# **EXHIBIT 10.2**

**SIXTHAMENDMENT TO CREDIT AGREEMENT**

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “**Amendment**”) is effective as of April 28,2006, by and between NORTECH SYSTEMS INCORPORATED, a Minnesota corporation (“**Borrower**”), and WELLS FARGO BANK, NATIONALASSOCIATION (“**Lender**”).

**RECITALS**

A.            Borrower is currently indebted to Lender pursuant to theterms and conditions of that certain Amended and Restated Credit Agreementbetween Borrower and Lender dated as of December 30, 2002, as amended from timeto time (“**Credit Agreement**”).

B.            Lender and Borrower have agreed to certain changes in theterms and conditions set forth in the Credit Agreement and have agreed to amendthe Credit Agreement to reflect said changes.

NOW, THEREFORE, for valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties heretoagree that the Credit Agreement shall be amended as follows:

1.             **Defined Terms**.Capitalized terms used in this Amendment that are defined in the CreditAgreements shall have the same meanings as defined therein, unless otherwisedefined herein.

In addition, Section 1.1of the Credit Agreement is amended by adding or amending, as the case may be,the following definitions:

“**Borrowing Base**” means at any time thelesser of:

(a)           the Maximum Line; or

(b)           subject to change from time to timein the Lender’s sole discretion, the sum of:

(i)            80% of Eligible Accounts; plus

(ii)                                  the lesser of (aa) 35% of EligibleInventory constituting raw material, plus 40% of Eligible Inventory constitutingfinished goods, or (bb) $3,000,000.

Subparagraph (xiii) ofthe definition for “**Eligible Accounts**”is hereby deleted in its entirety and replaced with the following:

(xiii)         Accounts owed by an account debtor,regardless of whether otherwise eligible, if 10% (or 25% with respect toAccounts owing by General Electric (“**GE**”)or any GE affiliate or subsidiary of GE or by Semitool, Inc.) or more of thetotal amount due under Accounts from such debtor is ineligible underclauses (i), (ii) or (xi) above; and

Subparagraph (ix) of thedefinition for “**Eligible Inventory**”is hereby deleted in its entirety and replaced with the following:

(ix)           All Inventory at any location otherthan the premises owned by the Borrower in Bemidji, MN and Fairmont, MN; and

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“**Floating Rate**” means:

(a)                                  With respect to the Revolving Note, anannual interest rate equal to the Base Rate minus one-quarter of one percent(0.25%), which interest rate shall change when and as the Base Rate changes;

(b)                                 With respect to the Equipment Term Note,an annual interest rate equal to the Base Rate, which interest rate shallchange when and as the Base Rate changes; and

(c)                                  With respect to the Real Estate TermNote, an annual interest rate equal to the Base Rate, which interest rate shallchange when and as the Base Rate changes;

“**Maturity Date**” means April 30, 2008 for theRevolving Note, February 5, 2007 for the Equipment Term Note and July 31, 2011for the Real Estate Term Note.

“**Maximum Line**” means $10,000,000 unless saidamount is reduced pursuant to Section 2.14, in which event it means suchlower amount.

2.             **Amended Revolving Note**.  In conjunction with this Amendment, Borrowershall execute and deliver that certain Amended and Restated Revolving Note ofeven date herewith made payable to the order of the Lender in the originalprincipal amount of $10,000,000 (as hereinafter amended, modified, supplementedor replaced, the “**Amended Revolving Note**”).  All references to the Revolving Notecontained in the Credit Agreement shall refer to the Amended Revolving Note.

3.             **Amended Real EstateTerm Note**.  In conjunctionwith this Amendment, Borrower shall execute and deliver that certain Amendedand Restated Real Estate Term Note of even date herewith made payable to theorder of the Lender in the original principal amount of $2,500,000 (ashereinafter amended, modified, supplemented or replaced, the “**Amended Real Estate Term Note**”).  All references to the Real Estate Term Notecontained in the Credit Agreement shall refer to the Amended Real Estate TermNote.  The Borrower acknowledges andagrees that as of April 28, 2006, the outstanding principal balance of the RealEstate Term Note is $1,805,555.50.

4.             **FinancialCovenants. **Subsections 6.2(b)and (c) of the Credit Agreement are hereby deleted in their entirety andrestated as follows:

### (b)           **Minimum Tangible Net Worth**.The Borrower will on a consolidated basis maintain its Tangible Net Worth atand as of each fiscal quarter end at an amount not less than $15,000,000.

### (c)           **Maximum Debt to TangibleNet Worth Ratio**. The Borrower will on a consolidated basis maintainits Debt to Tangible Net Worth ratio, determined as at the end of each quarter,at not more than 2.00 to 1.00.

5.             **ComplianceCertificate. **The borrowerfurther agrees that the Compliance Certificate attached to the Credit Agreementas Exhibit B is amended in its entirety and replaced by the ComplianceCertificate attached as ***ExhibitB*** hereto.

6.             **Amendment Fee**.The Borrower shall pay the Lender as of the date hereof a fully earned,non-refundable fee in the amount of $2,500.00 in consideration of the Lender’sexecution and delivery of this Amendment.

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7.             **ConditionsPrecedent. **This Amendmentshall be effective when the Lender shall have received an executed originalhereof together with the following:

(a)           Amended Revolving Note executed bythe Borrower;

(b)           First Amendment to Mortgage executedby the Borrower;

(c)           Amended Real Estate Term Note;

(d)           Payment of the fee described inParagraph 6 above; and

(e)           Such other documents as requested bythe Lender.

8.             **No Other Changes. **Except as specifically providedherein, all terms and conditions of the Credit Agreement remain in full forceand effect, without waiver or modification. This Amendment and the Credit Agreement shall be read together, as onedocument.

9.             **Representations andWarranties. **Borrower herebyremakes all representations and warranties contained in the Credit Agreementand reaffirms all covenants set forth therein. Borrower further certifies that as of the date of this Amendment thereexists no Event of Default as defined in the Credit Agreement, nor anycondition, act or event which with the giving of notice or the passage of timeor both would constitute any such Event of Default.

10.           **References**.All references in the Credit Agreement to “this Agreement” shall be deemed torefer to the Credit Agreement as amended hereby; and any and all references inthe Security Documents to the Credit Agreement shall be deemed to refer to theCredit Agreement as amended hereby.

11.           **NoWaiver**. Unless otherwise provided for herein, the execution of this Amendment andacceptance of any documents related hereto shall not be deemed to be a waiverof any Default or Event of Default undereither of the Credit Agreements or breach, default or event of default underany Security Document or other document held by the Lender, whether or notknown to the Lender and whether or not existing on the date of this Amendment.

12.           **Release**.The Borrower hereby absolutely and unconditionally releases and foreverdischarges the Lender, and any and all participants, parent corporations,subsidiary corporations, affiliated corporations, insurers, indemnitors,successors and assigns thereof, together with all of the present and formerdirectors, officers, agents and employees of any of the foregoing, from any andall claims, demands or causes of action of any kind, nature or description,whether arising in law or equity or upon contract or tort or under any state orfederal law or otherwise, which the Borrower has had, now has or has made claimto have against any such person for or by reason of any act, omission, matter,cause or thing whatsoever arising from the beginning of time to and includingthe date of this Amendment, whether such claims, demands and causes of actionare matured or unmatured or known or unknown.

13.           **Costsand Expenses**. The Borrower hereby reaffirms its agreement under theCredit Agreements to pay or reimburse the Lender on demand for all costs andexpenses incurred by the Lender in connection with the Loan Documents, includingwithout limitation all reasonable fees and disbursements of legal counsel.Without limiting the generality of the foregoing, the Borrower specificallyagrees to pay all fees and disbursements of counsel to the Lender for theservices performed by such counsel in connection with the preparation of thisAmendment and the documents and instruments incidental hereto. The Borrowerhereby agrees that the Lender may, at any time or from time to time in its solediscretion and without further authorization by the Borrower, make a loan tothe 

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Borrower under the Credit Agreements, or apply theproceeds of any loan, for the purpose of paying any such fees, disbursements,costs and expenses.

14.           **Miscellaneous**.This Amendment may be executed in any number of counterparts, each of whichwhen so executed and delivered shall be deemed an original and all of whichcounterparts, taken together, shall constitute one and the same instrument.

 

IN WITNESSWHEREOF, the parties hereto have caused this Sixth Amendment to be executed asof the day and year first written above.
| NORTECH SYSTEMS INCORPORATED           |                         |     | WELLS FARGO BANK,   |                 |                    |
|----------------------------------------|------------------------------|----------|---------------------|----------------------|-------------------------|
|                                   |                         |     |                | NATIONAL ASSOCIATION |                    |   |
|                                   |                         |     |                |                 |                    |   |
| By:                                    | /s/ *Richard G. Wasielewski* | * * | * *            | By:                  | /s/ *Mark T. Lundquist* | * * | * * |
| Name:                                  | Richard G. Wasielewski       |     |                |                 | Mark T. Lundquist       |   |   |
| Its Chief  Financial Officer/Treasurer |                         |     | Its Vice  President |                 |                    |

 

 

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Exhibit B toAmended and Restated Credit and Security Agreement

**ComplianceCertificate**
| To:      |   | Mark T. Lundquist                                                                                                                                                                                |
|----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   | Wells Fargo  Bank, N.A.                                                                                                                                                                          |
| Date:    |   |                                ,  200 |
| Subject: |   | Nortech Systems, Incorporated                                                                                                                                                                    |
|     |   | Financial  Statements                                                                                                                                                                            |

##  

## In accordance with our Amended and RestatedCredit and Security Agreement dated as of December 30, 2002 (the “**Credit Agreement**”), attached arethe financial statements of Nortech Systems, Incorporated (the “**Borrower**”) as of andfor               ,200     (the “**Reporting Date**”)and the year-to-date period then ended (the “**CurrentFinancials**”). All terms used in this certificate have themeanings given in the Credit Agreement.

## As of each quarterly reporting period, I certify that the CurrentFinancials have been prepared in accordance with GAAP, subject to year-endaudit adjustments, and fairly present the Borrower’s financial condition as ofthe date thereof.

Events of Default.(Check one):

o            The undersigned does not haveknowledge of the occurrence of a Default or Event of Default under the CreditAgreement except as previously reported in writing to the Lender.

o            The undersigned has knowledge of theoccurrence of a Default or Event of Default under the Credit Agreement notpreviously reported in writing to the Lender and attached hereto is a statementof the facts with respect to thereto. The Borrower acknowledges that pursuantto Section 2.10(d) of the Credit Agreement, the Lender may impose the DefaultRate at any time during the resulting Default Period.

Financial Covenants.I further hereby certify as follows:

1.                                       MinimumDebt Service Coverage Ratio. Section 6.2(a) of the Credit Agreement.

Required Ratio: 1.50 to 1.00 as of the end of each fiscal quarter.

As of the Reporting Date, Borrower’s quarterly consolidated DebtService Coverage Ratio (calculated as shown on attached work sheet) was         to 1.00 .

2.                                       MinimumTangible Net Worth. Section 6.2(b) of the Credit Agreement.

### Required Covenant: $15,000,000 as of the end of each fiscal quarter.

As of the Reporting Date, Borrower’s consolidated Tangible Net Worthwas $                    .

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3.             Maximum Debt toTangible Net Worth Ratio. Section 6.2(c) of the Credit Agreement.

### Required Ratio: 2.00 to 1.00 as of the end ofeach fiscal quarter.

### As of theReporting Date, Borrower’s quarterly consolidated Debt Service Coverage Ratio(calculated as shown on attached work sheet) was         to 1.00.

### 4.             MinimumNet Income.  Section 6.2(d) of theCredit Agreement.

### RequiredCovenant: the greater of (i) $0 or (ii) the sum of the Borrower’s principalpayments on allindebtedness for borrowed money (including capital lease obligations),less depreciation and amortization, determined quarterly on a rolling fourquarter basis. The Borrower’s consolidated Net Income for the year-to-date period ending onthe Reporting Date was $                       .

### 5.             CapitalExpenditures. Section 6.2(e) of the Credit Agreement.

### Required Covenant: No more than $2,000,000 inaggregate per fiscal year.

### As of theReporting Date, Borrower’s consolidated year-to-date capital expenditures was $                     .

### 6.             WorkingCapital. Section 6.2(f) of the Credit Agreement.

### Required Covenant: $8,000,000 as of the endof each fiscal quarter.

### As of theReporting Date, Borrower’s Working Capital was $                     .

## Attached to are all relevant facts inreasonable detail to evidence, and the computations of the financial covenantsreferred to above. These computations were made in accordance with GAAP.

|        | NORTECH SYSTEMS,  INCORPORATED         |
|--------|----------------------------------------|
|   |                                   |   |
|   | By                                     |   |
|   |                                   | Name: Richard G. Wasielewski |
|   | Its Chief  Financial Officer/Treasurer |

 

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