Exhibit 10.8

 

NORTECH SYSTEMS INCORPORATED

 

Restated Equity Appreciation Rights Plan

 

I.       Purposes of the Plan

 

The purposes of the Nortech Systems Incorporated Equity Appreciation Rights Plan
(the “Plan”) are to provide a means to attract, reward, and retain strong
management, and to align the interests of key managers participating in the Plan
with the interests of shareholders by offering an incentive compensation vehicle
based upon the growth in shareholders’ equity and the value of Nortech Systems
Incorporated.

 

II.        Definitions

 

In this Plan, the following terms shall have the meanings as set forth below:

 

(a)  “Base Date” means the date designated by the Committee on the Grant Date as
the date  for determining the initial valuation of a Unit.

 

(b)   “Board” means the Board of Directors of Nortech Systems Incorporated

 

(c)          “Book Value” means the Company stockholders’ equity  divided by the
total number of shares outstanding, excluding any increase in the number of such
shares represented by unexercised stock options.

 

(d)         “Committee” means the Compensation Committee of the Board or any
other committee the Board may subsequently appoint to administer the Plan. The
Committee shall be composed entirely of directors who meet the requirements as
set forth in Section III of this Plan.

 

(e)          “Common Stock” means the common stock of Nortech Systems
Incorporated, having a par value of $1.00 per share.

 

(f)           “Company” means Nortech Systems Incorporated and any present
subsidiary corporations or any successor to such corporations.

 

(g)  “Employee” means any employee of the Company selected to participate in the
Plan.

 

(h) “Equity Appreciation Right Unit” means a right equal in value to the Common
Stock’s    Book Value; each Equity Appreciation Right Unit will be equal in
value to one hundred percent (100%) of the Book Value per share of Common Stock
as of a date designated by the Committee on the Grant Date.

 

(i)         “Grant Date” means the date as of which an Equity Appreciation Right
Unit is granted by the Committee pursuant to this Plan.

 

(j)        “Grantee” means an Employee to whom an Equity Appreciation Right Unit
is granted by the Committee pursuant to this Plan.

 

(k) “Redemption Date” means the third anniversary of the Base Date.

 

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(l)  “Unit” means an Equity Appreciation Right Unit.

 

III.          The Committee as Plan Administrators

 

The Plan shall be administered by the Company’s Compensation Committee (the
“Committee”), which shall consist of not fewer than three persons who shall be
appointed by the Board and each of whom shall be a “disinterested person,” as
that term is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the Employees entitled to participate in the Plan, to
determine the size of the awards to be made to each such Employee, and to
determine the time or times when awards shall be made. The Committee’s
interpretation of the Plan and any action it takes with respect to awards
granted pursuant thereto shall be final and binding unless otherwise determined
by the Board. The Committee shall have the authority, subject to the provisions
of the Plan, to establish, adopt, revise or repeal such rules, regulations and
procedures with respect to the Plan as it may deem necessary or appropriate to
accomplish the objectives of the Plan, including the power to make decisions
relating to the Plan in instances where the Plan document is silent.

 

IV.          Aggregate Limitation on Units Subject to the Plan

 

The number of Units that may be awarded under this Plan shall not exceed an
aggregate of 750,000. If any Units granted under the Plan shall expire or
terminate or be forfeited or cancelled, such Units may again be granted pursuant
to the Plan.

 

V.            Terms and Conditions of the Grant of Units

 

Each Unit granted under this Plan shall be subject to the following terms and
conditions:

 

(a)               Each Unit granted shall continue in effect for a period of
three (3) years from the Grant Date, subject, however, to earlier termination as
hereinafter provided.

 

(b)               Each grant shall be evidenced by a written instrument
specifying to the Grantee the number of Units granted and the terms and
conditions of such grant.

 

(c)                Except as provided herein, the grant of a Unit shall not be
transferable other than by will or the laws of descent and distribution. During
the Grantee’s lifetime, a Unit held by a Grantee shall be payable only to the
Grantee, except as otherwise provided herein.

 

VI.          Payment of Unit Awards

 

All Unit redemptions shall be paid in cash within ninety (90) days after
determination by the Company of the Book Value of the Units as of the Redemption
Date.

 

VII.                          Redemption of Units

 

(a)                  A Unit granted pursuant to this Plan shall be subject to
redemption by the Company on the Redemption Date. Upon redemption of the Unit,
the Grantee shall receive a payment for each Unit redeemed equal to the
appreciation in the Book Value per share of Common Stock from the Base Date to
the Redemption Date.  In the event of a Change of Control as described in
Section XII, the Employee shall be entitled to receive an amount equal to the
per share purchase price less the per share Book Value on the Grant Date.

 

(b)                  Units granted to participants in the Plan which have not
been redeemed shall become

 

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automatically subject to redemption in the event of a Company Change in Control,
as set forth in Section XII.

 

VIII.       Dilution and Changes in Capitalization

 

In between the Grant Date of a Unit and the Redemption Date, any change that
shall occur in the number of shares of the Company’s Common Stock outstanding as
the result of any stock split or any stock dividend during any calendar year,
then the unredeemed portion of any such Units granted shall be adjusted
proportionately to the adjustment in the Company’s Common Stock. In the event of
any other change in the number or character of the outstanding securities of the
Company as the result of any recapitalization, reclassification, consolidation
or any analogous change in capitalization or of any distribution to holders of
the Company’s Common Stock other than a cash or stock dividend, the Committee
shall make such adjustments, if any, in the manner of calculating the valuation
of any outstanding Units as the Committee in the reasonable exercise of its
discretion deems equitable and appropriate.

 

IX.          Factors to be Considered on the Grant of Units

 

In making any determination as to the Employees to whom Units shall he granted
and as to the number of Units in any single grant, the Committee shall take into
account the duties and responsibilities of the respective Employees, their
present and potential contributions to the success of the Company, and such
other factors as the Committee shall deem important in connection with
accomplishing the purposes of the Plan.

 

X.            Termination of Employment

 

If the employment of an Employee to whom Units have been granted shall be
terminated (i) by the Employee’s retirement on or after age sixty-five (65), or
(ii) by the Company at any time without cause (which shall be determined solely
by the Committee) and otherwise than as provided for in Section XII hereof, such
Units shall be redeemed as provided in Sections VI and VII hereof. If the
employment of an Employee to whom Units shall have been granted shall be
terminated by the Company with cause or by the Employee’s voluntary resignation
prior to attaining age sixty-five (65) (all of which shall be determined solely
by the Committee) and otherwise than as provided for in Section XII hereof, such
Units shall expire simultaneously with such termination of employment. So long
as the Grantee shall continue to be an Employee of the Company or of one or more
of its subsidiaries, his or her Units shall not be affected by any change of
duties or position. Nothing in the Plan or in any agreement shall confer upon
any Employee any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate his employment at any time
whether for cause, or not.

 

XI.     Death or Incapacity of an Employee

 

If an Employee to whom Units have been granted shall die or become physically or
mentally incapacitated, as determined solely by the Committee, while he or she
shall be employed by the Company, all Units then held by such Employee
immediately prior to such Employee’s death or incapacity shall be redeemed by
the Company based on any appreciation in Book Value per share between the Base
Date and the last day of the calendar year immediately preceding the Employee’s
death, and paid to the personal representative or other legal representative of
such

 

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Employee within ninety (90) days after his or her death or incapacity.

 

XII.       The Effect of a Company Change in Control

 

(i)                     This Plan shall be affected by the event of a Company
Change in Control, which, for the sole purpose of this Plan, shall mean that the
Company or substantially all of the Company’s assets are either acquired by
and/or merged with another organization or corporate entity.

 

(ii)                      In the event of a Change of Control, the Employee
shall be entitled to receive an amount equal to the per share purchase price for
the Company’s shares or assets less the per share Book Value on the Base Date,
multiplied by the number of Units held by the Employee, such amount to be paid
to the Employee within ninety (90) days after the Change of Control.

 

XIII.                    Effective Date of the Plan

 

The Plan shall become effective on the date of its adoption by the Board;
provided, however, that the Plan shall automatically terminate and all Units
theretofore granted shall be null and void, in the event that the Plan shall not
have been duly and validly approved by the affirmative vote of a majority of the
stockholders of the Company present or represented at the annual meeting of the
stockholders of the Company next following the adoption of the Plan by the
Board.

 

XIV.                     Amendment, Suspension, or Termination of the Plan

 

The Committee may at any time terminate, suspend, or amend this Plan; however,
no amendment shall, without the approval of stockholders of the Company:

 

(i)      increase the number of Units which may be granted pursuant to the Plan;

 

(ii)     change the maximum period during which Units may be granted;

 

(iii)    extend the effective date of the Plan; or

 

(iv)    materially modify the requirements as to eligibility for participation
in the Plan.

 

XV.                          Duration of the Plan

 

No Units shall be granted under this Plan ten (10) years after the date the
Restated Plan was adopted by the Board. All Units granted before that date shall
remain valid thereafter in accordance with their terms.

 

This Restated Plan was adopted by the Board of Directors on March 6, 2013.

 

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