<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
NORTECH SYSTEMS INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NORTECH SYSTEMS INCORPORATED
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
------------------------
TO THE SHAREHOLDERS OF NORTECH SYSTEMS INCORPORATED:
The Annual Meeting of Shareholders of Nortech Systems Incorporated (the
"Company") will be held at the Wayzata Country Club, 200 West Wayzata Boulevard,
Wayzata, Minnesota, on May 19, 1998, at 4:00 p.m., for the following purposes:
1. To consider and act upon the Board of Directors' recommendation to fix
the number of directors of the Company at four;
2. To elect a Board of Directors to serve for a one-year term and until
their successors are elected and qualify;
3. To consider and vote upon a proposal to increase the number of shares of
the Company available under the Company's 1992 Stock Option Plan;
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on April 6, 1998, will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU EXPECT
TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU
MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
Your attention is called to the accompanying Proxy Statement.
By Order of the Board of Directors
Quentin E. Finkelson
SECRETARY
April 17, 1998
<PAGE>
NORTECH SYSTEMS INCORPORATED
---------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS, MAY 19, 1998
This Proxy Statement is furnished to shareholders of NORTECH SYSTEMS
INCORPORATED, a Minnesota corporation (the "Company"), in connection with the
solicitation on behalf of the Company's Board of Directors of proxies for use at
the annual meeting of shareholders to be held on May 19, 1998, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The address of the principal executive office of the Company is 641 East
Lake Street, Suite 244, Wayzata, Minnesota 55391. This Proxy Statement and form
of Proxy are being mailed to shareholders of the Company on April 17, 1998.
SOLICITATION AND REVOCATION OF PROXIES
The costs and expenses of solicitation of proxies will be paid by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers and regular employees of the Company personally or by
telegraph, telephone or letter with extra compensation. The Company will
reimburse brokers and other custodians, nominees or fiduciaries for their
expenses in forwarding proxy material to principals and obtaining their proxies.
Proxies in the form enclosed are solicited on behalf of the Board of
Directors. Any shareholder giving a proxy in such form may revoke it at any time
before it is exercised. Such proxies, if received in time for voting and not
revoked, will be voted at the annual meeting in accordance with the
specification indicated thereon.
VOTING RIGHTS
Only shareholders of record of the Company's 2,345,262 shares of Common
Stock outstanding as of the close of business on April 6, 1998, will be entitled
to execute proxies or to vote. Each share of Common Stock is entitled to one
vote. A majority of the outstanding shares must be represented at the meeting,
in person or by proxy, to transact business.
1
<PAGE>
ELECTION OF DIRECTORS
The bylaws of the Company provide for a Board of Directors consisting of one
or more members, and further provide that the shareholders at each annual
meeting shall determine the number of directors. The Company's Board of
Directors recommends that the number of directors be set at four and it is
intended that the proxies accompanying this statement will be voted at the 1998
meeting to establish a Board of Directors consisting of four members. The Board
of Directors currently consists of three members, Quentin E. Finkelson, Myron
Kunin and Richard W. Perkins. Proxies solicited by the Board of Directors will,
unless otherwise directed, be voted for the election of the following four
nominees:
MICHAEL J. DEGEN
QUENTIN E. FINKELSON
MYRON KUNIN
RICHARD W. PERKINS
Following is information regarding the nominees:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- --------------------------------------------------------------
<S> <C> <C>
Michael J. Degen 53 Managing Director, Worldwide Parts, The Toro Company
Quentin E. Finkelson 65 President and Chief Executive Officer, Secretary, and Chairman
of the Board of Directors
Myron Kunin 69 Director
Richard W. Perkins 67 Director
</TABLE>
Mr. Degen has been Managing Director, Worldwide Parts, The Toro Company,
since January, 1995. From May, 1991 through December, 1994, he was Managing
Director of Operations, The Toro Company.
Mr. Finkelson has been President and Chief Executive Officer, Secretary, and
Chairman of the Board of Directors of the Company since 1990.
Mr. Kunin has served as Chairman of the Board of Directors of Regis
Corporation since 1983. He is also a director of The Cerplex Group, Inc.
Mr. Perkins is President, Chief Executive Officer and a director of Perkins
Capital Management, Inc., Wayzata, Minnesota, where he has held those positions
since 1985. He is also a director of Bio-Vascular, Inc., Children's Broadcasting
Corporation, CNS, Inc., Eagle Pacific Industries, Inc., Harmony Holdings, Inc.,
Lifecore Biomedical, Inc., Peerless Industrial Group, Inc., Quantech Ltd. and
Vital Images, Inc.
2
<PAGE>
DIRECTORS MEETINGS
There were four meetings of the Board of Directors during the last fiscal
year. All directors attended meetings of the Board and committees of the Board
on which such director served.
The Company does not have a standing nominating committee of the Board. The
Compensation and Audit Committees consist of Messrs. Kunin and Perkins.
EXECUTIVE OFFICERS
The Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- --------------------------------------------------------------
<S> <C> <C>
Quentin E. Finkelson 65 President, Chief Executive Officer, Secretary and Chairman of
the Board of Directors
Gregory D. Tweed 47 Executive Vice President and Chief Operating Officer
Garry M. Anderly 51 Senior Vice President, Corporate Finance and Treasurer
Peter L. Kucera 52 Vice President, Corporate Quality
Donald E. Horne 49 Vice President, Corporate Procurement
</TABLE>
Mr. Finkelson has been President and Chief Executive Officer, Secretary and
Chairman of the Board of Directors of the Company since 1990.
Mr. Tweed has been Executive Vice President and Chief Operating Officer of
the Company since May, 1996. From 1993 to May, 1996, he was Senior Vice
President and General Manager of the Company.
Mr. Anderly has been Senior Vice President, Corporate Finance and Treasurer
of the Company since May 1996. He was Vice President of Finance and
Administration from 1991 to May 1996.
Mr. Kucera has been Vice President, Corporate Quality of the Company since
1991.
Mr. Horne has been Vice President, Corporate Procurement of the Company,
since December, 1997. From 1992 to November, 1997, he was Director of Materials,
Bemidji operations.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of the independent outside directors
whose names appear following this report. The Committee considers a variety of
issues in establishing compensation policies for executive officers, with the
primary basis for compensation being the financial performance of the Company.
Compensation for executive officers includes three elements: base salaries,
bonuses, and options to acquire Common Stock. Salaries are based on factors such
as the individual's level of responsibility and the amount of salary paid to
executives with similar responsibilities in comparable companies. Stock options
are designed to increase the incentive for an executive's interest in the
Company's long term success as measured by the market value of its stock.
The chief executive officer's compensation for 1997 was based on the
policies described above, with particular emphasis upon the Company's excellent
financial performance. Further, it was determined that the compensation of the
chief executive officer was comparable to compensation of chief executive
officers
3
<PAGE>
of comparable companies. The compensation of the other executive officers was
set at the level necessary to attract and retain executives performing the
functions being performed by such executives.
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience and performance of the
individual. Reference is also made to the competitive marketplace for executive
talent.
Myron Kunin
Richard W. Perkins
MEMBERS OF THE COMPENSATION COMMITTEE
4
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1997,
1996 and 1995, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to the Company's chief
executive officer, and each of the other two executive officers whose total
annual compensation in 1997 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS(#)
- -------------------------------------------------------- ------------- --------- --------------- -------------
<S> <C> <C> <C> <C>
Quentin E. Finkelson 1997 146,550 0 50,000
President/Chief Executive Officer 1996 130,707 0 0
Secretary, and Director 1995 130,707 0 50,000
Gregory D. Tweed 1997 116,600 0 20,000
Executive Vice President and 1996 104,000 0 0
Chief Operating Officer 1995 90,293 0 20,000
Garry Anderly 1997 102,608 0 20,000
Senior Vice President, 1996 89,610 0 0
Corporate Finance and Treasurer 1995 84,427 0 10,000
</TABLE>
STOCK OPTION GRANTS
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth for each of the named executives the stock
options granted by the Company in fiscal 1997 and the potential value of these
stock options determined pursuant to Securities and Exchange Commission
requirements.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------ ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OR OPTION TERM
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($)(1) 10%($)(1)
- -------------------------------------------- ----------- --------------- ------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Quentin E. Finkelson........................ 50,000 48% $ 5.00 2/19/07 157,225 398,425
Gregory D. Tweed............................ 20,000 19% $ 5.00 2/19/07 62,890 159,370
Garry Anderly............................... 20,000 19% $ 5.00 2/19/07 62,890 159,370
</TABLE>
- ------------------------
(1) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% and 10% set by the Securities
and Exchange Commission, and therefore is not intended to represent either
historical appreciation or anticipated future appreciation of the Company's
Common Stock price.
5
<PAGE>
STOCK OPTION EXERCISES AND OPTION VALUES
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table contains information concerning stock options exercised
during 1997 and stock options unexercised at the end of 1997 with respect to
each of the Named Executive Officers.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL FISCAL
YEAR-END(#) YEAR-END($)
SHARES ----------------- -----------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED $ UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)(1)
- ------------------------------------------ ------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Quentin E. Finkelson...................... -- -- 43,000/82,000 58,750/2,500
Gregory D. Tweed.......................... -- -- 15,500/32,000 23,428/0
Garry Anderly............................. -- -- 9,000/26,000 15,625/0
</TABLE>
- ------------------------
(1) Value of unexercised in-the-money options is determined by multiplying the
difference between the exercise price per share and $4.875, the closing
price per share on December 31, 1997, by the number of shares subject to
such options.
DIRECTOR COMPENSATION
Messrs. Kunin and Perkins, who are not employees of the Company, each
received an option to purchase 5,000 shares of the Company's common stock at an
exercise price of $5.00 per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Commission. Such officers, directors and
shareholders are required by the Commission's regulations to furnish the Company
with copies of all reports. To the knowledge of the Company, based solely on a
review of copies of reports filed with a Commission during the fiscal year ended
December 31, 1997, all applicable Section 16(a) filing requirements were
complied with.
APPROVAL OF INCREASE IN AVAILABLE SHARES
UNDER THE COMPANY'S 1992 STOCK OPTION PLAN
PURPOSE OF PLAN
The purpose of the Company's 1992 Stock Option Plan (the "Plan") is to
motivate key personnel to produce a superior return to the Shareholders of the
Company by offering such persons an opportunity to realize stock appreciation,
by facilitating stock ownership, and by rewarding them for achieving a high
level of corporate performance. The Plan is also intended to facilitate
recruiting and retaining key personnel of outstanding ability.
6
<PAGE>
ADMINISTRATION
The Plan is administered by the Board of Directors of the Company (the
"Board"). The Board has the exclusive power to grant options under the Plan and
to determine when and to whom options will be granted, and the form, amount and
other terms and conditions of each grant, subject to the provisions of the Plan.
The Board has the authority to interpret the Plan and any grant or agreement
made under the Plan.
ELIGIBILITY AND NUMBER OF SHARES
All employees of the Company and its affiliates are eligible to receive
grants under the Plan at the discretion of the Board. The total number of shares
of Company common stock available for distribution under the Plan is 350,000,
increased from 200,000 by the Board in September, 1997, subject to Shareholder
approval. As of April 1, 1998, options were outstanding for 252,500 shares. The
Board believes that to further the purpose of the Plan as the Company continues
to grow, the authorized number of available shares should be increased to
350,000.
TYPES OF GRANTS
The Board has discretion to determine whether an option grant shall be an
incentive stock option or a non-qualified option. Subject to certain
restrictions applicable to incentive stock options, options will be exercisable
by the recipients at such times as are determined by the Board, but in no event
may the term of a non-qualified option be longer than 15 years after the date of
grant (ten years with respect to an incentive option and five years with respect
to an incentive option granted to an employee holding 10% or more of the
Company's stock). Both incentive and non-qualified stock options may be granted
to recipients at such exercise prices as the Board may determine, except that
the exercise price of an incentive stock option shall not be less than 100% of
the fair market value of the stock on the date of grant of such option (110% in
the case of a grant to a 10% or greater Shareholder).
The purchase price payable upon exercise of options may be paid in cash, by
reducing the number of shares delivered to the holder or by delivering stock
already owned by the holder (where the fair market value of the shares withheld
or delivered on the date of exercise is equal to the option price of the stock
being purchased), or in a combination of cash and such stock, unless otherwise
provided in the related agreement.
TRANSFERABILITY
During the lifetime of an employee to whom an option has been granted, only
such employee, or such employee's legal representative, may exercise an option.
No options may be sold, assigned, transferred, exchanged, or otherwise
encumbered except to a successor in the event of an option holder's death.
AMENDMENT OR TERMINATION
The Board may amend or discontinue the Plan at any time, but no amendment or
termination shall be made that would impair the rights of any holder of any
option granted before such amendment or termination.
FEDERAL TAX CONSIDERATIONS
The Company has been advised by its counsel that grants made under the Plan
generally will result in the following tax events for United States citizens
under current United States federal income tax laws.
7
<PAGE>
INCENTIVE STOCK OPTIONS. A recipient will realize no taxable income, and
the Company will not be entitled to any related deduction, at the time an
incentive stock option is granted under the Plan. If certain statutory
employment and holding period conditions are satisfied before the recipient
disposes of shares acquired pursuant to the exercise of such an option, then no
taxable income will result in the exercise of such option and the Company will
not be entitled to any deduction in connection with such exercise. Upon
disposition of the shares after expiration of the statutory holding periods, any
gain or loss realized by recipient will be a capital gain or loss. The Company
will not be entitled to a deduction with respect to a disposition of the shares
by a recipient after the expiration of the statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon the
exercise of an incentive stock option are disposed of by such recipient before
the expiration of the statutory holding periods (a "disqualifying disposition"),
such recipient will be considered to have realized, as compensation taxable as
ordinary income in the year of disposition, an amount, not exceeding the gain
realized on such disposition, equal to the difference between the exercise price
and the fair market value of the shares on the date of exercise of the option.
The Company will be entitled to a deduction at the same time and in the same
amount as the recipient is deemed to have realized ordinary income. Any gain
realized on the disposition in excess of the amount treated as compensation or
any loss realized on the disposition will constitute capital gain or loss,
respectively. If the recipient pays the option price with shares that were
originally acquired pursuant to the exercise of an incentive stock option and
the statutory holding periods for such shares have not been met, the recipient
will be treated as having made a disqualifying disposition of such shares, and
the tax consequences of such disqualifying disposition will be as described
above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes an incentive stock option will be treated as if
it were a non-qualified stock option, the tax consequences of which are
discussed below.
NON-QUALIFIED STOCK OPTIONS. A recipient will realize no taxable income,
and the Company will not be entitled to any related deduction, at the time a
non-qualified stock option is granted under the Plan. At the time of exercise of
a non-qualified stock option, the recipient will realize ordinary income, and
the Company will be entitled to a deduction, equal to the excess of the fair
market value of the stock on the date of exercise over the option price. Upon
disposition of the shares, any additional gain or loss realized by the recipient
will be taxed as a capital gain or loss.
VOTING REQUIREMENTS; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company entitled to vote on this item and present in
person or by proxy at the Annual Meeting is required for approval of the
proposed amendment to the Plan. Proxies solicited by the Board will be voted for
approval of the amendment, unless shareholders specify otherwise in their
proxies.
For this purpose, a shareholder voting through a proxy who abstains with
respect to approval of the amendment is considered to be present and entitled to
vote on the approval of the amendment at the Annual Meeting, and is in effect
casting a negative vote, but a shareholder (including a broker) who does not
give authority to a proxy to vote, or withholds authority to vote, on the
approval of the amendment shall not be considered present and entitled to vote
on the proposal.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO INCREASE THE
AVAILABLE SHARES UNDER THE 1992 STOCK OPTION PLAN.
8
<PAGE>
COMPARATIVE STOCK PRICE PERFORMANCE
The graph below compares total shareholder return on the Company's Common
Stock for the last five fiscal years with the total return on Waters
Instruments, Inc. (a peer issuer) and the NASDAQ Composite Index for the same
periods. The graph assumes $100 invested on December 31, 1992.
NORTECH SYSTEMS INC.
COMPARATIVE STOCK PRICE PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEAR NORTECH WATERS INSTRUMENTS NASDAQ COMPOSITE
<S> <C> <C> <C>
1992 $100 $100 $100
1993 $240 $78 $115
1994 $180 $60 $111
1995 $423 $183 $155
1996 $280 $195 $191
1997 $260 $235 $232
</TABLE>
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Nortech 100 240 180 423 280 260
Waters Instruments 100 78 60 183 195 235
NASDAQ Composite 100 115 111 155 191 232
</TABLE>
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 1, 1998, the ownership of Common
Stock of the Company by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding shares of the Company, by each
director and by each executive officer identified in the Summary Compensation
Table, and by all executive officers and directors as a group. The parties
listed in the table have the voting and investment powers with respect to the
shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS
- ----------------------------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Myron Kunin ................................................................. 960,857 39.1%
7201 Metro Boulevard
Edina, MN 55439
Quentin E. Finkelson......................................................... 166,043 6.8%
Richard W. Perkins........................................................... 20,500 *
Gregory D. Tweed............................................................. 19,500 *
Garry M. Anderly............................................................. 13,000 *
Michael J. Degen............................................................. 0 *
All executive officers and directors as a group (six persons)................ 1,194,900(2) 48.6%
</TABLE>
- ------------------------
(1) Includes 53,000, 19,500, 13,000, 8,500 and 2,500 shares subject to presently
exercisable options granted to Messrs. Finkelson, Tweed, Anderly, Perkins
and Kunin, respectively, pursuant to the Company's stock option plan.
(2) Includes 111,500 shares subject to presently exercisable options.
* Less than one percent.
The Company will mail its annual report for the year 1997 on or about April
17, 1998, to all shareholders of the Company of record on April 6, 1998.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Larson, Allen, Weishair & Co., LLP, as
independent accountants of the Company for 1998. Larson, Allen, Weishair & Co.,
LLP, has performed this function for the Company since 1991. Members of the firm
will be available at the annual meeting of shareholders to answer questions and
to make a statement if they desire to do so.
QUORUM AND VOTE REQUIRED
The presence in person or by proxy of the holders of a majority of the
voting power of the shares of common stock issued, outstanding and entitled to
vote at a meeting for the transaction of business is required to constitute a
quorum. The election of each director will be decided by plurality votes. As a
result, any shares not voted for director (whether by withholding authority,
broker non-vote or otherwise) have no impact on the election of directors except
to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
10
<PAGE>
SHAREHOLDER PROPOSALS
Any proposal by a shareholder for the annual shareholders' meeting in May,
1999, must be received by the secretary of the Company at 641 East Lake Street,
Suite 244, Wayzata, Minnesota 55391, not later than the close of business on
November 20, 1998.
Proposals received by that date will be included in the 1999 proxy statement
if the proposals are proper for consideration at an annual meeting and are
required for inclusion in the proxy statement by, and conform to, the rules of
the Securities and Exchange Commission.
OTHER BUSINESS
The management does not know of any business other than the hereinbefore set
forth that may be presented for action at the annual meeting of shareholders. If
any other matters are properly presented at the meeting for action, the persons
named in the accompanying proxy will vote upon them in accordance with their
best judgment.
By Order of the Board of Directors
QUENTIN E. FINKELSON
SECRETARY
Minneapolis, Minnesota
April 17, 1998
11
<PAGE>
NORTECH SYSTEMS INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 19, 1998
The undersigned hereby appoints Quentin E. Finkelson and Garry Anderly and
either of them, proxies for the undersigned, with full power of substitution, to
represent the undersigned and to vote all of the shares of the Common Stock of
Nortech Systems Incorporated (the Company) which the undersigned is entitled to
vote at the annual meeting of shareholders of the Company to be held on May 19,
1998, and at any and all adjournments thereof.
1. To fix the number of directors of the Company at four.
/ / FOR / / AGAINST / / ABSTAIN
2. Election of directors.
NOMINEES: Michael J. Degen, Quentin E. Finkelson, Myron Kunin, Richard W.
Perkins.
/ / FOR all nominees above, / / WITHHOLD AUTHORITY to vote
except vote withheld from for all above.
individual nominees nominees
listed
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
3. To act upon a proposal to increase the number of shares of the Company
available under the Company's 1991 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
4. In their discretion, on such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be
voted as directed herein. If no direction is given, this proxy will be voted FOR
all the nominees listed in paragraph 2 and FOR the proposal in paragraph 3.
(CONTINUED, AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
<PAGE>
DATED _____________________ , 1998
__________________________________
(SIGNATURE OF SHAREHOLDERS)
__________________________________
(SIGNATURE OF SHAREHOLDERS)
WHERE STOCK IS REGISTERED JOINTLY
IN THE NAMES OF TWO OR MORE
PERSONS ALL SHOULD SIGN.
SIGNATURE(S) SHOULD CORRESPOND
EXACTLY WITH THE NAME(S) AS SHOWN
ABOVE. PLEASE SIGN AND DATE AND
RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED
STATES.
