Document:

EXHIBIT 10.2

SIXTH
AMENDMENT 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, NATIONAL
ASSOCIATION (“Lender”).

RECITALS

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

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

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

1.             Defined Terms.
Capitalized terms used in this Amendment that are defined in the Credit
Agreements shall have the same meanings as defined therein, unless otherwise
defined herein.

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

“Borrowing Base” means at any time the
lesser of:

(a)           the Maximum Line; or

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

(i)            80% of Eligible Accounts; plus

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

Subparagraph (xiii) of
the 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 to
Accounts owing by General Electric (“GE”)
or any GE affiliate or subsidiary of GE or by Semitool, Inc.) or more of the
total amount due under Accounts from such debtor is ineligible under
clauses (i), (ii) or (xi) above; and

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

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

 74
 

“Floating Rate” means:

(a)                                  With respect to the Revolving Note, an
annual 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 shall
change when and as the Base Rate changes; and

(c)                                  With respect to the Real Estate Term
Note, an annual interest rate equal to the Base Rate, which interest rate shall
change when and as the Base Rate changes;

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

“Maximum Line” means $10,000,000 unless said
amount is reduced pursuant to Section 2.14, in which event it means such
lower amount.

2.             Amended Revolving Note.  In conjunction with this Amendment, Borrower
shall execute and deliver that certain Amended and Restated Revolving Note of
even date herewith made payable to the order of the Lender in the original
principal amount of $10,000,000 (as hereinafter amended, modified, supplemented
or replaced, the “Amended Revolving Note”).  All references to the Revolving Note
contained in the Credit Agreement shall refer to the Amended Revolving Note.

3.             Amended Real Estate
Term Note.  In conjunction
with this Amendment, Borrower shall execute and deliver that certain Amended
and Restated Real Estate Term Note of even date herewith made payable to the
order of the Lender in the original principal amount of $2,500,000 (as
hereinafter amended, modified, supplemented or replaced, the “Amended Real Estate Term Note”).  All references to the Real Estate Term Note
contained in the Credit Agreement shall refer to the Amended Real Estate Term
Note.  The Borrower acknowledges and
agrees that as of April 28, 2006, the outstanding principal balance of the Real
Estate Term Note is $1,805,555.50.

4.             Financial
Covenants.  Subsections 6.2(b)
and (c) of the Credit Agreement are hereby deleted in their entirety and
restated as follows:

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

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

5.             Compliance
Certificate.  The borrower
further agrees that the Compliance Certificate attached to the Credit Agreement
as Exhibit B is amended in its entirety and replaced by the Compliance
Certificate attached as Exhibit
B 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’s
execution and delivery of this Amendment.

 75
 

7.             Conditions
Precedent.  This Amendment
shall be effective when the Lender shall have received an executed original
hereof together with the following:

(a)           Amended Revolving Note executed by
the Borrower;

(b)           First Amendment to Mortgage executed
by the Borrower;

(c)           Amended Real Estate Term Note;

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

(e)           Such other documents as requested by
the Lender.

8.             No Other Changes.  Except as specifically provided
herein, all terms and conditions of the Credit Agreement remain in full force
and effect, without waiver or modification. 
This Amendment and the Credit Agreement shall be read together, as one
document.

9.             Representations and
Warranties.  Borrower hereby
remakes all representations and warranties contained in the Credit Agreement
and reaffirms all covenants set forth therein. 
Borrower further certifies that as of the date of this Amendment there
exists no Event of Default as defined in the Credit Agreement, nor any
condition, act or event which with the giving of notice or the passage of time
or both would constitute any such Event of Default.

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

11.           No
Waiver. Unless otherwise provided for herein, the execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver
of any Default or Event of Default under
either of the Credit Agreements or breach, default or event of default under
any Security Document or other document held by the Lender, whether or not
known to the Lender and whether or not existing on the date of this Amendment.

12.           Release.
The Borrower hereby absolutely and unconditionally releases and forever
discharges 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 former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made claim
to 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 including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

13.           Costs
and Expenses. The Borrower hereby reaffirms its agreement under the
Credit Agreements to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to
the 

 76
 

Borrower under the Credit Agreements, or apply the
proceeds 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 which
when so executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.

 

IN WITNESS
WHEREOF, the parties hereto have caused this Sixth Amendment to be executed as
of 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

  	
   

  	
   

  

 

 

 77
 

Exhibit B to
Amended and Restated Credit and Security Agreement

Compliance
Certificate

	
  To:

  	
   

  	
  Mark T. Lundquist

  
	
   

  	
   

  	
  Wells Fargo
  Bank, N.A.

  
	
  Date:

  	
   

  	
                                 ,
  200

  
	
  Subject:

  	
   

  	
  Nortech Systems, Incorporated

  
	
   

  	
   

  	
  Financial
  Statements

  

 

In accordance with our Amended and Restated
Credit and Security Agreement dated as of December 30, 2002 (the “Credit Agreement”), attached are
the financial statements of Nortech Systems, Incorporated (the “Borrower”) as of and
for               ,
200     (the “Reporting Date”)
and the year-to-date period then ended (the “Current
Financials”). All terms used in this certificate have the
meanings given in the Credit Agreement.

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

Events of Default.
(Check one):

o            The undersigned does not have
knowledge of the occurrence of a Default or Event of Default under the Credit
Agreement except as previously reported in writing to the Lender.

o            The undersigned has knowledge of the
occurrence of a Default or Event of Default under the Credit Agreement not
previously reported in writing to the Lender and attached hereto is a statement
of the facts with respect to thereto. The Borrower acknowledges that pursuant
to Section 2.10(d) of the Credit Agreement, the Lender may impose the Default
Rate at any time during the resulting Default Period.

Financial Covenants.
I further hereby certify as follows:

1.                                       Minimum
Debt 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 Debt
Service Coverage Ratio (calculated as shown on attached work sheet) was         
to 1.00 .

2.                                       Minimum
Tangible 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 Worth
was $                    .

 78
 

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

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

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

4.             Minimum
Net Income.  Section 6.2(d) of the
Credit Agreement.

Required
Covenant: the greater of (i) $0 or (ii) the sum of the Borrower’s principal
payments on all
indebtedness for borrowed money (including capital lease obligations),
less depreciation and amortization, determined quarterly on a rolling four
quarter basis. 

The Borrower’s consolidated Net Income for the year-to-date period ending on
the Reporting Date was $                       .

5.             Capital
Expenditures. Section 6.2(e) of the Credit Agreement.

Required Covenant: No more than $2,000,000 in
aggregate per fiscal year.

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

6.             Working
Capital. Section 6.2(f) of the Credit Agreement.

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

As of the
Reporting Date, Borrower’s Working Capital was $                     .

Attached to are all relevant facts in
reasonable detail to evidence, and the computations of the financial covenants
referred to above. These computations were made in accordance with GAAP.

	
  

  	
  NORTECH SYSTEMS,
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
   

  
	
   

  	
   

  	
  Name: Richard G. Wasielewski

  
	
   

  	
  Its Chief
  Financial Officer/Treasurer

  

 

 79EXHIBIT 10.3

SEVENTH AMENDMENT TO CREDIT
AGREEMENT

THIS SEVENTH AMENDMENT TO
CREDIT AGREEMENT (this “Amendment”)
is effective as of February 2, 2007, by and between NORTECH SYSTEMS
INCORPORATED, a Minnesota corporation (“Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

RECITALS

C.            Borrower is currently indebted to
Lender pursuant to the terms and conditions of that certain Amended and
Restated Credit Agreement between Borrower and Lender dated on or about
December 30, 2002, as amended from time to time (“Credit Agreement”).

D.            Lender and Borrower have agreed to
certain changes in the terms and conditions set forth in the Credit Agreement
and have agreed to amend the Credit Agreement to reflect said changes.

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

15.           Defined
Terms. Capitalized terms used in this Amendment that are defined in
the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein.

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

“Base LIBOR” means the rate per annum for United States
dollar deposits quoted by Lender as the Inter-Bank Market Offered Rate, with
the understanding that such rate is quoted by Lender for the purpose of
calculating effective rates of interest for loans making reference thereto, on
the first day of a Fixed Rate Term for delivery of funds on said date for a
period of time approximately equal to the number of days in such Fixed Rate
Term and in an amount approximately equal to the principal amount to which such
Fixed Rate Term applies.  Borrower
understands and agrees that Lender may base its quotation of the Inter-Bank
Market Offered Rate upon such offers or other market indicators of the
Inter-Bank Market as Lender in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

“Borrowing Base” means at
any time the lesser of:

(a)           the Maximum Line; or

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

(i)            80% of Eligible
Accounts; plus

(ii)                                  the lesser of
(aa) 35% of Eligible Inventory constituting raw material, plus 40% of Eligible
Inventory constituting finished goods, or (bb) $5,000,000.

“Business Day” means any day except a Saturday, Sunday or any
other day on which commercial banks in Minnesota are authorized or required by
law to close.

 80
 

Subparagraph (xiii) of the 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 to
Accounts owing by General Electric (“GE”)
or any GE affiliate or subsidiary of GE or by Semitool, Inc. or Northrop
Grumman) or more of the total amount due under Accounts from such debtor is
ineligible under clauses (i), (ii) or (xi) above; and

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

(ix)           All Inventory at any location other
than the premises owned by the Borrower in Bemidji, Minnesota, Fairmont,
Minnesota and Garner, Iowa; and

“Existing  Real Estate Term Note”
means that certain Real Estate Term Note dated April 28, 2006 made payable by
the Borrower to the order of the Lender in the original principal amount of
$2,500,000.

“Fixed Rate Term” means a period commencing on a Business Day
and continuing for one (1) day.  If any
Fixed Rate Term would end on a day which is not a Business Day, then such Fixed
Rate Term shall be extended to the next succeeding Business Day.

“Floating Rate”  shall mean an annual interest rate equal to
the Base Rate, which interest rate shall change when and as the Base Rate
changes;

“LIBOR” means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the following
formula:

	
  

  	
  LIBOR Rate =

  	
  Base LIBOR

  	
   

  
	
   

  	
   

  	
  100% - LIBOR
  Reserve Percentage

  	
   

  

 

“Maturity Date” means
April 30, 2009 for the Revolving Note, February 5, 2007 for the Equipment Term
Note and May 31, 2012 for the Real Estate Term Note.

“Maximum Line” means
$15,000,000 unless said amount is reduced pursuant to Section 2.14, in
which event it means such lower amount.

“Real Estate Term Note” means that certain Real Estate Term
Note dated February     , 2007 made payable by the Borrower
to the order of the Lender in the original principal amount of $3,348,750 and
any note or notes issued in substitution therefore.

“Total Funded Debt” shall mean all interest-bearing
Indebtedness of Borrower, including, without limitation, any Capital Lease obligations.

16.           Amended
Revolving Note.  In
conjunction with this Amendment, Borrower shall execute and deliver that
certain Amended and Restated Revolving Note of even date herewith made payable
to the order of the Lender in the original principal amount of $15,000,000 (as
hereinafter amended, modified, supplemented or replaced, the “Amended Revolving Note”).  All references to the “Revolving Note”
contained in the Credit Agreement shall refer to the Amended Revolving Note.

17.           Term
Advances.  The Borrower acknowledges
and agrees that as of the date hereof, the outstanding principal balance of the
Existing Real Estate Term Note is $1,680,555.49.  In conjunction 

 81
 

with this Amendment,
Borrower has requested the Lender to, among other things, extend the maturity
date of the Existing Real Estate Note and to make an additional Term Advance to
the Borrower in the amount of $1,668,194.51 (the “Additional
Term Advance”), the proceeds of which are to be used by the Borrower
to fund a portion of the purchase price to be paid by the Borrower in
connection with the Suntron Acquisition (as hereinafter defined).  Subject to the terms and conditions set forth
in Section 10 below, the Lender shall make the Additional Term Advance to the
Borrower.  On the date hereof, the Borrower
shall execute and deliver to Lender that certain Amended and Restated Real
Estate Term Note of even date herewith made payable to the order of the Lender
in the original principal amount of $3,348,750 (as hereinafter amended,
modified, supplemented or replaced, the “Amended
Real Estate Term Note”), which Note shall evidence the repayment of
the Additional Term Advance and has been issued in replacement of and
substitution for, but not in repayment or satisfaction of the Existing Real
Estate Note.  All references to the Real
Estate Term Note contained in the Credit Agreement shall hereinafter refer to
the Amended Real Estate Term Note.

18.           Interest Rates.  Section 2.11(a) and
(b) of the Credit Agreement are hereby deleted in their entirety and the following
shall be substituted therefore:

(a)  Revolving
Note and Real Estate Term Note.  Except
as provided in Subsections  2.11
(d) and (g) below, the principal amount of each Advance evidenced by the
Revolving Note and the Real Estate Term Note shall bear interest at a floating
per annum rate of interest equal to LIBOR plus the applicable “Margin” as set
forth in Subsection 2.11(b) below (the “Daily
LIBOR Rate”); provided
however, that from the period of February 2, 2007 thru and
including February 2, 2009, principal evidenced by the Real Estate Term Note
shall accrue interest at a fixed, per annum rate of interest equal to Libor
rate plus 3.0 percent (8.35%).  Each
change in the Daily LIBOR Rate shall become effective on the date that (i) each
LIBOR change is announced by the Lender, and (ii) as and when the applicable
Margin changes in accordance with Subsection 2.11(b) below.  In the event Lender shall determine that
adequate and reasonable methods do not exist for ascertaining LIBOR, Lender
shall promptly provide notice of such determination to Borrower (which shall be
conclusive and binding on Borrower).  In
such event, the interest rate accruing on principal evidenced by each of the
Revolving Note and the Real Estate Term Note shall be automatically be modified
to accrue at the per annum rate equal to the Floating Rate.

(b)  Margins. 
The Margins through and including the first adjustment occurring as
specified below shall be two and three quarters of one percent (2.75%) for
Revolving Advances.  The Margins shall be
adjusted each fiscal quarter on the basis of the Total Funded Debt to EBITDA
Ratio of the Borrower as of the end of the previous fiscal quarter, in
accordance with the following table:

	
  

  	
   

  	
  Margins

  	
   

  
	
  FINANCIAL TEST

  	
   

  	
  Revolving Note

  	
   

  	
  Real Estate Term Note

  	
   

  
	
  (i) Total Funded Debt

  to EBITDA is

  determined by the

  Lender to be ≤ 1.75.

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii) Total Funded

  Debt to EBITDA is

  determined by the

  Lender to be > 1.75

  and ≤ 2.50.

  	
   

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii) Total Funded

  Debt to EBITDA is

  determined by the

  Lender to be > 2.50

  and ≤ 3.00.

  	
   

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)
  Total Funded

  Debt to EBITDA is

  determined by the

  Lender to be > 3.00.

  	
   

  	
  2.75

  	
  %

  	
  3.00

  	
  %

  

 

 82
 

Reductions and increases in the Margins will be
made following receipt of the Borrower’s financial statements required under
Section 6.1.  Each Margin change shall
become effective on the
first calendar day of the month following the month of receipt by the Lender of
the Borrower’s most recent financial statements. 
Notwithstanding the foregoing, (i) if the Borrower fails to deliver any
financial statements as required under Section 6.1, the Lender may, following
notice to the Borrower, increase any Margin to the highest Margin set forth
above, in addition to imposing
the Default Rate applicable under the terms of this Agreement, and (ii) no
reduction in any Margin will be made if a Default Period exists at the time
that such reduction would otherwise be made.

If amended or restated financial statements change previously calculated
Margins, the Lender may reduce or increase the Margins from the date of receipt
of such amended or restated financial statements, to the beginning of the
appropriate fiscal quarter to which the restated statements relate or to the
beginning of the fiscal quarter in which any Event of Default has occurred, as
the Lender in its sole discretion deems appropriate.

19.           Financial
Covenants.  Section 6.2 of the
Credit Agreement is hereby deleted in its entirety and restated as follows:

(a)
          Minimum Debt Service Coverage Ratio.
The Borrower will maintain, during each period described below, its Debt
Service Coverage Ratio, determined on a consolidated basis as at the end of
each fiscal quarter on a rolling four quarter basis, at not less than the ratio
set forth opposite such period:

	
  Quarter Ended

  	
   

  	
  Minimum Debt Service 

  Coverage Ratio

  	
   

  
	
  Each fiscal quarter up to and including 9/30/07

  	
   

  	
  1.25 to 1.00

  	
   

  
	
  12/31/07 and thereafter

  	
   

  	
  1.50 to 1.00

  	
   

  

 

(b)
          Maximum Total Funded Debt to EBITDA Ratio.
The Borrower will maintain, during each period described below, its ratio of
Total Funded Debt to EBITDA, determined on a consolidated basis as at the end
of each fiscal quarter on a rolling four quarter basis, at not more than the
ratio set forth opposite such period:

	
  Quarter Ended

  	
   

  	
  Total Funded Debt to EBITDA

  Ratio

  	
   

  
	
  Each fiscal
  quarter up to and including 9/30/07

  	
   

  	
  4.25 to 1.00

  	
   

  
	
  12/31/07 to  and including 6/30/2008

  	
   

  	
  3.50 to 1.00

  	
   

  
	
  9/30/08 and thereafter

  	
   

  	
  3.00 to 1.00

  	
   

  

 

 83
 

(c)           Minimum
Net Income. The Borrower will achieve Net Income determined on a
consolidated basis as at the end of each fiscal quarter on a rolling four
quarter basis of not less than $1.00.

(d)
          Capital Expenditures. Except to the
extent reasonably necessary to complete the Suntron Acquisition, the Borrower
will not incur or contract to incur Capital Expenditures of more than
$3,000,000 in the aggregate during any fiscal year without the lenders written
approval for capital items, including without limitation for new building and
building expansion projects, new business acquisition and or major unplanned
equipment projects.

(e)           Working
Capital.  The Borrower will maintain, during each
period described below, determined as at the end of each fiscal quarter, Working
Capital of not less than $10,000,000.

20.           Indebtedness.  Section 6.4 of the Credit Agreement is hereby
amended to add the following subsection (d) as Permitted Indebtedness:

(d)           Indebtedness for all leases assumed
under the Suntron Acquisition.

21.           Compliance
Certificate.  The borrower
further agrees that the Compliance Certificate attached to the Credit Agreement
as Exhibit B is amended in its entirety and replaced by the Compliance
Certificate attached as Exhibit
B hereto.

22.           Suntron Asset Acquisition.  On or about the date hereof, the Borrower has
entered into the certain [Asset Purchase Agreement]
with Suntron-Iowa, Inc., a Delaware corporation (“Suntron”),
pursuant to which the Borrower intends to acquire substantially all of the
assets and assume certain liabilities of Suntron as specifically provided in
the form of such agreement provided by the Borrower to the Lender (the “Suntron Acquisition”). 
The Lender hereby consents to such transactions and waives any
restriction thereto as set forth in Sections 6.4 and 6.19 of the Credit
Agreement, but does not waive Borrower’s required compliance with any other
terms and provisions under the Credit Agreement and related Loan Documents,
except as expressly modified by this Seventh Amendment.  The Lender further agrees that the Borrower
may obtain a Revolving Advance of up to $5,000,000 for funding all or part of
the purchase price for the assets acquired in the Suntron Acquisition.

23.           Amendment
Fee. The Borrower shall pay the Lender as of the date hereof a fully
earned, non-refundable fee in the amount of $10,000.00 in consideration of the
Lender’s execution and delivery of this Amendment.

24.           Conditions
Precedent.  Except as otherwise provided below, this
Amendment shall be effective when the Lender shall have received an executed
original hereof together with the following, each in form and substance
acceptable to the Lender in its sole discretion:

(a)           Amended Revolving Note executed by
the Borrower;

(b)           Amended Real Estate Term Note
executed by the Borrower;

(c)           Second Amendment to Mortgage executed
by the Borrower;

(d)           Combination Mortgage, Security
Agreement, Fixture Financing Statement, and Assignment of Leases and Rents
executed by the Borrower in favor of the Lender, granting the Lender a first,
perfected lien on the Borrower’s facility in Augusta, Wisconsin;

(e)           Fully paid title insurance
down-dating endorsements with respect to the Lender’s Minnesota Mortgage and a
title insurance policy with respect to its Wisconsin Mortgage;

 84
 

(f)            Written evidence and/or a
certification from Borrower that the transactions contemplated by the Suntron
Acquisition documents have closed or will close contemporaneously with the
execution of this Amendment and/or the funding of the additional loan advances
contemplated under the Credit Agreement as amended by this Seventh Amendment.

(g)           Payment of the fee
described in Paragraph 8 above; and

(h)           Such other documents as requested by
the Lender.

25.           No
Other Changes.  Except as
specifically provided herein, all terms and conditions of the Credit Agreement
remain in full force and effect, without waiver or modification.  This Amendment and the Credit Agreement shall
be read together, as one document.

26.           Representations
and Warranties.  Borrower
hereby remakes all representations and warranties contained in the Credit
Agreement and reaffirms all covenants set forth therein.  Borrower further certifies that as of the
date of this Amendment there exists no Event of Default as defined in the Credit
Agreement, nor any condition, act or event which with the giving of notice or
the passage of time or both would constitute any such Event of Default.

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

28.           No
Waiver. Unless otherwise provided for herein, the execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver
of any Default or Event of Default under
either of the Credit Agreements or breach, default or event of default under
any Security Document or other document held by the Lender, whether or not
known to the Lender and whether or not existing on the date of this Amendment.

29.           Release.
The Borrower hereby absolutely and unconditionally releases and forever
discharges 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 former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which the Borrower has had, now has or has made claim
to 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 including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

30.           Costs
and Expenses. The Borrower hereby reaffirms its agreement under the
Credit Agreements to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to
the Borrower under the Credit Agreements, or apply the proceeds of any loan,
for the purpose of paying any such fees, disbursements, costs and expenses.

 85
 

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

IN WITNESS
WHEREOF, the parties hereto have caused this Seventh Amendment to be executed
as of 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

  	
   

  	
   

  

 

 86
 

Exhibit B
to Amended and Restated Credit and Security Agreement

Compliance
Certificate

	
  To:

  	
   

  	
  Mark T. Lundquist

  
	
   

  	
   

  	
  Wells Fargo Bank, N.A.

  
	
  Date:

  	
   

  	
                                        ,
  200     

  
	
  Subject:

  	
   

  	
  Nortech Systems, Incorporated

  
	
   

  	
   

  	
  Financial Statements

  

 

In accordance with our Amended and Restated
Credit and Security Agreement dated as of December 30, 2002, and as amended
from time to time (as amended, the “Credit Agreement”), attached are
the financial statements of Nortech Systems, Incorporated (the “Borrower”) as of and for
                       ,
200      (the “Reporting
Date”) and the year-to-date period then ended (the “Current Financials”). All terms
used in this certificate have the meanings given in the Credit Agreement.

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

Events
of Default. (Check one):

o            The
undersigned does not have knowledge of the occurrence of a Default or Event of
Default under the Credit Agreement except as previously reported in writing to
the Lender.

o            The undersigned has knowledge of the
occurrence of a Default or Event of Default under the Credit Agreement not
previously reported in writing to the Lender and attached hereto is a statement
of the facts with respect to thereto. The Borrower acknowledges that pursuant
to Section 2.10(d) of the Credit Agreement, the Lender may impose the Default
Rate at any time during the resulting Default Period.

Financial
Covenants. I further hereby certify as follows:

1.                                       Minimum Debt
Service Coverage Ratio. Section 5(a) of the Credit Agreement.

Required Ratio:  1.25 to 1.00 as of the end of each fiscal
quarter up to and including 9/30/07.

1.50 to 1.00 as of the
end of each fiscal quarter as of 12/31/07 and thereafter.

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

2.                                       Maximum Total
Funded Debt to EBITDA Ratio. Section 5(b) of the Credit Agreement.

Required Funded Debt to EBITDA Ratio shall be not more than:

4.25 to 1.00 for each
fiscal quarter up to and including 9/30/07.

3.50 to 1.00 for each
fiscal quarter ending 12/31/07 to and including 6/30/08

3.00
to 1.00 for each fiscal quarter ending 9/30/08 and thereafter.

As of the Reporting Date, Borrower’s Total Funded Debt
to EBITDA Ratio was       to 1.00.

3.                                       Minimum Net
Income.  Section 5(c) of the Credit
Agreement.

Required Covenant: not less than 1.00 on a consolidated basis at the
end of each fiscal quarter on a rolling four quarter basis.

 87
 

The Borrower’s consolidated Net Income for the
year-to-date period ending on the Reporting Date was $                        .

4.             Capital Expenditures.
Section 5(d) of the Credit Agreement.

Required
Covenant: No more than $3,000,000 in aggregate per fiscal year, except for expenses
reasonably necessary to complete Suntron Acquisition.

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

5.             Working Capital. Section
5(e) of the Credit Agreement.

Required
Covenant: $10,000,000 as of the end of each fiscal quarter.

As of the Reporting Date, Borrower’s Working Capital was
$                              .

Attached to
are all relevant facts in reasonable detail to evidence, and the computations
of the financial covenants referred to above. These computations were made in
accordance with GAAP.

 

	
  

  	
  NORTECH SYSTEMS, INCORPORATED

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Richard G. Wasielewski

  	
   

  
	
   

  	
  Its Chief Financial Officer/Treasurer

  	
   

  

 

 

 88

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]