SEC Contract Filing

Filing Date: 2019-08-14

Document Content:
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex_155127.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
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<p style="margin-bottom: 0px; text-align: right; margin-top: 0px"><font style="font-family: 'Times New Roman', Times, serif; font-size: 10pt"><b>Exhibit 10.1</b></font></p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b>SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER</b></p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT AND WAIVER (this &#8220;<u>Amendment</u>&#8221;) is made and entered into effective as of August 13, 2019, by and between NORTECH SYSTEMS INCORPORATED, a Minnesota corporation (&#8220;<u>Borrower</u>&#8221;), and BANK OF AMERICA, N.A., a national banking association (the &#8220;<u>Lender</u>&#8221;).</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;text-indent:0pt;">RECITALS:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A.&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Borrower and Lender are parties to a certain Loan and Security Agreement dated as of June 15, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the &#8220;<u>Loan Agreement</u>&#8221;). Capitalized terms not otherwise defined in this Amendment shall have the meanings assigned to them in the Loan Agreement.</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">B.&nbsp;&nbsp;&nbsp; &nbsp; &nbsp; &nbsp; The Borrower has requested that the Lender (i) amend and modify certain terms and provisions of the Loan Agreement and (ii) waive the Borrower&#8217;s non-compliance with certain provisions set forth in the Loan Agreement.</p>

<p style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</p>

<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">C.&nbsp;&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; The Lender has agreed to grant such waiver and to so amend the Loan Agreement upon the terms and subject to the conditions set forth in this Amendment.</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">AGREEMENTS:</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">NOW, THEREFORE, in consideration of the premises herein set forth and for other good and valuable consideration, the nature, receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">1.&nbsp;&nbsp;&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; <u>Recitals</u>. The Borrower and the Lender agree that the Recitals set forth above are true and correct.</p>

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<p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">2.&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; &nbsp; <u>Waiver</u>.</p>

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<p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 36pt; text-align: justify; text-indent: 27pt;">&nbsp;&nbsp; a.&nbsp;&nbsp;&nbsp; &nbsp; &nbsp; &nbsp; Pursuant to <u>Section 9.3.1</u> of the Loan Agreement, the Borrower is required maintain a Fixed Charge Coverage Ratio of at least 1.0 to 1.0 for each period of four Fiscal Quarters. The Borrower has informed the Lender that the Fixed Charge Coverage Ratio for the four Fiscal Quarter period ending June 30, 2019 was less than 1.0 to 1.0. Such non-compliance with <u>Section 9.3.1</u> of the Loan Agreement constitutes an Event of Default pursuant to <u>Section 10.1(c)</u> of the Loan Agreement (the &#8220;<u>Existing Default&#8221;).</u></p>

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<p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 27pt; text-align: justify; text-indent: 36pt;">&nbsp;&nbsp; b.&nbsp;&nbsp;&nbsp; &nbsp; &nbsp; &nbsp; Borrower has r