NORTECH SYSTEMS INCORPORATED (NASDAQ:NSYS) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Nortech Systems Incorporated (the “Company”) entered into a First Amendment to Loan and Security Agreement with Bank of America, N.A. (the “Amendment”) effective December29, 2017. The Amendment amends the Loan and Security Agreement with Bank of America, N.A. dated June15, 2017 (the “Loan Agreement”) which provides for senior secured asset-based credit facilities of up to $21.0 million, including up to $16.0 million of revolving loans and up to $5.0 million of term loans.
The Amendment, among other things, changes the starting date of the financial covenant that requires the Company to maintain a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 for each period of four fiscal quarters. Previously, this covenant required quarterly compliance starting with the period of four calendar quarters ending March31, 2017. Under the Amendment, the covenant requires compliance with this covenant commencing with the four quarters ending December31, 2018. The “Fixed Charge Coverage Ratio” is defined in the Loan Agreement as the ratio of (a)EBITDA, minus (i)capital expenditures, (ii)cash taxes paid and (iii)distributions made, to (b)the sum of interest expense (other than payment-in-kind) and scheduled principal payments made on borrowed money.
In addition, the Amendment requires that the Company comply with certain minimum levels of cumulative EBITDA for measurement periods during fiscal 2018, including cumulative EBITDA of $1,970,000 for the twelve months ended December31, 2018.
The Loan Agreement, as amended by the Amendment, contains certain other covenants which, among other things, require the Company to adhere to regular reporting requirements, abide by annual shareholder dividend limitations, maintain certain financial performance, and limit the amount of annual capital expenditures.
The foregoing summary description of the terms and conditions of the Loan Agreement, as amended by the Amendment, does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit10.2 to this Current Report on Form8-K and incorporated by reference herein, and the Loan Agreement, a copy of which was filed as Exhibit10.1 to our Current Report on Form8-K filed on June21, 2017 and incorporated by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January8, 2018, the Company announced the hiring and appointment of Connie Beck as vice president and chief financial officer. Ms.Beck was formerly vice present of finance and controller for MOCON,Inc., a publicly traded provider of measurement instruments and services, from 2013 to 2017. Prior to MOCON, Ms.Beck held director-level financial reporting positions with Navarre Corporation and Lakes Entertainment,Inc. She also has over 10 years of public accounting experience with Grant Thornton, McGladrey& Pullen and Protiviti. Ms.Beck is a CPA and earned a bachelor of science degree in accounting from Northern Illinois University. Ms.Beck
