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Exhibit 10.27

COMMERCIAL BUILDING LEASE

THIS COMMERCIAL BUILDING LEASE (the “Lease”) is effective as of the 31st day of
December, 2012 (the “Effective Date”), by and between NORTECH SYSTEMS
INCORPORATED, a Minnesota corporation (hereinafter referred to as “Landlord”),
and WINLAND ELECTRONICS, INC., a Minnesota corporation (hereinafter referred to
as “Tenant”).

W I T N E S S E T H :

Landlord hereby leases to Tenant, and Tenant leases from Landlord 1,924 square
feet of its office and manufacturing facility (the “Building”) and improvements
(collectively, the “Improvements”) located at 1950 Excel Drive, Mankato
Minnesota, 56001, which Building and Improvements are hereinafter referred to as
the “Leased Premises.”

TO HAVE AND TO HOLD the Leased Premises shall be a month-to-month lease
beginning on the Effective Date (the “Term”), subject to the following terms and
conditions.  Tenant may terminate this Lease at any time by giving Landlord not
less than thirty days’ prior written notice.

ARTICLE 1.  RENT.  Base rent shall be payable to Landlord without demand,
deduction or setoff, at $842.75 per month.  Tenant shall pay to Landlord during
the Term of this Lease base monthly rent, on the fifth (5th) day of each and
every month, without demand, deduction, or set-off, during the Term.  The
Landlord shall be responsible for maintenance, utilities, taxes, insurance and
all other payments to third parties as contemplated by this Lease.  Each
installment of base rent and any additional amounts due under this Lease to be
paid to Landlord shall be paid by check, payable to the order of Landlord (or
such nominee as shall have been designated by Landlord to receive such
payment).  A pro rata portion of such monthly base rent shall be due for any
partial calendar month during the Term, in proportion to the number of days of
such calendar month falling within the Term.

           ARTICLE 2.  TAXES AND SPECIAL ASSESSMENTS.  Landlord shall pay, when
due and before penalty attaches, all real estate taxes and installments of
special assessments, and any similar charges or liens due and payable during the
Term hereof with respect to the Leased Premises and improvements situated
thereon, provided that election shall be made to pay any special assessment over
the longest period allowed by law.  For any partial calendar year within the
Term of this Lease, Landlord shall be responsible for a pro rata portion of such
taxes and special assessments due and payable in such calendar year in
proportion to the number of days of such calendar year falling within the Term,
and appropriate adjustments shall be made at the beginning of the Term and at
the end of the Term.
 
 
 

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ARTICLE 3.  MAINTENANCE AND REPAIR.  Landlord shall be responsible for
maintaining the interior of the Leased Premises, including all interior walls,
doors, windows, ceilings, and floors in good condition and repair, reasonable
wear and tear and casualty damaged excepted.  Landlord shall also make all
necessary routine repairs to all building systems serving the Leased Premises,
and shall keep all portions of the Leased Premises in a clean and orderly
condition, including the sidewalks, curbs, drives, parking areas, landscaped
areas, and passageways adjoining the same, which shall be kept free of dirt,
rubbish, snow, ice and unlawful obstructions.  Landlord shall maintain, repair,
and, as necessary, replace during the Term of this Lease, all foundations,
structural elements, roofs and roof membranes, and major building systems in
good order and repair.

ARTICLE 4.  ALTERATIONS AND ADDITIONS.  Except for non-structural alterations,
additions or improvements (“Alterations”) that (i) do not exceed $10,000 in the
aggregate, (ii) are not visible from the exterior of the Premises, (iii) do not
affect any building system or the structural strength of the Improvements, and
(iv) do not require penetrations into the floor, ceiling, roof or walls, Tenant
shall not make or permit any Alterations in or to the Leased Premises without
first obtaining Landlord’s consent, which consent shall not be unreasonably
withheld.  With respect to any Alterations made by or on behalf of Tenant
requiring Landlord’s consent hereunder: (i) not less than 10 days prior to
commencing any such Alteration, Tenant shall deliver to Landlord the plans,
specifications and necessary permits for the Alteration, together with
certificates evidencing that Tenant’s contractors and subcontractors have
adequate insurance coverage naming Landlord as an additional insured, (ii)
Tenant shall obtain Landlord’s prior written approval of any contractor or
subcontractor, and (iii) complete the Alterations in accordance with the plans
and specifications delivered to and approved by Landlord.  All Alterations made
by or on behalf of Tenant (regardless if Landlord’s consent is required
hereunder) shall be constructed with new materials, in a good and workmanlike
manner, and in compliance with all laws, regulations, codes and ordinances
(collectively, “Laws”).  Any Alteration by Tenant shall be the property of
Tenant until the expiration or termination of this Lease.  At the expiration or
termination of this Lease, without payment by Landlord, the Alteration shall
remain on the property and become the property of Landlord (except for any
Alterations which are trade fixtures, which shall remain the property of
Tenant), unless Landlord gives notice to Tenant to remove it, in which event
Tenant will remove it and will repair any resulting damage.  At Tenant’s request
prior to Tenant making any Alterations, Landlord will notify Tenant whether
Tenant is required to remove the Alterations at the expiration or termination of
this Lease.  Tenant may install its trade fixtures, furniture and equipment in
the Premises, provided that the installation and removal of them will not affect
any structural portion of the Improvements, any building system or any other
equipment or facilities serving the Improvements.

ARTICLE 5.  MECHANIC’S LIENS.  Tenant shall promptly pay for any labor,
services, materials, supplies or equipment furnished to Tenant in or about the
Leased Premises.  Tenant shall keep the Leased Premises free from any liens
arising out of any labor, services, materials, supplies or equipment furnished
or alleged to have been furnished to Tenant.  Tenant shall take all steps
permitted by law in order to avoid the imposition of any such lien.  Should any
such lien or notice of such lien be filed against the Leased Premises, Tenant
shall discharge the same by bonding or otherwise within thirty (30) days after
Tenant has notice that the lien or claim is filed regardless of the validity of
such lien or claim.  Landlord shall have the right to post and maintain on the
Leased Premises notice of non-responsibility under the laws of Minnesota.
 
 
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ARTICLE 6.  USE OF LEASED PREMISES; COMPLIANCE WITH LAWS; ENVIRONMENTAL
COVENANTS.  The Leased Premises shall be used and occupied by Tenant for any
lawful manufacturing or industrial activity that is permitted in the zoning
classification in which the Leased Premises is located, and for no other
purpose, and such use and occupancy shall be in compliance with all applicable
Laws.  Without limiting the foregoing, Tenant shall, at Tenant’s expense, make
all such improvements and alterations required by reason of Tenant’s specific
use and shall comply with all Environmental Laws as hereinafter provided, and
Landlord shall have no responsibility for the same.  Tenant shall indemnify,
defend and hold harmless Landlord from any loss or liability incurred by reason
of any failure by Tenant to comply with applicable Laws in its use and occupancy
of the Leased Premises.  Notwithstanding the foregoing, Tenant shall not be
required to further improve or alter the Leased Premises in order to carry out
its obligations under this Article, unless the need to make such improvements is
due to Tenant’s specific use of the Leased Premises or a specific act of
Tenant.  Landlord shall be responsible for and make any alterations or
improvements required by applicable Laws not due to Tenant’s specific use or
acts.  It shall be Tenant’s obligation to obtain any permits or licenses
required in connection with Tenant’s use of the Leased Premises.

As used herein, the following terms shall have the following meanings:
 
“Environmental Laws” – All present or future federal, state or local laws,
ordinances, rules or regulations (including the rules and regulations of the
federal Environmental Protections Agency and comparable state agency) relating
to the protection of human health or the environment.

“Hazardous Materials” – Pollutants, contaminants, toxic or hazardous wastes or
other materials the removal of which is required or the use of which is
regulated, restricted, or prohibited by any Environmental Law.

Tenant agrees that (i) no activity will be conducted on the Leased Premises that
will use or produce any Hazardous Materials, except for activities which are
part of the ordinary course of Tenant’s business and are conducted in accordance
with all Environmental Laws (“Permitted Activities”); (ii) the Premises will not
be used for storage of any Hazardous Materials, except for materials used in the
Permitted Activities which are properly stored in a manner and location
complying with all Environmental Laws; (iii) no portion of the Leased Premises
will be used by Tenant or Tenant’s employees, invitees, contractors or agents
(“Tenant’s Agents”) for disposal of Hazardous Materials; and (iv) Tenant will
immediately notify Landlord of any violation by Tenant or Tenant’s Agents of any
Environmental Laws or the release or suspected release of Hazardous Materials
in, under or about the Leased Premises, and Tenant shall immediately deliver to
Landlord a copy of any notice, filing or permit sent or received by Tenant with
respect to the foregoing.  If at any time during or after the Term, Tenant or
Tenant’s Agents causes contamination on any portion of the Leased Premises,
Tenant will indemnify, defend and hold Landlord harmless from all claims,
demands, actions, liabilities, costs, expenses, attorneys’ fees, damages and
obligations of any nature arising from or as a result thereof, and Landlord
shall have the right to direct remediation activities, all of which shall be
performed at Tenant’s cost.  Tenant’s obligations pursuant to this Article 6
shall survive the expiration or termination of this Lease.
 
 
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ARTICLE 7.  UTILITIES.  Landlord will pay or cause to be paid when due all
charges for gas, water, sewer, electricity, telephone and other utilities and
services used, rendered or supplied to, upon or in connection with the Leased
Premises, and Tenant shall have no responsibility to supply the same.  Without
limiting Landlord’s general duty to maintain and repair, Tenant shall maintain
in good order and condition during the term and any renewal term of this Lease
all pipes, wires, conduits, boilers and other equipment for the provision of
utility services to the Leased Premises.

ARTICLE 8.  INSURANCE.

(a)           Public Liability.  At all times during the term and any renewal
term of this Lease, Tenant shall keep in full force and effect at its expense a
policy or policies of commercial general liability insurance with respect to the
Leased Premises and the business of Tenant and any subtenant, licensee or
concessionaire, with a company licensed to do business in the State of Minnesota
reasonably acceptable to Landlord, in which both Tenant and Landlord shall be
named as insureds and adequately covered under reasonable limits of liability
not less than $5,000,000.00 combined single limit coverage of bodily injury,
property damage or combination thereof.  Landlord shall be named as an
additional loss payee.  Tenant shall furnish Landlord with certificates or other
acceptable evidence that such insurance is in effect, which evidence shall state
that Landlord shall be notified in writing thirty (30) days prior to
cancellation, material change or renewal of insurance.

(b)           Hazard Insurance.  At all times during the Term, Tenant shall keep
in full force and effect a policy of fire and extended coverage insurance on the
Improvements (including any Alterations therein or thereto) for its full
insurable replacement cost, with a company licensed to do business in the State
of Minnesota reasonably acceptable to Landlord, naming both Landlord and Tenant
as insureds, but payable only to Landlord and containing a loss payable clause
as required by any mortgagees of the Leased Premises; and shall furnish Landlord
and all such mortgagees with certificates or other acceptable evidence that such
insurance is in effect, which evidence shall state that Landlord and all such
mortgagees shall be notified in writing thirty (30) days prior to cancellation,
material change or renewal of insurance.  Tenant may separately or under the
same policy insure any trade fixtures, equipment, supplies and other personal
property owned by Tenant and located upon the Leased Premises.

(c)           Waiver of Subrogation.  Notwithstanding anything to the contrary
in this Lease, Landlord and Tenant each waive, and release each other from and
against, all claims for recovery against the other for any loss or damage to the
property of such party arising out of fire or other casualty coverable by a
standard fire and extended coverage property insurance policy, even if such loss
or damage shall be brought about by the fault or negligence of the other party
or its employees or agents.  This waiver and release is effective regardless of
whether the releasing party actually maintains the insurance described above in
this subsection and is not limited to the amount of insurance actually carried,
or to the actual proceeds received after a loss.  Each party shall have its
insurance company that issues its property coverage waive any rights of
subrogation, and shall have the insurance company include an endorsement
acknowledging this waiver, if necessary.  Tenant assumes all risk of damage of
Tenant’s property within the Leased Premises, including any loss or damage
caused by water leakage, fire, windstorm, explosion, theft, or other cause.
 
 
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ARTICLE 9.  NON-LIABILITY; COVENANTS TO HOLD HARMLESS.  Except to the extent
caused by the negligence or intentional misconduct of Landlord, its agents, or
employees, Landlord shall be held harmless by Tenant from any liability for
damages to any person or property in or upon the Leased Premises and the
sidewalks adjoining same, including the property of Tenant and its employees and
all persons in the Leased Premises at its or their invitation.  All property
kept, stored or maintained in the Leased Premises shall be so kept, stored or
maintained at the sole risk of Tenant.  Tenant shall be held harmless by
Landlord for any damages to person or property caused by the negligence or
intentional misconduct of Landlord, its agents, or employees.  Tenant’s and
Landlord’s obligations under this Article 9 shall survive the expiration or
earlier termination of this Lease.

ARTICLE 10.  EMINENT DOMAIN.

(a)           Entire Premises.  If substantially all of the Leased Premises
shall be taken under the power of eminent domain then the term of this Lease
shall cease as of the day possession shall be taken and the rent shall be paid
up to that day with a proportionate refund by Landlord of such rent as may have
been paid in advance.

(b)           Partial Taking.  If more than twenty percent (20%) of the floor
space in the Leased Premises shall be taken under the power of eminent domain,
both Landlord and Tenant shall have the right to terminate this Lease as of the
day possession shall be taken by notice to the other party given within ten (10)
days after possession is so taken.  If the unexpired portion of the Term shall
be one (1) year or less at the date of taking of any portion of the Leased
Premises, Landlord shall have the right to terminate this Lease as of the day
possession shall be taken by like notice to Tenant.  Tenant shall be allowed a
reasonable time not to exceed ten (10) days after any such termination to vacate
the remainder of the Leased Premises, and rent shall be paid up to the day
possession shall be taken or the day Tenant vacates the remainder of the Leased
Premises, whichever is later.

(c)           Continuation of Lease.  In the event this Lease is not terminated
pursuant to paragraphs (a) or (b) of this Article, all the terms of this Lease
shall continue in effect, except that the base rent shall be reduced in
proportion to the reduction in floor space in the Leased Premises as a result of
the taking, and Landlord shall, at its own cost and expense, make all necessary
repairs or alterations to the Improvements so as to constitute the remaining
Leased Premises a complete architectural unit.

(d)           Damages.  In any event all damages awarded for such taking under
the power of eminent domain, whether for the whole or a part of the Leased
Premises, shall belong to and be the property of Landlord whether such damages
shall be awarded as compensation for diminution in value to the leasehold or to
the fee of the premises; provided, however, that Landlord shall not be entitled
to any award made separately to Tenant for relocation benefits, for “going
concern” value of its business, loss of business, fair value of, and cost of
removal of stock and fixtures, which shall belong to Tenant.

(e)           Definition.  The term “eminent domain” shall include the exercise
of any similar power and any purchase or other acquisition in lieu of
condemnation.
 
 
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ARTICLE 11.  DAMAGE.

(a)           Partial or Total Destruction.  In case the Leased Premises shall
be partially or totally destroyed by fire or other casualty insurable under fire
and extended casualty insurance so as to become partially or totally
untenantable, the same, unless Landlord or Tenant shall terminate this Lease as
hereinafter provided, shall be repaired or rebuilt as quickly as practicable at
the cost and direction of Landlord, and the base rent shall abate during the
period of repair in proportion to the portion of the floor space in the Leased
Premises that is untenantable or unfit for use by Tenant in its business.

(b)           Extensive Damage; Election.  If the Improvements located on the
Leased Premises shall be destroyed or damaged by fire or other casualty
insurable under fire and extended casualty insurance, so as to become wholly
untenantable, and:

1.           the Leased Premises cannot be repaired or restored within one
hundred twenty days (120) after such damage or destruction; or

2.           the unexpired portion of the term or any renewal term of this Lease
is one (1) year or less at the date of the damage;

then either Landlord or Tenant may terminate this Lease as of the date of such
destruction or damage by giving written notice to the other party of such
election within thirty (30) days after such damage or destruction.

ARTICLE 12.  SURRENDER; HOLDING OVER.  On the last day of the term or any
renewal term hereof or on the sooner termination thereof, Tenant shall peaceably
surrender the Leased Premises in good order, condition and repair, broom-clean,
casualty damage and reasonable wear and tear only excepted.  Tenant shall repair
any damage to the Leased Premises caused by removal of Tenant’s trade fixtures
or equipment.  Any of Tenant’s property not removed on the last day of the term
or any renewal term hereof or on the sooner termination thereof, shall be deemed
abandoned.  In the event Tenant remains in possession of the Leased Premises
after the expiration of the Term without the execution of a new lease, Tenant’s
occupancy of the Premises shall be that of a tenancy at will.  Tenant’s
occupancy during any holdover period shall otherwise be subject to the
provisions of this Lease (unless clearly inapplicable), except that the base
rent shall be 125% of the base rent payable for the last full month immediately
preceding the holdover.  No holdover or payment by Tenant after the expiration
or termination of this Lease shall operate to extend the Term or prevent
Landlord from immediate recovery of possession of the Leased Premises by summary
proceedings or otherwise.  Tenant shall be liable for all damages that Landlord
suffers as a result of the holdover.

ARTICLE 13.  DEFAULT; REMEDIES.

(a)           Default.  The occurrence of any of the following shall constitute
an “Event of Default” under this Lease:
 
 
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1.           Tenant shall fail to pay any installment of base rent to Landlord
within ten (10) days after the due date;

2.           Tenant shall have failed to comply with any other provision of this
Lease, and shall not have cured such failure within thirty (30) days after
Landlord, by written notice, has informed Tenant of such non­compliance;
provided, however, in the case of a default which cannot be cured, with due
diligence, within a period of thirty (30) days, Tenant shall have such
additional time to cure such default as may be reasonably necessary, provided
that Tenant proceeds promptly and with due diligence to cure such default after
receipt of said notice;

3.           Tenant shall have filed a petition in bankruptcy or insolvency or
for reorganization or for the appointment of a receiver or trustee for it or its
property, or any similar petition, or shall have made an assignment for the
benefit of creditors, or an order for relief shall have been entered in any
proceeding under the federal Bankruptcy Code in which Tenant is named as the
debtor;

4.           Any involuntary petition of the type or similar to those referred
to in Paragraph 3 of this Subsection (a) shall have been filed against Tenant,
and shall not be vacated or withdrawn within sixty (60) days after the date of
the filing thereof; or

5.           Tenant shall have abandoned the Leased Premises, which shall be
conclusively presumed if Tenant shall vacate the premises for thirty (30) days
without giving written notice of its intent to return to possession of the
Leased Premises.

(b)           Remedies.  Whenever any event of default shall have occurred and
be subsisting, Landlord may elect either:

1.           To cancel and terminate this Lease; or

2.           To reenter and take possession of the Leased Premises, and
terminate Tenant’s right to possession of the Leased Premises, without
terminating this Lease or any of Tenant’s obligations for the balance of the
term of this Lease.

Landlord may at any time elect to terminate this Lease despite a prior election
to exercise its remedies under Paragraph 2 above.  In the event Landlord
exercises its remedies under Paragraph 2 above, it may remove all persons and
property from the Leased Premises and store such property at the cost of and for
the account of Tenant, may make alterations and repairs and redecorate the
premises to the extent deemed by Landlord necessary or desirable, and may relet
the premises, or any part thereof, for the account of Tenant, to any person,
firm or corporation, other than Tenant, for such rent, for such time and upon
such terms as Landlord, in Landlord’s sole discretion, shall determine; but
Landlord shall not be required to accept any tenant offered by Tenant or to
observe any instruction given by Tenant concerning such reletting.  Any rent and
other amounts received by Landlord upon such reletting shall be applied first to
the costs and expenses of Landlord in regaining possession of the Leased
Premises, storing property removed from the premises, making alterations or
repairs or redecorating the Leased Premises, and reletting the premises,
including, without limitation, brokerage and reasonable attorneys fees, then to
the rentals and other obligations of Tenant under this Lease, and any surplus
shall be paid to Tenant.
 
 
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ARTICLE 14.  NOTICES.  Any notice required or permitted under this Lease shall
be deemed sufficiently given or served when personally delivered (in person, by
commercial courier service, by facsimile with confirmed transmission, or
otherwise) or forty-eight (48) hours after mailed by registered or certified
mail to Tenant at the address of the Leased Premises and to Landlord at the
address then fixed for the payment of rent, and either party may by like written
notice at any time designate a different address to which notices shall
subsequently be sent.

           ARTICLE 15.  GENERAL.  This Lease does not create the relationship of
principal and agent or of partnership or of joint venture or of any association
between Landlord and Tenant, the sole relationship between Landlord and Tenant
being that of Landlord and Tenant.  One or more waivers of any default of Tenant
by Landlord shall not be construed as a waiver of a subsequent breach of the
same covenant, term or condition.  The consent to or approval by Landlord of any
act by Tenant requiring Landlord’s consent or approval shall not waive or render
unnecessary Landlord’s consent to or approval of any subsequent similar act by
Tenant.   Each term and each provision of this Lease performable by Tenant shall
be construed to be both a covenant and a condition.  The marginal or topical
headings of the several articles, paragraphs and clauses are for convenience
only and do not define, limit or construe the contents of such articles,
paragraphs or clauses.  All preliminary negotiations and all prior written
agreements regarding the subject matter of this Lease are superseded and merged
into and incorporated in this Lease.  The laws of the State of Minnesota shall
govern the validity, performance and enforcement of this Lease.  The terms,
covenants and conditions hereof shall be binding upon and inure to the benefit
of the successors in interest and assigns of the parties hereto.  This Lease may
be executed in counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same written action.

ARTICLE 16.  QUIET ENJOYMENT.  Landlord covenants and agrees with Tenant that
upon Tenant paying the rent and performing all of the terms and conditions on
Tenant’s part to be observed and performed, Tenant may peaceably and quietly
enjoy the premises hereby leased, subject, nevertheless, to the terms and
conditions of this Lease and subject to covenants, conditions, restrictions and
easements of record, if any.

ARTICLE 17.  SUBORDINATION.  Tenant agrees that its interest in the Leased
Premises is and shall be subordinate to any mortgages that may hereafter be
placed upon said premises and to any and all advances to be made thereunder, and
to the interest thereon and all renewals, replacements and extensions thereof,
provided the mortgagee named in said mortgages shall agree not to disturb
Tenant’s occupancy under this Lease in the event of foreclosure if Tenant is not
in default beyond applicable periods of grace.  Tenant agrees to execute such
documents as may be reasonably required by such mortgagee to confirm the
same.  In the event that any mortgagee elects to have the Lease a prior lien to
its mortgage, then and in such event upon such mortgagee notifying Tenant to
that effect, this Lease shall be deemed prior in lien to the said mortgage,
whether this Lease is dated prior to or subsequent to the date of said mortgage.
 
 
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ARTICLE 18.  ASSIGNMENT AND SUBLETTING.  Landlord may freely transfer the Leased
Premises, subject to this Lease, and/or assign its rights under this
Lease.  Upon any transfer of the Leased Premises, subject to this Lease,
Landlord shall be relieved of all of its obligations under this Lease.  Tenant
shall not assign this Lease or sublease all or part of the Leased Premises
(voluntarily, by operation of law or otherwise) without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.

ARTICLE 19.  NO RECORDING OF LEASE.  The parties agree not to record or register
this Lease.  At the request of either party, or such party’s lender, a
memorandum of this Lease in form mutually acceptable to the parties may be
recorded.
 
 
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IN WITNESS, the Landlord and the Tenant have caused this Lease to be executed as
of the day and year first above written.
 

 
NORTECH SYSTEMS INCORPORATED
       
By:
/s/ Richard Wasielewski          
Its:
Chief Financial Officer          
WINLAND ELECTRONICS, INC.
       
By:
/s/ Brian Lawrence          
Its:
Chief Financial Officer and Senior Vice President  

 
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