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These excerpts taken from the NSYS 10-K filed May 13, 2008. NOTE 10 COMMITMENTS AND CONTINGENCIES Operating Leases The company has various operating leases for production and office equipment, office space, and buildings under non-cancelable lease agreements expiring on various dates through 2011. Rent expense, which includes amounts for other short-term leases, for the years ended December 31, 2007 and 2006 amounted to approximately $1,015,000 and $863,000 respectively. Approximate future minimum lease payments are as follows:
Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations. 43 NORTECH SYSTEMS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2007 AND 2006 NOTE 10 COMMITMENTS AND CONTINGENCIES (Continued) Executive Life Insurance Plan During 2002, we set up an Executive Bonus Life Insurance Plan (the "Plan") for our key employees ("participants"). Pursuant to the Plan, we will pay a bonus to officer participants of 15% and a bonus to all other participants of 10% of the participants' base annual salary, as well as an additional bonus to cover federal and state taxes incurred by the participants. The participants are required to purchase life insurance and retain ownership of the life insurance policy once it is purchased. The Plan provides a five-year graded vesting schedule in which the participants vest at a rate of 20% each year. Should a participant terminate employment prior to the fifth year of vesting, that participant may be required to reimburse us for any unvested amounts, under certain circumstances. Expenses under the Plan were $304,000 and $290,000 for the years ended December 31, 2007 and 2006, respectively. Change of Control Agreements During 2002, we entered into Change of Control Agreements (the "Agreement(s)") with certain key executives ("the Executive(s)"). The Agreements provide an inducement for each Executive to remain as an employee in the event of any proposed or anticipated change of control in the organization, including facilitating an orderly transition, and to provide economic security for the Executive after a change in control has occurred. In the event of an involuntarily termination, each Executive would receive their base salary, annual bonus at time of termination, and continued participation in health, disability and life insurance plans for a period of three years for officers and two years for all other participants. Participants would also receive professional outplacement services up to $10,000 if applicable. Each Agreement remains in full force until the Executive terminates employment or we terminate the employment of the Executive. NOTE 10 COMMITMENTS AND CONTINGENCIES Operating Leases The company has various operating leases for production and office equipment, office space, and buildings under non-cancelable lease agreements Rent Approximate
Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2007 AND 2006 NOTE 10 COMMITMENTS AND CONTINGENCIES (Continued) Executive Life Insurance Plan During 2002, we set up an Executive Bonus Life Insurance Plan (the "Plan") for our key employees ("participants"). Pursuant to the Plan, we will pay a bonus to Change of Control Agreements During 2002, we entered into Change of Control Agreements (the "Agreement(s)") with certain key executives ("the Executive(s)"). The Agreements provide an In These excerpts taken from the NSYS 10-K filed Mar 17, 2008. NOTE 10 COMMITMENTS AND CONTINGENCIES Operating Leases The company has various operating leases for production and office equipment, office space, and buildings under non-cancelable lease agreements expiring on various dates through 2011. Rent expense, which includes amounts for other short-term leases, for the years ended December 31, 2007 and 2006 amounted to approximately $1,015,000 and $863,000 respectively. Approximate future minimum lease payments are as follows:
Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations. 43 NORTECH SYSTEMS INCORPORATED AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2007 AND 2006 NOTE 10 COMMITMENTS AND CONTINGENCIES (Continued) Executive Life Insurance Plan During 2002, we set up an Executive Bonus Life Insurance Plan (the "Plan") for our key employees ("participants"). Pursuant to the Plan, we will pay a bonus to officer participants of 15% and a bonus to all other participants of 10% of the participants' base annual salary, as well as an additional bonus to cover federal and state taxes incurred by the participants. The participants are required to purchase life insurance and retain ownership of the life insurance policy once it is purchased. The Plan provides a five-year graded vesting schedule in which the participants vest at a rate of 20% each year. Should a participant terminate employment prior to the fifth year of vesting, that participant may be required to reimburse us for any unvested amounts, under certain circumstances. Expenses under the Plan were $304,000 and $290,000 for the years ended December 31, 2007 and 2006, respectively. Change of Control Agreements During 2002, we entered into Change of Control Agreements (the "Agreement(s)") with certain key executives ("the Executive(s)"). The Agreements provide an inducement for each Executive to remain as an employee in the event of any proposed or anticipated change of control in the organization, including facilitating an orderly transition, and to provide economic security for the Executive after a change in control has occurred. In the event of an involuntarily termination, each Executive would receive their base salary, annual bonus at time of termination, and continued participation in health, disability and life insurance plans for a period of three years for officers and two years for all other participants. Participants would also receive professional outplacement services up to $10,000 if applicable. Each Agreement remains in full force until the Executive terminates employment or we terminate the employment of the Executive. NOTE 10 COMMITMENTS AND CONTINGENCIES Operating Leases The company has various operating leases for production and office equipment, office space, and buildings under non-cancelable lease agreements Rent Approximate
Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) DECEMBER 31, 2007 AND 2006 NOTE 10 COMMITMENTS AND CONTINGENCIES (Continued) Executive Life Insurance Plan During 2002, we set up an Executive Bonus Life Insurance Plan (the "Plan") for our key employees ("participants"). Pursuant to the Plan, we will pay a bonus to Change of Control Agreements During 2002, we entered into Change of Control Agreements (the "Agreement(s)") with certain key executives ("the Executive(s)"). The Agreements provide an In This excerpt taken from the NSYS 10-K filed Mar 9, 2006. NOTE 10 COMMITMENTS AND CONTINGENCIES
Litigation We are subject to various legal proceedings and claims that arise in the ordinary course of business. In our opinion, the amount of any ultimate liability with respect to these actions will not materially affect our consolidated financial statements or results of operations. 39 NORTECH SYSTEMS INCORPORATED AND SUBSIDIARY NOTE 10 COMMITMENTS AND CONTINGENCIES (Continued) Executive Life Insurance Plan During 2002, we set up an Executive Bonus Life Insurance Plan (the “Plan”) for our key employees (“participants”). Pursuant to the Plan, we will pay a bonus to participants equal to 10% of the participants’ base annual salary, as well as an additional bonus to cover federal and state taxes incurred by the participants. The participants are required to purchase life insurance and retain ownership of the life insurance policy once it is purchased. The Plan provides a five-year graded vesting schedule in which the participants vest at a rate of 20% each year. Should a participant terminate employment prior to the fifth year of vesting, that participant may be required to reimburse us for any unvested amounts, under certain circumstances. Charges to income under the Plan were $228,000, $167,375 and $156,091 for the years ended December 31, 2005, 2004 and 2003. Change of Control Agreements During 2002, we entered into Change of Control Agreements (the “Agreement(s)”) with certain key executives (“the Executive(s)”). The Agreements provide an inducement for each Executive to remain as an employee in the event of any proposed or anticipated change of control in the organization, including facilitating an orderly transition, and to provide economic security for the Executive after a change in control has occurred. In the event of an involuntarily termination, each Executive would receive their base salary, annual bonus at time of termination, and continued participation in health, disability and life insurance plans for a period of three years. Each Executive would also receive professional outplacement services up to $10,000. Each Agreement remains in full force until the Executive terminates employment or we terminate the employment of the Executive. Commitment to Purchase Real Property We entered into an agreement in November 2005 to lease 20,000 square feet of a building located in Blue Earth, Minnesota, to be used for manufacturing space effective December 1, 2005. The lease, which has a 90-day option to renew, expires as of March 31, 2006. At the end of December 2005, we signed an agreement to purchase the entire 140,000 square foot Blue Earth, Minnesota building for $1,350,000, the closing is scheduled for June 2006, with the seller having the option to lease back from us 50,000 square feet through the first quarter of 2007. We intend to issue an Variable Rate Demand Industrial Development Revenue Bond through the City of Blue Earth, MN, secured by an Irrevocable Letter of Credit to be issued by Wells Fargo Bank, National Association. 40 NORTECH SYSTEMS INCORPORATED AND SUBSIDIARY | EXCERPTS ON THIS PAGE:
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