iv) a direct or indirect
                      acquisition or series of acquisitions of shares of stock
                      of the Company, by any person, corporation or other
                      entity, included but not limited to acquisitions by reason
                      of merger, consolidation or tender offer, which results in
                      an Ownership Change, or (v) a majority of the Board of
                      Directors ceases to be composed of individuals who are
                      Continuing Directors or any other event shall occur which
                      would be required to be reported as a change in control in
                      response to Item 6(e) of Schedule 14A of Regulation 14A
                      promulgated under the Securities Exchange Act of 1934, as
                      amended, whether or not the Company is then subject to
                      such reporting requirements.

        SECTION 8.  Deferred Stock Awards.

(a)            Administration.  Deferred Stock may be awarded either alone or in
               addition to other awards granted under the Plan. The Committee
               shall determine the officers and key employees of the Company and
               Subsidiaries to whom and the time or times at which Deferred
               Stock shall be awarded, the number of Shares of Deferred Stock to
               be awarded to any participant or group of participants, the
               duration of the period (the "Deferral Period") during which, and
               the conditions under which, receipt of the Stock will be
               deferred, and the terms and conditions of the award in addition
               to those contained in paragraph (b) of this Section.  The
               Committee may also condition the grant of Deferred Stock upon the
               attainment of specified performance goals.  The provisions of
               Deferred Stock awards need not be the same with respect to each
               recipient.

(b)            Terms and Conditions.

               (i)    Subject  to the  provisions  of this  Plan  and the  award
                      agreement,   Deferred   Stock  awards  may  not  be  sold,
                      assigned,  transferred,  pledged or  otherwise  encumbered
                      during the Deferral Period. In no event shall the Deferral
                      Period be less than one (1) year. At the expiration of the
                      Deferral  Period  (or  Elective  Deferral  Period,   where
                      applicable),  share certificates shall be delivered to the
                      participant,  or his  legal  representative,  in a  number
                      equal to the shares covered by the Deferred Stock award.

                                       9
<PAGE>

               (ii)   Amounts  equal  to  any  dividends   declared  during  the
                      Deferral  Period  with  respect  to the  number  of shares
                      covered  by a  Deferred  Stock  award  will be paid to the
                      participant   currently  or  deferred  and  deemed  to  be
                      reinvested  in  additional  Deferred  Stock  or  otherwise
                      reinvested,  all as determined at the time of the award by
                      the Committee, in its sole discretion.

               (iii)  Subject  to the  provisions  of the  award  agreement  and
                      paragraph  (b)(iv) of this Section,  upon  termination  of
                      employment for any reason during the Deferral Period for a
                      given  award,  the  Deferred  Stock in  question  shall be
                      forfeited by the participant.

               (iv)   In  the  event  of  special  hardship  circumstances  of a
                      participant whose employment is terminated (other than for
                      Cause)  including death,  Disability or Retirement,  or in
                      the event of an  unforeseeable  emergency of a participant
                      still  in  service,   the  Committee   may,  in  its  sole
                      discretion,  when it finds  that a waiver  would be in the
                      best  interest of the  Company,  waive in whole or in part
                      any or all of the remaining deferral  limitations  imposed
                      hereunder with respect to any or all of the  participant's
                      Deferred Stock.

               (v)    A  participant  may elect to further  defer receipt of the
                      award for a specified  period or until a  specified  event
                      (the "Elective Deferral Period"),  subject in each case to
                      the  Committee's   approval  and  to  such  terms  as  are
                      determined by the Committee,  all in its sole  discretion.
                      Subject to any exceptions  adopted by the Committee,  such
                      election must generally be made prior to completion of one
                      half of the Deferral Period for a Deferred Stock award (or
                      for an installment of such an award).

               (vi)   Each award shall be confirmed by, and subject to the terms
                      of, a Deferred Stock agreement executed by the Company and
                      the participant.

        SECTION 9.  Transfer, Leave of Absence, Etc.

        For purposes of the Plan, the following events shall not be deemed a
termination of employment:

(a)            a transfer of an employee from the Company to a Parent
               Corporation or Subsidiary, or from a Parent Corporation or
               Subsidiary to the Company, or from one Subsidiary to another;

(b)            a leave of  absence,  approved in writing by the  Committee,  for
               military  service or sickness,  or for any other purpose approved
               by the Company if the period of such leave does not exceed ninety
               (90) days (or such longer period as the Committee may approve, in
               its sole discretion); and

(c)            a leave of absence in excess of ninety  (90)  days,  approved  in
               writing by the  Committee,  but only if the  employee's  right to
               reemployment  is  guaranteed  either by a statute or by contract,
               and  provided  that,  in the case of any  leave of  absence,  the
               employee  returns  to work  within 30 days  after the end of such
               leave.

                                       10
<PAGE>

        SECTION 10.  Amendments and Termination.

        The Board may amend,  alter,  or discontinue the Plan, but no amendment,
alteration,  or discontinuation  shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option,  Stock  Appreciation  Right,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the  optionee's or  participant's  consent,  or (ii) which,  without the
approval of the  stockholders of the Company,  would cause the Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of
the Code, or any other regulatory requirements.

        The  Committee  may amend  the terms of any award or option  theretofore
granted,  prospectively  or  retroactively,  but, subject to Section 3 above, no
such amendment  shall impair the rights of any holder  without his consent.  The
Committee may also  substitute  new Stock Options for  previously  granted stock
options,  including  previously  granted  stock options  having higher  exercise
prices.

        SECTION 11.  Unfunded Status of Plan.

        The Plan is intended to constitute an "unfunded"  plan for incentive and
deferred  compensation.  With  respect  to  any  payments  not  yet  made  to  a
participant or optionee by the Company,  nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other  arrangements to meet the obligations  created under
the Plan to  deliver  Stock or  payments  in lieu of or with  respect  to awards
hereunder,  provided,  however,  that  the  existence  of such  trusts  or other
arrangements is consistent with the unfunded status of the Plan.

        SECTION 12.  General Provisions.

(a)            The Committee may require each person  purchasing shares pursuant
               to a Stock  Option  under the Plan to represent to and agree with
               the Company in writing that the optionee is acquiring  the shares
               without a view to distribution thereof. The certificates for such
               shares  may  include  any  legend  which  the   Committee   deems
               appropriate to reflect any restrictions on transfer.

               All  certificates  for shares of Stock  delivered  under the Plan
               pursuant  to  any  Restricted  Stock,  Deferred  Stock  or  other
               Stock-based award shall be subject to such stock-transfer  orders
               and other  restrictions as the Committee may deem advisable under
               the rules, regulations,  and other requirements of the Securities
               and Exchange Commission,  any stock exchange upon which the Stock
               is then listed,  and any applicable  federal or state  securities
               laws,  and the  Committee may cause a legend or legends to be put
               on any such  certificates to make  appropriate  reference to such
               restrictions.

(b)            Subject to paragraph (d) below,  recipients of Restricted  Stock,
               Deferred Stock and other Stock-based awards under the Plan (other
               than  Stock  Options)  are not  required  to make any  payment or
               provide consideration other than the rendering of services.

(c)            Nothing  contained  in this  Plan  shall  prevent  the  Board  of
               Directors   from  adopting   other  or  additional   compensation
               arrangements, subject to stockholder approval if such approval is
               required;   and  such   arrangements   may  be  either  generally
               applicable or applicable only in specific cases.  The adoption of
               the Plan shall not confer upon any employee of the Company or any
               Subsidiary any right to continued  employment with the Company or
               a  Subsidiary,  as the case may be, nor shall it interfere in any
               way with the right of the Company or a  Subsidiary  to  terminate
               the employment of any of its employees at any time.

                                       11
<PAGE>

(d)            Each participant shall, no later than the date as of which any
               part of the value of an award first becomes includable as
               compensation in the gross income of the participant for federal
               income tax purposes, pay to the Company, or make arrangements
               satisfactory to the Committee regarding payment of, any federal,
               state, or local taxes of any kind required by law to be withheld
               with respect to the award.  The obligations of the Company under
               the Plan shall be conditional on such payment or arrangements and
               the Company and Subsidiaries shall, to the extent permitted by
               law, have the right to deduct any such taxes from any payment of
               any kind otherwise due to the participant.  With respect to any
               award under the Plan, if the terms of such award so permit, a
               participant may elect by written notice to the Company to satisfy
               part or all of the withholding tax requirements associated with
               the award by (i) authorizing the Company to retain from the
               number of shares of Stock that would otherwise be deliverable to
               the participant, or (ii) delivering to the Company from shares of
               Stock already owned by the participant, that number of shares
               having an aggregate Fair Market Value equal to part or all of the
               tax payable by the participant under this Section.  Any such
               election shall be in accordance with, and subject to, applicable
               tax and securities laws, regulations and rulings.

(e)            At the time of grant, the Committee may provide in connection
               with any grant made under this Plan that the shares of Stock
               received as a result of such grant shall be subject to a
               repurchase right in favor of the Company, pursuant to which the
               participant shall be required to offer to the Company upon
               termination of employment for any reason any  shares that the
               participant acquired under the Plan, with the price being the
               then Fair Market Value of the Stock or, in the case of a
               termination for Cause, an amount equal to the cash consideration
               paid for the Stock, subject to such other terms and conditions as
               the Committee may specify at the time of grant.  The Committee
               may, at the time of the grant of an award under the Plan, provide
               the Company with the right to repurchase, or require the
               forfeiture of, shares of Stock acquired pursuant to the Plan by
               any participant who, at any time within two years after
               termination of employment with the Company, directly or
               indirectly competes with, or is employed by a competitor of, the
               Company.

(f)            The reinvestment of dividends in additional  Restricted Stock (or
               in Deferred  Stock or other types of Plan  awards) at the time of
               any dividend  payment shall only be  permissible if the Committee
               (or the Company's  chief  executive or chief  financial  officer)
               certifies in writing that under  Section 3 sufficient  shares are
               available  for  such  reinvestment   (taking  into  account  then
               outstanding Stock Options and other Plan awards).

        SECTION 13.  Effective Date of Plan.

        The Plan shall be  effective  on the date it is  approved  by a vote of
the holders of a majority of the Stock  present and entitled to vote at a
meeting of the Company's shareholders.



                                       12
<PAGE>


                                                                     Exhibit 5.1



                                December 2, 1999





Communications Systems, Inc.
213 South Main Street
Hector, Minnesota  55342

        Re:  Opinion of Counsel as to Legality of 1,000,000 Shares of Common
             Stock to be registered under the Securities Act of 1933

Ladies and Gentlemen:

        This opinion is furnished in connection with the registration  under the
Securities Act of 1933 on Form S-8 of 1,000,000 shares of Common Stock, $.05 par
value, of  Communications  Systems Inc. (the "Company")  offered to employees of
the Company  pursuant to the  Communications  Systems Inc.  1992 Stock Plan (the
"Plan").

        As  general  counsel  for the  Company,  we  advise  you  that it is our
opinion,  based on our familiarity  with the affairs of the Company and upon our
examination of pertinent documents, that the 1,000,000 shares of Common Stock to
be issued by the Company  under the Plan,  will,  when paid for and  issued,  be
validly issued and lawfully outstanding,  fully paid and nonassessable shares of
Common Stock of the Company.

        The  undersigned  hereby  consent to the filing of this opinion with the
Securities and Exchange  Commission as an Exhibit to the Registration  Statement
with respect to said shares of Common Stock under the Securities Act of 1933.

                                                 Very truly yours,

                                                 LINDQUIST & VENNUM P.L.L.P.

                                                 /s/ Lindquist & Vennum P.L.L.P.


<PAGE>



                                                                    Exhibit 23.2


                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this  Registration  Statement of
Communications  Systems Inc. on Form S-8 relating to the increase in  authorized
shares of common stock under the Communications Systems, Inc. 1992 Stock Plan of
our  report  dated  March 2,  1999  (March  12,  1999 as to Note 11) on the 1998
financial   statements,   appearing  in  the  Annual  Report  on  Form  10-K  of
Communications  Systems,  Inc.  for the year ended  December 31, 1998.


                                                 DELOITTE & TOUCHE LLP

                                                 /s/ Deloitte & Touche LLP


December 2, 1999
Minneapolis, Minnesota
[{"type": "S-8", "sequence": "1", "description": "COMMUNICATIONS SYSTEMS, INC. 1992 STOCK PLAN", "secsgml_size_bytes": 68306}]
{"company-data": {"conformed-name": "COMMUNICATIONS SYSTEMS INC", "cik": "0000022701", "assigned-sic": "3661", "irs-number": "410957999", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-92063", "film-number": "99768606"}, "business-address": {"street1": "213 S MAIN ST", "city": "HECTOR", "state": "MN", "zip": "55342", "phone": "3208486231"}, "mail-address": {"street1": "213 MAIN STREET", "street2": "P O BOX 777", "city": "HECTOR", "state": "MN", "zip": "55342"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                           ---------------------------

                          COMMUNICATIONS SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

         Minnesota                                              41-0957999
(State of other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

                              213 South Main Street
                             Hector, Minnesota 55342
              (Address of Principal Executive Offices and zip code)
                          -----------------------------

                          COMMUNICATIONS SYSTEMS, INC.
                                 1992 STOCK PLAN
                            (Full title of the Plan)
                           ---------------------------

                                Curtis A. Sampson
                          Communications Systems, Inc.
                              213 South Main Street
                             Hector, Minnesota 55342
                                 (320) 848-6231
                          (Name, address, including zip
                            code and telephone number
                              of agent for service)

                                    Copy to:
                                 Richard Primuth
                           Lindquist & Vennum P.L.L.P.
                                 4200 IDS Center
                              Minneapolis, MN 55402
                                 (612) 371-3211

                         CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
                               Proposed
Title of                        Maximum     Proposed
Securities         Amount      Aggregate     Maximum
to be              to be       Offering     Aggregate           Amount of
Registered      Registered(2)    Price      Offering          Registration
                               Per Share     Price                 Fee
--------------  -------------  ---------  --------------      ------------
Common Stock,     1,000,000    $12.00(1)  $12,000,000.00(1)     $3,168.00
$.05 par value

--------------------------------------------------------------------------------

(1)  Estimated  soley  for the  purpose  of  determining  the  registration  fee
     pursuant  to Rule 457(c) and (h) and based upon the average of the high and
     low  transaction  prices of the  Company's  Common Stock as reported on the
     Nasdaq  National  Market System on December 2, 1999.

(2)  400,000  shares (as adjusted for a stock split in 1993) were  registered on
     Form S-8 (File No.  33-60930) on April 12, 1993 and 500,000 were registered
     on Form S-8 (File No. 33-99566) on November 17, 1995.  1,000,000 shares are
     being registered herewith.
                  --------------------------------------------
INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
                                  BY REFERENCE

     A Registration Statement on Form S-8 (File No. 33-60930) was filed with the
Securities and Exchange  Commission on April 12, 1993 covering the  registration
of 400,000 shares (as adjusted for a stock split in 1993)  initially  authorized
for issuance under the Company's  1992 Stock Plan (the "Plan").  A filing fee of
was  paid at the time the  Registration  Statement  was  filed.  A  Registration
Statement  on Form S-8 (File No.  33-99566)  was filed with the  Securities  and
Exchange  Commission on November 17, 1995 covering the  registration  of 500,000
shares  authorized  for issuance  under the Plan. A filing fee of $2,693.97  was
paid at the time that  Registration  Statement  was filed.  Pursuant  to general
Instruction  E of Form  S-8,  this  Registration  Statement  is  being  filed to
register the additional 1,000,000 shares authorized under the Plan. An amendment
to the Plan to increase by 500,000 the number of reserved and authorized  shares
under the Plan was  authorized by the Company's  Board of Directors on March 31,
1998. This amendment was approved by the Company's shareholders on May 19, 1998.
An amendment  to the Plan to increase by another  500,000 the number of reserved
and authorized  shares under the Plan was  authorized by the Company's  Board on
April 1, 1999 and such amendment was approved by the Company's  shareholders  on
May 18, 1999. This  Registration  Statement is intended to register the 1998 and
1999  amendments  for an  aggregate  increase  of  1,000,000  additional  shares
authorized under the Plan. This Registration Statement should also be considered
a post-effective amendment to prior Registration Statements. The contents of the
prior Registration Statements are incorporated herein by reference.

PART I

         Pursuant to part I of Form S-8, the  information  required by Items 1
and 2 of Form S-8 in not filed as a part of this Registration Statement.

PART II

Item 3.  Incorporation of Documents by Reference.

         The  following   documents  filed  with  the  Securities  and  Exchange
Commission are hereby incorporated by reference:

         (a) The Annual Report of the Company on Form 10-K for the calendar year
             ended December 31, 1998.

         (b) The Quarterly  Reports of the Company on Form 10-Q for the quarters
             ended March 31, 1999, June 30, 1999 and September 30, 1999.

         (c) The Definitive Proxy Statement dated April 5, 1999 for the Annual
             Meting of Shareholders held on May 18, 1999.

         (d) The description of the Company's  Common Stock as set forth in the
             Company's  Registration  Statement on Form S-1 dated June 17, 1983
             (Registration No. 2-84100), including any amendment or report filed
             for the purpose of updating such description.

         All documents  subsequently  filed by the Company  pursuant to Sections
13(a),  13(c), 14 and 15(d) of the Securities  Exchange Act of 1934 prior to the
completion  or  termination  of this offering of shares of Common Stock shall be
deemed to be incorporated by reference in this Registration  Statement and to be
a part hereof from the date of filing of such documents.

Item 4.  Description of Securities.
Not applicable.

                                       1
Item 5. Interest of Named Experts and Counsel.

         Richard A. Primuth, Secretary of the Company, is a partner of Lindquist
&  Vennum  P.L.L.P.,  which  is the law  firm  passing  on the  validity  of the
securities issued under the Plan.

Item 6. Indemnification of Directors of Officers.

         The Company  Bylaws  provide that the  Registrant  shall  indemnify any
person  made or  threatened  to be made a party to any  threatened,  pending  or
completed  civil,   criminal,   administrative,   arbitration  or  investigative
proceeding,  including a proceeding  by or in the right of the  corporation,  by
reason of the former or present  official  capacity of the person,  provided the
person seeking indemnification meets five criteria set forth in Section 302A.521
of the Minnesota Business Corporation Act.

         The Registrant's  Bylaws also authorize the Board of Directors,  to the
extent  permitted  by  applicable  law,  to  indemnify  any person or entity not
described  in the  Bylaws  pursuant  to,  and to the  extent  described  in,  an
agreement between the Company and such person, or as otherwise determined by the
Board of Directors in its discretion.

         Section  302A.521 of the Minnesota  Business  Corporation  Act provides
that a  corporation  shall  indemnify any person made or threatened to be made a
party to a proceeding by reason of acts or omissions performed in their official
capacity as an officer,  director,  employee or agent of the corporation against
judgments, penalties, fines, including without limitation, excise taxes assessed
against such person with respect to an employee benefit plan,  settlements,  and
reasonable expenses,  including  attorneys' fees and disbursements,  incurred by
such person in connection  with the  proceeding  if, with respect to the acts or
omissions of such person  complained of in the  proceeding,  such person (i) has
not been  indemnified by another  organization or employee  benefit plan for the
same  expenses  with respect tot eh same acts or  omissions;  (ii) acted in good
faith;  (iii)  received no improper  personal  benefit and  Minnesota  Statutes,
Section  302A.255  (regarding  conflicts of interest),  if applicable,  has been
satisfied; (iv) in the case of a criminal proceeding, has no reasonable cause to
believe the conduct was  unlawful;  and (v) in the case of acts or  omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interest of the corporation,  or in the case of acts
or omissions by persons in their  capacity  for other  organization,  reasonably
believed  that  the  conduct  was  not  opposed  to the  best  interests  of the
corporation.  In addition,  Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment or reimbursement by the corporation,  upon written request,  of
reasonable expenses (including  attorneys' fees) incurred by a person in advance
of the final  disposition of a proceeding in certain  instances if a decision as
to required  indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a  designated  committee  of  the  Board,  by  special  legal  counsel,  by  the
shareholders or by a court.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing  provisions,  or  otherwise,  we have been advised that, in the
opinion of the SEC, such  indemnification  is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

Item 7.  Exemption from Registration Claimed.

         Not Applicable.

                                       2
Item 8. Exhibits.

        Exhibit

        4.1  992 Stock Plan, as amended

        5.1  Opinion of Lindquist & Vennum P.L.L.P.

        23.1 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1)

        23.2 Consent of Deloitte & Touche L.L.P., independent public accountants

        24.1 Power of Attorney (set forth on signature page hereof)

Item 9. Undertakings.

        The Company hereby undertakes:

(a) (1) To file,  during any period in which  offers or sales are being made,  a
post-effective amendment to this registration statement:

                  (i)  To include any prospectus required by section 10(a)(3) of
         the Securities Act of 1933;

                  (ii) To reflect in the  prospectus any facts or events arising
         after the  effective  date of the  registration  statement (or the most
         recent  post-effective  amendment thereof) which individually or in the
         aggregate,  represent a fundamental change in the information set forth
         in the  registration  statement.  Notwithstanding  the  foregoing,  any
         increase  or  decrease  in volume of  securities  offered (if the total
         dollar  value of  securities  offered  would not exceed  that which was
         registered) and any deviation from the low or high end of the estimated
         maximum offering range may be reflected in the form of prospectus filed
         with the Commission pursuant to Rule 424(b) under the Securities Act of
         1933 if, in the aggregate, the changes in volume and price represent no
         more than a 20%  change in the  maximum  aggregate  offering  price set
         forth in the  "Calculation of Registration  Fee" table in the effective
         registration statement; and

                  (iii) To include any material  information with respect to the
         plan of  distribution  not  previously  disclosed  in the  registration
         statement  or  any  material   change  to  such   information   in  the
         registration statement.

         (2) For  determining  liability under the Securities Act, to treat each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

         (3) To file a post-effective  amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

(b) The  Company  hereby  undertakes  that,  for  purposes  of  determining  any
liability under the Securities Act of 1933, each filing of the Company's  annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable,  each filing of an employee benefit plan's annual report
pursuant  to  Section  15(d) of the  Securities  Exchange  Act of 1934)  that is
incorporated by reference in the Registration  Statement shall be deemed to be a
new Registration  Statement relating to the securities offered therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

                                       3
(h) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to  directors,  officers,  and  controlling
persons of the small business  issuer pursuant to the foregoing  provisions,  or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action,  suit  or  proceeding)  is  asserted  by  such  director,   officer,  or
controlling person in connection with the securities being registered, the small
business  issuer will,  unless in the opinion of its counsel the matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question  whether such  indemnification  by it is against  public  policy as
expressed  in the Act and will be  governed  by the final  adjudication  of such
issue.

                                       4
SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of Hector and the State of  Minnesota on the 2nd day of
December, 1999.

                       COMMUNICATIONS SYSTEMS, INC.

                       By /s/ Curtis A. Sampson
                       Curtis A. Sampson, Chairman of the Board, President
                       and Chief Executive Officer (Principal Executive Officer)

                                POWER OF ATTORNEY

         The undersigned officers and directors of Communications  Systems, Inc.
hereby constitute and appoint Curtis A. Sampson and Paul N. Hanson, or either of
them, with power to act one without the other, our true and lawful capacities to
sign  any and  all  amendments  (including  post-effective  amendments)  to this
Registration Statement and all documents relating thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities  and Exchange  Commission,  granting unto said  attorney-in-fact  and
agent,  full power and  authority to do and perform each and every act and thing
necessary  or advisable  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming all that said  attorney-in-fact  and agent, or his  substitutes,  may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this  Registration  Statement has been signed below by the following  persons on
December 2, 1999 in the capacities indicated.

Signature                                   Title

/s/ Curtis A. Sampson                       Chairman of the Board, President,
Curtis A. Sampson                           Chief Executive Officer and Director
                                            (Principal Executive Officer)

/s/ Paul J. Anderson                        Director
Paul J. Anderson

/s/ Edwin C. Freeman                        Director
Edwin C. Freeman

/s/ Wayne E. Sampson                        Director
Wayne E. Sampson

/s/ Edward E. Strickland                    Director
Edward E. Strickland

                                       5
/s/ Joseph W. Parris                        Director
Joseph W. Parris

/s/Luella Gross Goldberg                    Director
Luella Gross Goldberg

/s/ Frederick M. Green                      Director
Frederick M. Green

/s/ Gerald D. Pint                          Director
Gerald D. Pint

/s/ Randall D. Sampson                      Director
Randall D. Sampson

                                       6
COMMUNICATIONS SYSTEMS, INC.
                                 1992 STOCK PLAN

     SECTION 1.  General Purpose of Plan; Definitions.

     The name of this plan is the Communications  Systems,  Inc. 1992 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Communications  Systems, Inc.
(the "Company") and its Subsidiaries to retain and attract  executives and other
key  employees  who  contribute  to the  Company's  success  by  their  ability,
ingenuity and industry,  and to enable such  individuals  to  participate in the
long-term  success  and  growth  of the  Company  by giving  them a  proprietary
interest in the Company.

     For purposes of the Plan, the following terms shall be defined as set forth
below:
     (a) "Board" means the Board of Directors of the Company.

     (b) "Cause" means a felony conviction of a participant or the failure of
          a participant to contest prosecution for a felony, or a  participant's
          willful misconduct or dishonesty, any of which is directly and
          materially harmful to the business or reputation of the Company.

     (c) "Code" means the Internal Revenue Code of 1986, as amended.

     (d) "Committee"  means the Committee  referred to in Section 2 of the Plan.
         If at any time no Committee  shall be in office,  then the functions of
         the Committee specified in the Plan shall be exercised by the Board.

     (e) "Company" means Communications Systems, Inc., a corporation organized
         under the laws of the State of Minnesota (or any successor
         corporation).

     (f) "Continuing Directors" means (i) individuals who on the effective date
         of the  Plan  constituted  the  Board  of  Directors  of the Company
         and  (ii)  any  new  director  who  subsequent  to  the effective  date
         of the Plan is elected or nominated  for election by a majority of the
         directors  who held such office  immediately prior to any of the events
         involving a change in  ownership or control described in Sections 5(c)
         and 7(c)(v).

     (g) "Deferred Stock" means an award made pursuant to Section 8 below of the
         right to receive Stock at the end of a specified deferral period.

     (h) "Disability" means permanent and total disability as determined by the
         Committee.

     (i) "Disinterested Director" shall have the meaning set forth in Rule
         16b-3(c)(2) as  promulgated  by  the  Securities  and  Exchange
         Commission  under the  Securities  Exchange  Act of 1934,  or any
         successor definition adopted by the Commission.

     (j) "Early Retirement" means retirement, with consent of the Committee at
         the time of retirement,  from active employment with  the  Company  and
         any  Subsidiary  or Parent  Corporation  of the Company.

     (k) "Fair Market  Value" means the value of the Stock on a given date as
         determined by the Committee in accordance  with Section 422 of the Code
         and any applicable Treasury Department regulations with respect to
         incentive stock options.

                                       1
(l) "Incentive Stock Option" means any Stock Option intended to be and
         designated as an "Incentive Stock Option" within the meaning of Section
         422 of the Code.

     (m) "Non-Qualified Stock Option" means any Stock Option that is not an
         Incentive Stock Option, and is intended to be and is designated as a
         "Non-Qualified Stock Option."

     (n) "Normal Retirement" means retirement from active employment with the
         Company and any Subsidiary or Parent Corporation of the Company on or
         after age 65.

     (o) "Ownership Change" means an "ownership change" as defined in Section
         382(g) of the Code determined without regard to Section 382(i)(3)
         of the Code.

     (p) "Parent  Corporation"  means  any  corporation  (other  than  the
         Company) in an  unbroken  chain of  corporations  ending with the
         Company if each of the corporations (other than the Company) owns
         stock  possessing 50% or more of the total combined  voting power
         of all classes of stock in one of the other  corporations  in the
         chain.

     (q) "Restricted Stock" means an award of shares of Stock that are subject
         to restrictions under Section 7 below.

     (r) "Retirement" means Normal Retirement or Early Retirement.

     (s) "Stock" means the Common Stock, $.05 par value per share, of the
         Company.

     (t) "Stock Appreciation Right" means the right pursuant to an award granted
         under Section 6 below to surrender to the Company all or a portion of a
         Stock Option in exchange for an amount equal to the difference between
         (i) the Fair Market Value, as of the date such Stock Option or such
         portion thereof is surrendered, of the shares of Stock covered  by such
         Stock Option or such portion thereof, and (ii) the aggregate exercise
         price of such Stock Option or such portion thereof.

     (u) "Stock Option" means any option to purchase shares of Stock granted
         pursuant to Section 5 below.

     (v) "Subsidiary" means any corporation (other than the Company) in an
         unbroken chain of corporations beginning with the Company if each of
         the corporations (other than the last corporation in the unbroken
         chain) owns stock  possessing  50% or more of the total combined voting
         power of all classes of stock in one of the other corporations in the
         chain.

     SECTION 2.  Administration.

     The Plan shall be  administered by the Board of Directors or by a Committee
of not less than three  Disinterested  Directors,  who shall be appointed by the
Board of  Directors  of the Company  and who shall serve at the  pleasure of the
Board. If the Plan is administered by the Board,  each member of the Board shall
be a Disinterested Director.

     The  Committee  shall  have the power and  authority  to grant to  eligible
employees,  pursuant  to the terms of the Plan:  (i) Stock  Options,  (ii) Stock
Appreciation Rights, (iii) Restricted Stock, and (iv) Deferred Stock awards.

                                       2
In particular, the Committee shall have the authority:
     (i)   to select the officers  and other key  employees of the Company and
           its Subsidiaries to whom Stock Options,  Stock  Appreciation  Rights,
           Restricted Stock and/or Deferred Stock awards may from time to time
           be granted hereunder;

     (ii)  to determine whether and to what extent Incentive Stock Options,
           Non-Qualified Stock Options,  Stock Appreciation  Rights,  Restricted
           Stock or Deferred  Stock awards, or a combination  of the  foregoing,
           are to be granted hereunder;

     (iii) to determine the number of shares to be covered by each such award
           granted hereunder;

     (iv)  to determine the terms and conditions, not inconsistent with the
           terms of the Plan, of any award granted hereunder (including, but not
           limited to, any restriction on any Stock Option or other award and/or
           the shares of Stock relating thereto); and

     (v)   to determine whether, to what extent and under what circumstances
           Stock and other amounts payable with respect  to an award under  this
           Plan shall be deferred either automatically or at the election of the
           participant.

        The Committee  shall have the authority to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable;  to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements  relating thereto);
and to otherwise  supervise the  administration  of the Plan.  The Committee may
delegate  its  authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.

        All decisions  made by the Committee  pursuant to the  provisions of the
Plan shall be final and binding on all persons,  including  the Company and Plan
participants.

        SECTION 3.   Stock Subject to Plan.

        The  total  number  of  shares  of  Stock  reserved  and  available  for
distribution  under the Plan shall be  1,900,000.  Such shares may  consist,  in
whole or in part, of authorized and unissued shares.

        Subject to paragraph (b)(iv) of Section 6 below, if any shares that have
been optioned cease to be subject to Stock Options,  or if any shares subject to
any Restricted Stock or Deferred Stock award granted  hereunder are forfeited or
such award otherwise terminates without a payment being made to the participant,
such shares shall again be available for  distribution in connection with future
awards under the Plan.

                                       3
In   the   event   of   any   merger,   reorganization,   consolidation,
recapitalization,  stock dividend, other change in corporate structure affecting
the Stock,  or spin-off or other  distribution of assets to  shareholders,  such
substitution  or  adjustment  shall be made in the  aggregate  number  of shares
reserved for issuance  under the Plan,  in the number and option price of shares
subject to  outstanding  options  granted  under the Plan,  and in the number of
shares  subject to Restricted  Stock or Deferred  Stock awards granted under the
Plan as may be  determined  to be  appropriate  by the  Committee,  in its  sole
discretion, provided that the number of shares subject to any award shall always
be a whole number.  Such  adjusted  option price shall also be used to determine
the amount  payable by the Company upon the  exercise of any Stock  Appreciation
Right associated with any Stock Option.

        SECTION 4.  Eligibility.

        Officers and other key employees of the Company and its Subsidiaries who
are responsible for or contribute to the management, growth and/or profitability
of the business of the Company and its  Subsidiaries  are eligible to be granted
Stock Options,  Stock  Appreciation  Rights,  Restricted Stock or Deferred Stock
awards under the Plan.  The optionees and  participants  under the Plan shall be
selected from time to time by the Committee, in its sole discretion,  from among
those eligible, and the Committee shall determine,  in its sole discretion,  the
number of shares covered by each award.

        SECTION 5.  Stock Options.

        Any Stock Option granted  under  the Plan  shall be in such  form as the
Committee may from time to time approve.  4. 5. The Stock Options  granted under
the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified
Stock Options.  No Incentive Stock Options shall be granted under the Plan after
March 17, 2002.

        The Committee shall have the authority to grant any optionee  Incentive
Stock Options,  Non-Qualified  Stock  Options,  or both types of options in each
case with or without Stock  Appreciation  Rights.  To the extent that any option
does not qualify as an Incentive  Stock Option,  it shall  constitute a separate
Non-Qualified Stock Option.

        Anything in the  Plan to the  contrary notwithstanding,  no term of this
Plan  relating to  Incentive  Stock  Options  shall be  interpreted,  amended or
altered,  nor shall any  discretion  or authority  granted  under the Plan be so
exercised,  so as to disqualify  either the Plan or any  Incentive  Stock Option
under  Section 422 of the Code.  The preceding  sentence  shall not preclude any
modification or amendment to an outstanding  Incentive Stock Option,  whether or
not such  modification or amendment  results in  disqualification  of such Stock
Option as an Incentive Stock Option,  provided the optionee  consents in writing
to the modification or amendment.

        Stock Options  granted  under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

(a)  Option Price. The option price per share of Stock purchasable under a Stock
     Option shall be  determined  by the Committee at the time of grant and may,
     except as provided in this paragraph, be less than the Fair Market Value of
     the Stock on the date the Stock  Option is  granted.  In the event that the
     Committee  does  not  determine  the  exercise  price  per  share  of Stock
     purchasable  under a Stock  Option,  the  exercise  price shall be the Fair
     Market Value of the Stock on the date the Stock Option is granted except as
     otherwise  required in this  paragraph.  In no event shall the Stock Option
     price per share of Stock  purchasable  under an Incentive Stock Option or a
     Non-Qualified Stock Option be less than 100% or 50%,  respectively,  of the
     Fair Market Value of the Stock on the date the Stock Option is granted.  If
     an employee  owns or is deemed to own (by reason of the  attribution  rules
     applicable  under Section 424(d) of the Code) more than 10% of the combined
     voting  power  of all  classes  of  stock  of  the  Company  or any  Parent
     Corporation or Subsidiary and an Incentive  Stock Option is granted to such
     employee,  the exercise price shall be no less than 110% of the Fair Market
     Value of the Stock on the date the Stock Option is granted.

                                       4
(b)  Option Term. The term of each Stock Option shall be fixed by the Committee,
     but no  Incentive  Stock Option  shall be  exercisable  more than ten years
     after the date the Stock Option is granted. In the event that the Committee
     does not fix the term of a Stock  Option,  the term shall be ten years from
     the date the Stock Option is granted.  Notwithstanding the foregoing, if an
     employee  owns or is deemed to own (by reason of the  attribution  rules of
     Section  424(d) of the Code) more than 10% of the combined  voting power of
     all classes of stock of the Company or any Parent Corporation or Subsidiary
     and an Incentive Stock Option is granted to such employee, the term of such
     Stock Option shall be no more than five years from the date of grant.

(c)  Exercisability. Stock Options shall be exercisable at such time or times as
     determined  by the  Committee  at or after  grant.  In the  event  that the
     Committee  does not  determine  the time at which a Stock  Option  shall be
     exercisable, such Stock Option shall be exercisable one year after the date
     of grant.  If the Committee  provides,  in its  discretion,  that any Stock
     Option is exercisable  only in  installments,  the Committee may waive such
     installment exercise provisions at any time.

(d)  Method of Exercise.  Stock  Options may be exercised in whole or in part at
     any time during the option period by giving  written  notice of exercise to
     the Company  specifying  the number of shares to be purchased.  Such notice
     shall be  accompanied by payment in full of the purchase  price,  either by
     certified or bank check, or by any other form of legal consideration deemed
     sufficient  by the  Committee and  consistent  with the Plan's  purpose and
     applicable law, including  promissory notes or a properly executed exercise
     notice together with irrevocable instructions to a broker acceptable to the
     Company  to  promptly  deliver  to the  Company  the amount of sale or loan
     proceeds to pay the exercise price. As determined by the Committee,  in its
     sole discretion, payment in full or in part may also be made in the form of
     unrestricted  Stock  already  owned by the  optionee or, in the case of the
     exercise of a  Non-Qualified  Stock  Option,  Restricted  Stock or Deferred
     Stock  subject to an award  hereunder  (based,  in each  case,  on the Fair
     Market  Value  of the  Stock  on the  date  the  option  is  exercised,  as
     determined by the Committee),  provided,  however,  that, in the case of an
     Incentive Stock Option,  the right to make a payment in the form of already
     owned shares may be authorized only at the time the option is granted,  and
     provided further that in the event payment is made in the form of shares of
     Restricted  Stock or a Deferred  Stock award,  the optionee  will receive a
     portion of the option shares in the form of, and in an amount equal to, the
     Restricted  Stock or  Deferred  Stock  award  tendered  as  payment  by the
     optionee.  If the terms of a Stock Option so permit,  an optionee may elect

                                       5
to pay all or part of the  exercise  price by having the  Company  withhold
     from the shares of Stock that would  otherwise be issued upon exercise that
     number of shares of Stock having a Fair Market Value equal to the aggregate
     exercise  price for the shares with respect to which such election is made.
     No shares of Stock shall be issued  until full  payment  therefor  has been
     made. An optionee  shall  generally  have the rights to dividends and other
     rights of a shareholder  with respect to shares  subject to the option when
     the optionee  has given  written  notice of exercise,  has paid in full for
     such shares, and, if requested,  has given the representation  described in
     paragraph (a) of Section 12.

(e)  Non-Transferability  of Options.  No Stock Option shall be  transferable by
     the  optionee  otherwise  than  by  will  or by the  laws  of  descent  and
     distribution,  and all  Stock  Options  shall be  exercisable,  during  the
     optionee's lifetime, only by the optionee.

(f)  Termination  by Death.  If an optionee's  employment by the Company and any
     Subsidiary or Parent  Corporation  terminates by reason of death, the Stock
     Option  may  thereafter  be  immediately  exercised,  to  the  extent  then
     exercisable (or on such accelerated  basis as the Committee shall determine
     at or after  grant),  by the legal  representative  of the estate or by the
     legatee of the  optionee  under the will of the  optionee,  for a period of
     three  years (or such  shorter  period as the  Committee  shall  specify at
     grant)  from the date of such death or until the  expiration  of the stated
     term of the option, whichever period is shorter.

(g)  Termination  by Reason of  Disability.  If an optionee's  employment by the
     Company and any  Subsidiary or Parent  Corporation  terminates by reason of
     Disability,  any Stock  Option  held by such  optionee  may  thereafter  be
     exercised,  to the extent it was exercisable at the time of termination due
     to  Disability  (or  on  such  accelerated  basis  as the  Committee  shall
     determine at or after  grant),  but may not be exercised  after three years
     (or such shorter  period as the Committee  shall specify at grant) from the
     date of such termination of employment or the expiration of the stated term
     of the option,  whichever period is shorter. In the event of termination of
     employment  by  reason  of  Disability,  if an  Incentive  Stock  Option is
     exercised  after the  expiration  of the  exercise  periods  that apply for
     purposes of Section 422 of the Code, the option will  thereafter be treated
     as a Non-Qualified Stock Option.

(h)  Termination  by Reason of  Retirement.  If an optionee's  employment by the
     Company and any  Subsidiary or Parent  Corporation  terminates by reason of
     Retirement,  any Stock  Option  held by such  optionee  may  thereafter  be
     exercised to the extent it was exercisable at the time of such  Retirement,
     but may not be  exercised  after  three  years (or such  shorter  period as
     Committee  shall  specify at grant)  from the date of such  termination  of
     employment or the  expiration  of the stated term of the option,  whichever
     period is shorter.  In the event of  termination of employment by reason of
     Retirement,  if an Incentive Stock Option is exercised after the expiration
     of the exercise periods that apply for purposes of Section 422 of the Code,
     the option will thereafter be treated as a Non-Qualified Stock Option.

(i)  Other  Termination.  Unless  otherwise  determined by the Committee,  if an
     optionee's   employment  by  the  Company  and  any  Subsidiary  or  Parent
     Corporation  terminates  for any reason  other than  death,  Disability  or
     Retirement,  the Stock Option shall  thereupon  terminate,  except that the
     option  may  be  exercised  to  the  extent  it  was  exercisable  at  such
     termination  for the lesser of three  months or the balance of the option's
     term if the  optionee  is  involuntarily  terminated  without  Cause by the
     Company and any Subsidiary or Parent Corporation.

                                       6
(j)  Annual Limit on Incentive  Stock  Options.  The aggregate Fair Market Value
     (determined as of the time the Stock Option is granted) of the Common Stock
     with  respect to which an  Incentive  Stock  Option  under this Plan or any
     other plan of the  Company  and any  Subsidiary  or Parent  Corporation  is
     exercisable  for the first time by an  optionee  during any  calendar  year
     shall not exceed $100,000.

        SECTION 6.  Stock Appreciation Rights.

(a)  Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
     with all or part of any Stock Option granted under the Plan. In the case of
     a Non-Qualified Stock Option, such rights may be granted either at or after
     the time of the grant of such  Option.  In the case of an  Incentive  Stock
     Option,  such  rights may be  granted  only at the time of the grant of the
     Stock Option.

     A Stock Appreciation Right or applicable portion thereof granted with
     respect to a given Stock Option  shall  terminate  and no longer be
     exercisable upon the termination or exercise of the related Stock Option,
     except that a Stock  Appreciation Right granted with respect to less than
     the full number of shares  covered by a related Stock Option shall not be
     reduced until the exercise or  termination  of the related Stock Option
     exceeds the number of shares not covered by the Stock Appreciation Right.

     A Stock  Appreciation  Right may be exercised by an optionee, in accordance
     with paragraph (b) of this Section,  by surrendering the applicable portion
     of the related Stock Option. Upon such exercise and surrender, the optionee
     shall be entitled to receive an amount  determined in the manner prescribed
     in  paragraph  (b) of  this  Section.  Stock  Options  which  have  been so
     surrendered,  in whole or in part,  shall no longer be  exercisable  to the
     extent the related Stock Appreciation Rights have been exercised.

(b)  Terms and Conditions.  Stock  Appreciation  Rights shall be subject to such
     terms and conditions,  not inconsistent with the provisions of the Plan, as
     shall be  determined  from  time to time by the  Committee,  including  the
     following:

    (i)               Stock  Appreciation  Rights shall be  exercisable  only at
                      such  time or  times  and to the  extent  that  the  Stock
                      Options  to which  they  relate  shall be  exercisable  in
                      accordance  with  the  provisions  of  Section  5 and this
                      Section of the Plan.

    (ii)              Upon  the  exercise  of a  Stock  Appreciation  Right,  an
                      optionee  shall be entitled to receive up to, but not more
                      than,  an amount in cash or shares of Stock equal in value
                      to the  excess  of the Fair  Market  Value of one share of
                      Stock over the exercise  price per share  specified in the
                      related  option  multiplied  by the  number  of  shares in
                      respect of which the Stock  Appreciation  Right shall have
                      been  exercised,  with the  Committee  having the right to
                      determine the form of payment.

    (iii)             Stock Appreciation Rights shall be transferable only when
                      and to the extent that the underlying Stock Option would
                      be transferable under Section 5 of the Plan.

    (iv)              Upon the exercise of a Stock Appreciation Right, the Stock
                      Option or part thereof to which such Stock Appreciation
                      Right is related shall be deemed to have been exercised
                      for the purpose of the limitation set forth in Section 3
                      of the Plan on the number of shares of Stock to be issued
                      under the Plan, but only to the extent of the number of
                      shares issued or issuable under the Stock Appreciation
                      Right at the time of exercise based on the value of the
                      Stock Appreciation Right at such time.

                                       7
(v)               A Stock  Appreciation  Right granted in connection with an
                      Incentive  Stock Option may be exercised  only if and when
                      the market  price of the Stock  subject  to the  Incentive
                      Stock Option exceeds the exercise price of such Option.

SECTION 7.  Restricted Stock.

(a)            Administration.  Shares of Restricted  Stock may be issued either
               alone or in addition to other awards  granted under the Plan. The
               Committee  shall  determine the officers and key employees of the
               Company and Subsidiaries to whom, and the time or times at which,
               grants of Restricted  Stock will be made, the number of shares to
               be  awarded,  the time or times  within  which such awards may be
               subject to  forfeiture,  and all other  conditions of the awards.
               The  Committee may also  condition the grant of Restricted  Stock
               upon  the  attainment  of  specified   performance   goals.   The
               provisions of  Restricted  Stock awards need not be the same with
               respect to each recipient.

(b)            Awards and Certificates. The prospective recipient of an award of
               shares of Restricted Stock shall not have any rights with respect
               to such award,  unless and until such  recipient  has executed an
               agreement evidencing the award and has delivered a fully executed
               copy thereof to the Company,  and has otherwise complied with the
               then applicable terms and conditions.

               (i)    Each  participant  shall be issued a stock  certificate in
                      respect of shares of  Restricted  Stock  awarded under the
                      Plan. Such certificate  shall be registered in the name of
                      the  participant,  and shall  bear an  appropriate  legend
                      referring  to  the  terms,  conditions,  and  restrictions
                      applicable to such award,  substantially  in the following
                      form:

                             "The  transferability  of this  certificate and the
                             shares of stock  represented  hereby are subject to
                             the terms and conditions (including  forfeiture) of
                             the  Communications  Systems,  Inc. 1992 Stock Plan
                             and  an   Agreement   entered   into   between  the
                             registered owner and Communications  Systems,  Inc.
                             Copies  of such Plan and  Agreement  are on file in
                             the offices of Communications  Systems,  Inc., P.O.
                             Box 777, Hector, MN 55342."

               (ii)   The Committee  shall  require that the stock  certificates
                      evidencing  such  shares be held in custody by the Company
                      until the  restrictions  thereon  shall have  lapsed,  and
                      that, as a condition of any  Restricted  Stock award,  the
                      participant  shall have delivered a stock power,  endorsed
                      in blank, relating to the Stock covered by such award.

(c)            Restrictions and Conditions.  The shares of Restricted Stock
               awarded pursuant to the Plan shall be subject to the following
               restrictions and conditions:

               (i)    Subject  to the  provisions  of this  Plan  and the  award
                      agreement, during a period set by the Committee commencing
                      with the date of such  award (the  "Restriction  Period"),
                      the participant shall not be permitted to sell,  transfer,
                      pledge or assign shares of Restricted  Stock awarded under
                      the Plan. In no event shall the Restriction Period be less
                      than one (1) year. Within these limits,  the Committee may
                      provide for the lapse of such restrictions in installments
                      where deemed appropriate.

               (ii)   Except as provided in paragraph (c)(i) of this Section,
                      the participant shall have, with respect to the shares of
                      Restricted Stock, all of the rights of a shareholder of
                      the Company, including the right to vote the shares and
                      the right to receive any cash dividends. The Committee, in
                      its sole discretion, may permit or require the payment of

                                       8
cash dividends to be deferred and, if the Committee so
                      determines, reinvested in additional shares of Restricted
                      Stock (to the extent shares are available under Section 3
                      and subject to paragraph (f) of Section 12).  Certificates
                      for shares of unrestricted Stock shall be delivered to the
                      grantee promptly after, and only after, the period of
                      forfeiture shall have expired without forfeiture in
                      respect of such shares of Restricted Stock.

               (iii)  Subject  to the  provisions  of the  award  agreement  and
                      paragraph  (c)(iv) of this Section,  upon  termination  of
                      employment for any reason during the  Restriction  Period,
                      all shares still subject to restriction shall be forfeited
                      by the participant.

               (iv)   In  the  event  of  special  hardship  circumstances  of a
                      participant whose employment is terminated (other than for
                      Cause),  including death, Disability or Retirement,  or in
                      the event of an  unforeseeable  emergency of a participant
                      still  in  service,   the  Committee   may,  in  its  sole
                      discretion,  when it finds  that a waiver  would be in the
                      best  interest of the  Company,  waive in whole or in part
                      any or all  remaining  restrictions  with  respect to such
                      participant's shares of Restricted Stock.

               (v)    Notwithstanding the foregoing, all restrictions with
                      respect to any participant's shares of Restricted Stock
                      shall lapse, on the date determined by the Committee,
                      prior to, but in no event more than sixty (60) days prior
                      to, the occurrence of any of the following events:
                      (i) dissolution or liquidation of the Company, other than
                      in conjunction with a bankruptcy of the Company or any
                      similar occurrence, (ii) any merger, consolidation,
                      acquisition, separation, reorganization, or similar
                      occurrence, where the Company will not be the surviving
                      entity, (iii) the transfer of substantially all of the
                      assets of the Company, (iv) a direct or indirect
                      acquisition or series of acquisitions of shares of stock
                      of the Company, by any person, corporation or other
                      entity, included but not limited to acquisitions by reason
                      of merger, consolidation or tender offer, which results in
                      an Ownership Change, or (v) a majority of the Board of
                      Directors ceases to be composed of individuals who are
                      Continuing Directors or any other event shall occur which
                      would be required to be reported as a change in control in
                      response to Item 6(e) of Schedule 14A of Regulation 14A
                      promulgated under the Securities Exchange Act of 1934, as
                      amended, whether or not the Company is then subject to
                      such reporting requirements.

        SECTION 8.  Deferred Stock Awards.

(a)            Administration.  Deferred Stock may be awarded either alone or in
               addition to other awards granted under the Plan. The Committee
               shall determine the officers and key employees of the Company and
               Subsidiaries to whom and the time or times at which Deferred
               Stock shall be awarded, the number of Shares of Deferred Stock to
               be awarded to any participant or group of participants, the
               duration of the period (the "Deferral Period") during which, and
               the conditions under which, receipt of the Stock will be
               deferred, and the terms and conditions of the award in addition
               to those contained in paragraph (b) of this Section.  The
               Committee may also condition the grant of Deferred Stock upon the
               attainment of specified performance goals.  The provisions of
               Deferred Stock awards need not be the same with respect to each
               recipient.

(b)            Terms and Conditions.

               (i)    Subject  to the  provisions  of this  Plan  and the  award
                      agreement,   Deferred   Stock  awards  may  not  be  sold,
                      assigned,  transferred,  pledged or  otherwise  encumbered
                      during the Deferral Period. In no event shall the Deferral
                      Period be less than one (1) year. At the expiration of the
                      Deferral  Period  (or  Elective  Deferral  Period,   where
                      applicable),  share certificates shall be delivered to the
                      participant,  or his  legal  representative,  in a  number
                      equal to the shares covered by the Deferred Stock award.

                                       9
(ii)   Amounts  equal  to  any  dividends   declared  during  the
                      Deferral  Period  with  respect  to the  number  of shares
                      covered  by a  Deferred  Stock  award  will be paid to the
                      participant   currently  or  deferred  and  deemed  to  be
                      reinvested  in  additional  Deferred  Stock  or  otherwise
                      reinvested,  all as determined at the time of the award by
                      the Committee, in its sole discretion.

               (iii)  Subject  to the  provisions  of the  award  agreement  and
                      paragraph  (b)(iv) of this Section,  upon  termination  of
                      employment for any reason during the Deferral Period for a
                      given  award,  the  Deferred  Stock in  question  shall be
                      forfeited by the participant.

               (iv)   In  the  event  of  special  hardship  circumstances  of a
                      participant whose employment is terminated (other than for
                      Cause)  including death,  Disability or Retirement,  or in
                      the event of an  unforeseeable  emergency of a participant
                      still  in  service,   the  Committee   may,  in  its  sole
                      discretion,  when it finds  that a waiver  would be in the
                      best  interest of the  Company,  waive in whole or in part
                      any or all of the remaining deferral  limitations  imposed
                      hereunder with respect to any or all of the  participant's
                      Deferred Stock.

               (v)    A  participant  may elect to further  defer receipt of the
                      award for a specified  period or until a  specified  event
                      (the "Elective Deferral Period"),  subject in each case to
                      the  Committee's   approval  and  to  such  terms  as  are
                      determined by the Committee,  all in its sole  discretion.
                      Subject to any exceptions  adopted by the Committee,  such
                      election must generally be made prior to completion of one
                      half of the Deferral Period for a Deferred Stock award (or
                      for an installment of such an award).

               (vi)   Each award shall be confirmed by, and subject to the terms
                      of, a Deferred Stock agreement executed by the Company and
                      the participant.

        SECTION 9.  Transfer, Leave of Absence, Etc.

        For purposes of the Plan, the following events shall not be deemed a
termination of employment:

(a)            a transfer of an employee from the Company to a Parent
               Corporation or Subsidiary, or from a Parent Corporation or
               Subsidiary to the Company, or from one Subsidiary to another;

(b)            a leave of  absence,  approved in writing by the  Committee,  for
               military  service or sickness,  or for any other purpose approved
               by the Company if the period of such leave does not exceed ninety
               (90) days (or such longer period as the Committee may approve, in
               its sole discretion); and

(c)            a leave of absence in excess of ninety  (90)  days,  approved  in
               writing by the  Committee,  but only if the  employee's  right to
               reemployment  is  guaranteed  either by a statute or by contract,
               and  provided  that,  in the case of any  leave of  absence,  the
               employee  returns  to work  within 30 days  after the end of such
               leave.

                                       10
SECTION 10.  Amendments and Termination.

        The Board may amend,  alter,  or discontinue the Plan, but no amendment,
alteration,  or discontinuation  shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option,  Stock  Appreciation  Right,
Restricted Stock, Deferred Stock or other Stock-based award theretofore granted,
without the  optionee's or  participant's  consent,  or (ii) which,  without the
approval of the  stockholders of the Company,  would cause the Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934, Section 422 of
the Code, or any other regulatory requirements.

        The  Committee  may amend  the terms of any award or option  theretofore
granted,  prospectively  or  retroactively,  but, subject to Section 3 above, no
such amendment  shall impair the rights of any holder  without his consent.  The
Committee may also  substitute  new Stock Options for  previously  granted stock
options,  including  previously  granted  stock options  having higher  exercise
prices.

        SECTION 11.  Unfunded Status of Plan.

        The Plan is intended to constitute an "unfunded"  plan for incentive and
deferred  compensation.  With  respect  to  any  payments  not  yet  made  to  a
participant or optionee by the Company,  nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other  arrangements to meet the obligations  created under
the Plan to  deliver  Stock or  payments  in lieu of or with  respect  to awards
hereunder,  provided,  however,  that  the  existence  of such  trusts  or other
arrangements is consistent with the unfunded status of the Plan.

        SECTION 12.  General Provisions.

(a)            The Committee may require each person  purchasing shares pursuant
               to a Stock  Option  under the Plan to represent to and agree with
               the Company in writing that the optionee is acquiring  the shares
               without a view to distribution thereof. The certificates for such
               shares  may  include  any  legend  which  the   Committee   deems
               appropriate to reflect any restrictions on transfer.

               All  certificates  for shares of Stock  delivered  under the Plan
               pursuant  to  any  Restricted  Stock,  Deferred  Stock  or  other
               Stock-based award shall be subject to such stock-transfer  orders
               and other  restrictions as the Committee may deem advisable under
               the rules, regulations,  and other requirements of the Securities
               and Exchange Commission,  any stock exchange upon which the Stock
               is then listed,  and any applicable  federal or state  securities
               laws,  and the  Committee may cause a legend or legends to be put
               on any such  certificates to make  appropriate  reference to such
               restrictions.

(b)            Subject to paragraph (d) below,  recipients of Restricted  Stock,
               Deferred Stock and other Stock-based awards under the Plan (other
               than  Stock  Options)  are not  required  to make any  payment or
               provide consideration other than the rendering of services.

(c)            Nothing  contained  in this  Plan  shall  prevent  the  Board  of
               Directors   from  adopting   other  or  additional   compensation
               arrangements, subject to stockholder approval if such approval is
               required;   and  such   arrangements   may  be  either  generally
               applicable or applicable only in specific cases.  The adoption of
               the Plan shall not confer upon any employee of the Company or any
               Subsidiary any right to continued  employment with the Company or
               a  Subsidiary,  as the case may be, nor shall it interfere in any
               way with the right of the Company or a  Subsidiary  to  terminate
               the employment of any of its employees at any time.

                                       11
(d)            Each participant shall, no later than the date as of which any
               part of the value of an award first becomes includable as
               compensation in the gross income of the participant for federal
               income tax purposes, pay to the Company, or make arrangements
               satisfactory to the Committee regarding payment of, any federal,
               state, or local taxes of any kind required by law to be withheld
               with respect to the award.  The obligations of the Company under
               the Plan shall be conditional on such payment or arrangements and
               the Company and Subsidiaries shall, to the extent permitted by
               law, have the right to deduct any such taxes from any payment of
               any kind otherwise due to the participant.  With respect to any
               award under the Plan, if the terms of such award so permit, a
               participant may elect by written notice to the Company to satisfy
               part or all of the withholding tax requirements associated with
               the award by (i) authorizing the Company to retain from the
               number of shares of Stock that would otherwise be deliverable to
               the participant, or (ii) delivering to the Company from shares of
               Stock already owned by the participant, that number of shares
               having an aggregate Fair Market Value equal to part or all of the
               tax payable by the participant under this Section.  Any such
               election shall be in accordance with, and subject to, applicable
               tax and securities laws, regulations and rulings.

(e)            At the time of grant, the Committee may provide in connection
               with any grant made under this Plan that the shares of Stock
               received as a result of such grant shall be subject to a
               repurchase right in favor of the Company, pursuant to which the
               participant shall be required to offer to the Company upon
               termination of employment for any reason any  shares that the
               participant acquired under the Plan, with the price being the
               then Fair Market Value of the Stock or, in the case of a
               termination for Cause, an amount equal to the cash consideration
               paid for the Stock, subject to such other terms and conditions as
               the Committee may specify at the time of grant.  The Committee
               may, at the time of the grant of an award under the Plan, provide
               the Company with the right to repurchase, or require the
               forfeiture of, shares of Stock acquired pursuant to the Plan by
               any participant who, at any time within two years after
               termination of employment with the Company, directly or
               indirectly competes with, or is employed by a competitor of, the
               Company.

(f)            The reinvestment of dividends in additional  Restricted Stock (or
               in Deferred  Stock or other types of Plan  awards) at the time of
               any dividend  payment shall only be  permissible if the Committee
               (or the Company's  chief  executive or chief  financial  officer)
               certifies in writing that under  Section 3 sufficient  shares are
               available  for  such  reinvestment   (taking  into  account  then
               outstanding Stock Options and other Plan awards).

        SECTION 13.  Effective Date of Plan.

        The Plan shall be  effective  on the date it is  approved  by a vote of
the holders of a majority of the Stock  present and entitled to vote at a
meeting of the Company's shareholders.

                                       12
Exhibit 5.1

                                December 2, 1999

Communications Systems, Inc.
213 South Main Street
Hector, Minnesota  55342

        Re:  Opinion of Counsel as to Legality of 1,000,000 Shares of Common
             Stock to be registered under the Securities Act of 1933

Ladies and Gentlemen:

        This opinion is furnished in connection with the registration  under the
Securities Act of 1933 on Form S-8 of 1,000,000 shares of Common Stock, $.05 par
value, of  Communications  Systems Inc. (the "Company")  offered to employees of
the Company  pursuant to the  Communications  Systems Inc.  1992 Stock Plan (the
"Plan").

        As  general  counsel  for the  Company,  we  advise  you  that it is our
opinion,  based on our familiarity  with the affairs of the Company and upon our
examination of pertinent documents, that the 1,000,000 shares of Common Stock to
be issued by the Company  under the Plan,  will,  when paid for and  issued,  be
validly issued and lawfully outstanding,  fully paid and nonassessable shares of
Common Stock of the Company.

        The  undersigned  hereby  consent to the filing of this opinion with the
Securities and Exchange  Commission as an Exhibit to the Registration  Statement
with respect to said shares of Common Stock under the Securities Act of 1933.

                                                 Very truly yours,

                                                 LINDQUIST & VENNUM P.L.L.P.

                                                 /s/ Lindquist & Vennum P.L.L.P.
Exhibit 23.2

                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this  Registration  Statement of
Communications  Systems Inc. on Form S-8 relating to the increase in  authorized
shares of common stock under the Communications Systems, Inc. 1992 Stock Plan of
our  report  dated  March 2,  1999  (March  12,  1999 as to Note 11) on the 1998
financial   statements,   appearing  in  the  Annual  Report  on  Form  10-K  of
Communications  Systems,  Inc.  for the year ended  December 31, 1998.

                                                 DELOITTE & TOUCHE LLP

                                                 /s/ Deloitte & Touche LLP

December 2, 1999
Minneapolis, Minnesota